Macroeconomics Study Library.

Scarcity, opportunity cost, and trade-offs · Production Possibilities Curve (PPC): efficiency, economic growth, shifts · Comparative advantage and gains from specialization and trade · Demand and supply fundamentals; market equilibrium · Resource markets vs. goods and services markets

Gross Domestic Product (GDP): expenditure approach (C + I + G + NX), income approach · Real GDP vs. nominal GDP; GDP deflator calculation · Unemployment rate calculation; types of unemployment (frictional, structural, cyclical) · Natural rate of unemployment (NRU) and full employment · Inflation: Consumer Price Index (CPI) calculation; effects on purchasing power and real wages · Circular flow model (households, firms, government, financial sector, foreign sector) · Business cycle phases: expansion, peak, recession, trough

Aggregate Demand (AD): components and shifters · Short-Run Aggregate Supply (SRAS): determinants and shifters · Long-Run Aggregate Supply (LRAS): full-employment output (Yfe) · AD-AS model: short-run and long-run equilibrium; recessionary and inflationary gaps · Fiscal policy: discretionary government spending and tax changes; automatic stabilizers · Spending multiplier: 1 / MPS = 1 / (1 − MPC); tax multiplier: −MPC / MPS · Crowding out: interaction of fiscal policy expansion with the loanable funds market

Money: functions (medium of exchange, store of value, unit of account), types (M1, M2) · Money creation through the fractional reserve banking system; money multiplier (1 / reserve requirement ratio) · Money market: money supply (vertical) and money demand; nominal interest rate determination · Loanable funds market: real interest rate determination; saving supply and investment demand · Federal Reserve structure and monetary policy tools: open market operations, discount rate, reserve requirements · Expansionary vs. contractionary monetary policy and the transmission mechanism to AD

Short-run Phillips Curve (SRPC): inverse relationship between inflation and unemployment · Long-run Phillips Curve (LRPC): vertical at NAIRU; adaptive expectations · Stagflation and supply-side shocks; SRPC shifts left/up with cost-push inflation · Effects of fiscal and monetary policy on the Phillips Curve in the short and long run · Quantity theory of money (MV = PQ); long-run neutrality of money · Economic growth: capital accumulation, productivity improvements, rule of 70 · Policy responses to recessionary gaps vs. supply-side inflationary shocks

Balance of payments: current account vs. capital/financial account; balance of payments identity · Foreign exchange (forex) markets: exchange rate determination, currency appreciation and depreciation · Currency changes and effects on net exports, aggregate demand, and the domestic economy · International capital flows and interest rate parity connections · Trade deficits and surpluses; savings-investment identity (S − I = NX) · How domestic monetary and fiscal policy changes transmit through forex and NX to AD