INTRODUCTION TO ECONOMICS II

Back

Learning Outcomes

define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate income
Explain two ways of measuring GDP
Explain how we measure real GDP and the GDP deflator
Explain how we use real GDP to measure economic growth
monitor cycles, jobs and the price level
Explain how we date business cycles
Define the unemployment rate and the labor force participation rate
Describe the sources of unemployment, its duration and the groups most affected by it
Explain how we measure the price level and the inflation rate using the CPI
use Aggregate supply and aggregate demand in macroeconomic analysis
Explain what determines aggregare supply
Express what determines aggregate demand
Demonstrate macroeconomic equilibrium
Explain the effects of changes in aggregate supply and aggregate demand on economic growth, inflation and the business cycle
interpret the economy at full employment
Describe the relationship between the quantity of labor employed and real GDP
Explain what determines the demand for labor and the supply of labor
Explain what determines unemployment when the economy is at full employment
distinguish capital, investment and saving
Describe the growth and fluctuations of investment, tha capital stock and the real interest rate
Explain how business investment decisions are made
Explain how household saving decisions are made
Analyse how invetsment and saving interact to determine the real interest rate
calculate expenditure multipliers
Explain how expenditure plans and real GDP are determined when the price level is fixed
Use the expenditure multiplier
Explain how recessions and expansions begin
Analyse how the multiplier gets smaller as the price level changes
Will be abke to describe fiscal policy
Define and explain the fiscal policy multipliers
Explain the effects of fiscal policy in both the short run and the long run
Distinguish between the demand side and supply side effects of fiscal policy
define money markets
Define money and describe its functions
Explain the economic functions of banks and other depository institutions
Describe how banks create money