Study topics for exam 2 (scheduled for November 8, 2004).
Exam will cover chapters 10, 11, 12, 13 and 3 and will consist of 20 multiple choice
questions and a section of graphs, problems, short answer and short essay. Please come to
the exam prepared and with a calculator.
unemployment, long-run vs. short-run unemployment
natural rate of unemployment, cyclical unemployment
labor force, unemployment rate, out of the labor force, labor force participation rate
discouraged workers, duration of unemployment,
effects of the minimum wage; know how to draw and work with the labor market graph
unions, economic impacts of unions, efficiency wages
commodity money, fiat money, desirable properties of money, functions of money
technical definitions of money, liquidity, M1, M2 ;
broader vs. narrower definitions of money
The missing money, currency substitution and dollarization
fractional reserve system, required reserves, excess reserves, money multiplier
Fed, Central Bank, Board of Governors, Alan Greenspan
open market operations, discount rate, Fed's tools to conduct monetary policy
money market equilibrium diagram (Money supply and money demand)
Equation of Exchange and Quantity Theory of Money
velocity and money neutrality
Costs of inflation, shoeleather costs, menu costs
increasing opportunity costs, constant opportunity costs
absolute advantage, comparative advantage, complete specialization
gains from trade, David Ricardo and the corn laws
real and nominal interest rates
openness of economies,net foreign outflows, portfolio vs direct investment
national saving, domestic investment, nominal vs. real exchange rate
appreciation, depreciation, purchasing power parity; law of one price.
(I will cover the following final concept at the beginning of class on November 8th just
before the exam) relative purchasing power parity and forecasting exchange rates using
purchasing power parity.