CAS EC 102 Study Guide - Final Guide: Jeffrey Sachs, Gdp Deflator, Fiscal Multiplier
19 Dec 2017
School
Department
Course
Professor
Final Review
Macro Final Review
Final Review
-ARTICLES FOR THE FINAL EXAM
•“Institutions Matter, but not for everything” by Jeffrey Sachs
•“Grinding the poor” The Economist
•“A model of reform” The Economist
•“Micro no more” The Economist
-Core Concepts
•Aggregate Expenditure and Aggregate Demand
-Aggregate Expenditure is a POINT on the AD curve
•it shows what the total AE will be at a particular price level
-AD shows what the AE will be at EVERY price level
•it is the entire line
-GDP = Aggregate Expenditure (AE)
•Y = C + I + G + NX
-Consumption:
•spending by households on goods and services
•exception: purchases of new housing
-Investment:
•net change in inventory
•plant equipment
-Warehouses
-office buildings
!1
find more resources at oneclass.com
find more resources at oneclass.com
Final Review
-Factories
•Residential investment
-family purchases a new house
-builder builds a new apartment building
-Government purchases
-Net Exports
•exports:
-spending on domestically produced goods by foreigners
•imports:
-spending on foreign produced goods by domestic people
-an increase in AE is a movement along the AD curve
•P decreases -> Y increases
•the only thing that produces the change in AE is the change in price level
-a decrease in AE is a movement along the AD curve
•P increases -> Y decreases
-Why does the Aggregate Demand Curve Slope Down?
•Wealth Effect
-P increases -> purchasing power of household wealth decreases -> C decreases -> AE
decreases
•International Trade Effect
-P increases -> e increases -> NX decreases -> AE decreases
•Interest Rate Effect
-P increases -> r increases -> C decreases, I decreases
•r us increases ( relative to r in rest of the world)
!2
find more resources at oneclass.com
find more resources at oneclass.com
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CAS EC 102 Full Course Notes
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Document Summary
Articles for the final exam: institutions matter, but not for everything by jeffrey sachs, grinding the poor the economist, a model of reform the economist, micro no more the economist. Core concepts: aggregate expenditure and aggregate demand. Aggregate expenditure is a point on the ad curve: it shows what the total ae will be at a particular price level. Ad shows what the ae will be at every price level: it is the entire line. Gdp = aggregate expenditure (ae: y = c + i + g + nx. Consumption: spending by households on goods and services, exception: purchases of new housing. Investment: net change in inventory, plant equipment. Spending on domestically produced goods by foreigners: imports: Spending on foreign produced goods by domestic people. An increase in ae is a movement along the ad curve: p decreases -> y increases, the only thing that produces the change in ae is the change in price level.
