Transcript econ231_2 - William J. Polley

Principles of
Macroeconomics
Econ 231 Spring 2010
William J. Polley
Department of Economics
College of Business and Technology
Western Illinois University
Top 10 Things to Know for the
Exam
 10. GDP: Definition, how to calculate, what it
means and what it doesn’t mean,
Y=C+I+G+NX (all of chapter 5)
 9. Calculating growth rates (p. 73): useful in
working with GDP and other statistics
 8. Facts about growth: (pages 92-97)
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Countries vary widely
Everyone used to be poor
Growth miracles and growth disasters
Top 10 Things to Know for the
Exam
 7. Factors of production: (pages 97-99)
 Physical capital (machines)
 Human capital (education, experience,
“brains”)
 Technical knowledge (technology)
 6. The importance of incentives and
institutions for growth (pages 99-106)
 5. Catching up vs. Cutting edge (Chapter 7)
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Growth experiences of China vs. U.S.
Solow model: Investment and depreciation
Diminishing returns to capital
Top 10 Things to Know for the
Exam
 4. Ideas are what drive growth in the long
run. (last part of chapter 7)
 3. Supply and demand for loans
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People want to smooth consumption. This
means borrowing and lending.
Interest rate is the price of a loan.
What causes shifts in supply or demand?
(pages 154-157)
Bond prices and interest rates (yields) move in
opposite directions.
Top 10 Things to Know for the
Exam
 2. Efficient markets hypothesis
 Prices of traded assets reflect all publicly
available information.
 Risk vs. return tradeoff
 1. Material from chapters 1-4 (Exam 1) will
make up a small but important part of the
exam. (about 1/3 of the points, more or less)