***Economics Review***

  1. Know what inflation is and how to calculate the inflation rate. 2) Know the three types of unemployment. 3) Know the different schools of macroeconomic thought (Keynesian, Classical, and Monetarists) – know what each theory says and where they agree and where they disagree. 4) Know the time lags of fiscal policy and the different automatic stabilizers. 5) Know PPP – law of one price, absolute PPP, relative PPP and formulae 6) Know the three ways that the Fed can control the money supply and how to calculate the deposit expansion multiplier and the difference between the actual and potential deposit expansion multiplier. 7) Know that a currency will appreciate/depreciate based on relative income growth rates, relative rates of inflation and changes in real interest rates. 8) Know interest rate parity which says that countries with high nominal interest rates will have their currencies sell at a forward or discount to prevent arbitrage 9) Know how to calculate the forward premium or discount on a currency vis-à-vis another currency (focus on the currency in the denominator). 10) Know the difference between a direct and indirect quote and whether a currency is appreciating or depreciating. 11) Know elasticity of demand and supply COLD and how to calculate them. Know whether it is a highly elastic, inelastic or unitary elasticity. 12) Know the difference between accounting and economic profits. 13) Know the law of diminishing returns and what it is. 14) Know the different competitive models (pure competition, monopolistic competition, monopoly, and oligopoly) and their characteristics as well as what they say about economic profits in short and long run. 15) Know the Marginal Revenue Product for inputs and how it relates to price. 16) Review the reading on the Supply of and Demand for Productive Resources mostly for terminology and concepts. 17) Make sure you know ATC, AVC, AFC, curves well and how they relate to MC curve. 18) Know the constant returns to scale, diseconomies of scale and economies of scale in the long-run.