2. State the healthy /stable markers for Real GDP growth, inflation, and unemployment for the United States.

3. Draw a dynamic AD/AS model and label all the axes and curves*

4. Define aggregate demand, long run aggregate supply, and short run aggregate supply.

5. List the sources of real shocks 6. Using the AD/AS graph show the effect of positive and negative real shocks on real growth and inflation*

7. Draw a dynamic AD/AS model and label all the axes and curves*

8. Using the AD/AS graph show the effect of positive and negative real shocks on real growth and inflation*

9. Define the short run and long run in the AD/AS model

10. Explain why the short run aggregate supply curve is upward sloping

11. List the sources of aggregate demand shocks

12. Using the AD/AS graph show the effects of positive and negative AD shocks on real growth and inflation (both short run and long run)*

13. Explain how the economy transitions from a short run shock to a long run equilibrium.

14. Analyze short run changes in GDP, inflation, and unemployment using the AD/AS model.*

15. Use the diagnosis matrix to determine the predominant force behind economic instability

1. Define intertemporal substitution

2. Explain how intertemporal substitution can amplify a shock to the economy

3. Define time bunching 4. Explain how time bunching can amplify a shock to the economy

5. Define Irreversible investment 6. Explain how uncertainty affects investment and can make a negative shock worse, and cause economic recovery to take longer

7. Identify labor adjustment costs

8. Explain how labor adjustment costs can make a negative shock worse, and cause economic recovery to take longer

9. Define collateral

10. Explain how changes in asset values (and thus available collateral) can contribute to bigger economic fluctuations.

11. Discuss the interaction effects between real shocks and demand shocks

12. Summarize how small to medium sized shocks in the economy can lead to large fluctuations in economic production and employment