Study Guide for ECON 311 Midterm Study advice We have covered various topics so far, and all of them are fair game for the exam I recommend studying the homework, readings, and lectures slides to prepare for this exam Below, I list the main topics of each class and suggest some questions that you should ask yourself as you study these topics If you are able to answer these well, you will do excellently Topics The Science of Macroeconomics What are models Why do economists use them Can assumptions that do not hold true still be useful What is a market clearing model, what does it assume, and what contexts is it appropriate for The Data of Macroeconomics What two things does Gross Domestic Product (GDP) measure How can it measure both of them Why does GDP measure sales of final goods rather than all goods What are the different parts of the National Income Accounts Identity What counts and does not count as part of GDP accounting What is the difference between GDP and GNP How does CPI and PCE Deflator differ from the GDP deflator How is unemployment calculated What is the difference between unemployment and labor force participation What does Robert Higgs argue about macroeconomic statistics during WWII National Income (Closed Economy) What are the characteristics of the Cobb Douglass Production Function What has constant returns to scale What has diminishing returns to scale What do the exponents on K or L represent What are the factors of production What will their prices be in a perfectly competitive market What are MPK and MPL equivalent to What is one theory that can use the Cobb Douglass Production Function to explain the early growth of the West What are some theories for the increased capital share of income How to calculate national income (Think Y C I G) What is the interest rate What role does it play How do changes in G or T affect the market for loanable funds Open Economy Miscellaneous what index measures inequality Does inequality correlate with higher GDP per capita What does it mean to have an open economy (Think international trade vs no international trade) What parts of the national income identity change as a result of international trade What represents a trade deficit, trade surplus, or balanced trade How do you calculate current accounts vs capital accounts What do trade deficits mean What is the difference between small and large open economy What are the effects of fiscal policy on savings and investment What are the effects of changes in world interest rate on whether a country has a trade surplus, deficit, or balanced trade What is the difference between real and nominal exchange rates Understand this formulaically What does the exchange rate say about the relative prices of foreign goods How are net exports effected by changes in real exchange rate What is the effect of fiscal policy on real exchange rate and net exports What is the effect of protectionist policy on the real exchange rate and net exports Economic Growth What is the Solow growth model Which variables does it treat as exogenous and which as endogenous What is the steady state level of capital How does a change in the saving rate influence the steady state level of capital The steady state level of income According to the Solow model, which variable can cause sustained long run growth in income per person In other words, which variable influences the steady state rate of growth in income per person How does a change in savings rate, population growth, or technological progress change the steady state equibrium What is endogenous growth theory How does it differ from the Solow model What are institutions How do they effect growth Why are institutions important Why are property rights important (related to the 3 Ps 3Is) How do institutions impact growth according to Acemoglu, Johnson, and Robinson How do settlement patterns relate to institutions and growth according to Acemoglu, Johnson, and Robinson Has development research focused on larger or smaller questions in the past decade What is the role of institutions in causing fractionalization

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Study Guide for ECON 311 Midterm Study advice: We have covered various topics so far, and all of them are fair game for the exam.

Study Guide for ECON 311 Midterm

Study advice:

We have covered various topics so far, and all of them are fair game for the exam. I recommend studying the homework, readings, and lectures/slides to prepare for this exam.

Below, I list the main topics of each class and suggest some questions that you should ask yourself as you study these topics. If you are able to answer these well, you will do excellently.

Topics:

The Science of Macroeconomics

What are models? Why do economists use them?
Can assumptions that do not hold true still be useful?
What is a market-clearing model, what does it assume, and what contexts is it appropriate for?

The Data of Macroeconomics

What two things does Gross Domestic Product (GDP) measure? How can it measure both of them?
Why does GDP measure sales of final goods rather than all goods?
What are the different parts of the National Income Accounts Identity?
What counts and does not count as part of GDP accounting?
What is the difference between GDP and GNP?
How does CPI and PCE Deflator differ from the GDP deflator?
How is unemployment calculated? What is the difference between unemployment and labor force participation?
What does Robert Higgs argue about macroeconomic statistics during WWII?

National Income (Closed Economy)

What are the characteristics of the Cobb-Douglass Production Function?
- What has constant returns to scale?
- What has diminishing returns to scale?
- What do the exponents on K or L represent?
What are the factors of production? What will their prices be in a perfectly competitive market?
- What are MPK and MPL equivalent to?
What is one theory that can use the Cobb-Douglass Production Function to explain the early growth of the West?
What are some theories for the increased capital share of income?
How to calculate national income? (Think Y = C + I + G).
What is the interest rate? What role does it play?
How do changes in G or T affect the market for loanable funds?

Open Economy

Miscellaneous: what index measures inequality?
- Does inequality correlate with higher GDP per capita?
What does it mean to have an open economy? (Think international trade vs. no international trade).
What parts of the national income identity change as a result of international trade?
What represents a trade deficit, trade surplus, or balanced trade?
How do you calculate current accounts vs. capital accounts?
What do trade deficits mean?
What is the difference between small and large open economy?
What are the effects of fiscal policy on savings and investment?
What are the effects of changes in world interest rate on whether a country has a trade surplus, deficit, or balanced trade?
What is the difference between real and nominal exchange rates?
- Understand this formulaically.
What does the exchange rate say about the relative prices of foreign goods?
- How are net exports effected by changes in real exchange rate?
What is the effect of fiscal policy on real exchange rate and net exports?
What is the effect of protectionist policy on the real exchange rate and net exports?

Economic Growth

What is the Solow growth model?
Which variables does it treat as exogenous and which as endogenous?
What is the steady-state level of capital?
How does a change in the saving rate influence the steady-state level of capital? The steady-state level of income?
According to the Solow model, which variable can cause sustained long-run growth in income per person? In other words, which variable influences the steady-state rate of growth in income per person?
How does a change in savings rate, population growth, or technological progress change the steady state equibrium?
What is endogenous growth theory? How does it differ from the Solow model?
What are institutions? How do they effect growth?
- Why are institutions important?
Why are property rights important? (related to the 3 Ps 3Is).
How do institutions impact growth according to Acemoglu, Johnson, and Robinson?
How do settlement patterns relate to institutions and growth according to Acemoglu, Johnson, and Robinson?
Has development research focused on larger or smaller questions in the past decade?
What is the role of institutions in causing fractionalization?