Econ 158 Juergen Fleck
Spring, 2011
In the final test you are responsible for the following:
Chapters 12 - 18
Problem sets 12 - 16
The following concepts were stressed in class:
AD-AS analysis: short-run and long-run adjustments
The slow adjustment of wages
The effects of monetary and fiscal policies
Demand-pull and cost-push inflation
Stagflation
The sacrifice ratio, Okun’s law, the misery index
The budget deficit and the trade deficit
Crowding out
A balanced budget amendment
The effects of a large national debt
The importance and functions of money
Money creation and the money multiplier
The Federal Reserve System
Tools, instruments, targets and goals of monetary policy
The Great Depression and the financial crisis of 2008
Equilibrium in the money market
The quantity theory of money
The income velocity of money
The neutrality of money
The Fisher equation
Monetary growth rules versus active stabilization policies
Inflation targeting, RGDP targeting, and NGDP targeting
Credibility versus flexibility
Policy lags
Hyperinflation
The Phillips curve and the natural rate of unemployment
Rational and adaptive expectations
Monetarism and new Keynesian economics
Purchasing power parity and interest rate parity
Exchange rate determination
Capital flight
Current economic conditions