Macroeconomics Final Exam
Study and Review Sheet
Every concept covered in this review sheet will be covered on the final exam. There won’t be any
questions that will cover material not mentioned in this review. This is designed ostensibly to get
you to focus on the most important elements of the course and to avoid distractions. If you do
what I tell you to do in this review sheet and you take it seriously you should earn a good grade
on the final. Remember, you should also review the text, the instructional videos and the
practice chapter quizzes.
1. Know and understand the concept of opportunity cost and be able to apply it in a
situation.
2. Understand how the budget deficit is calculated and apply it.
3. Identify the marginal propensity consume and know how to use it.
4. Know the different motivations for holding money.
5. Compare and contrast a command economy with a market economy.
6. Evaluate the impact of currency appreciation and depreciation on a country’s exports
and imports.
7. Determine how a country’s standard of living can be improved.
8. Identify hyperinflation and the impact that it has on a nation’s economy.
9. Understand investment demand and the factors that affect it.
10. Know how to calculate the official unemployment rate and be able to analyze how it
might be different than the actual unemployment rate.
11. Interpret the shift of the aggregate demand and aggregate supply curves and determine
the impact on the equilibrium price level and the equilibrium real GDP.
12. Distinguish between expansionary and contractionary fiscal policy.
13. Understand the circular flow and its relationship between income and production.
14. Know how the real interest rate is calculated and its impact on consumption and real
GDP.
15. Apply the concept of the Phillips curve and understand the relationship between the
unemployment rate and the inflation rate.
16. Analyze the impact of changes in the money supply on interest rates.
17. Know the determinants that shift the aggregate demand curve to the right and left.
18. Use the balance sheet of a commercial bank to calculate the excess reserves and its
money creating potential.
19. Analyze the impact on the economy of inflationary expectations.
20. Know the factors that impact the short-run aggregate supply curve.
21. Determine the effect of a change in government spending on the economy.
22. Analyze the effect of expansionary and contractionary monetary policy on the
equilibrium price level and real GDP.
23. Know the economic policies that are required to reduce the inflation rate.
24. Differentiate between comparative advantage and absolute advantage.
25. Know how to calculate the official unemployment rate.
26. Understand the relationship between net investment and economic growth.
Study and Review Sheet
Every concept covered in this review sheet will be covered on the final exam. There won’t be any
questions that will cover material not mentioned in this review. This is designed ostensibly to get
you to focus on the most important elements of the course and to avoid distractions. If you do
what I tell you to do in this review sheet and you take it seriously you should earn a good grade
on the final. Remember, you should also review the text, the instructional videos and the
practice chapter quizzes.
1. Know and understand the concept of opportunity cost and be able to apply it in a
situation.
2. Understand how the budget deficit is calculated and apply it.
3. Identify the marginal propensity consume and know how to use it.
4. Know the different motivations for holding money.
5. Compare and contrast a command economy with a market economy.
6. Evaluate the impact of currency appreciation and depreciation on a country’s exports
and imports.
7. Determine how a country’s standard of living can be improved.
8. Identify hyperinflation and the impact that it has on a nation’s economy.
9. Understand investment demand and the factors that affect it.
10. Know how to calculate the official unemployment rate and be able to analyze how it
might be different than the actual unemployment rate.
11. Interpret the shift of the aggregate demand and aggregate supply curves and determine
the impact on the equilibrium price level and the equilibrium real GDP.
12. Distinguish between expansionary and contractionary fiscal policy.
13. Understand the circular flow and its relationship between income and production.
14. Know how the real interest rate is calculated and its impact on consumption and real
GDP.
15. Apply the concept of the Phillips curve and understand the relationship between the
unemployment rate and the inflation rate.
16. Analyze the impact of changes in the money supply on interest rates.
17. Know the determinants that shift the aggregate demand curve to the right and left.
18. Use the balance sheet of a commercial bank to calculate the excess reserves and its
money creating potential.
19. Analyze the impact on the economy of inflationary expectations.
20. Know the factors that impact the short-run aggregate supply curve.
21. Determine the effect of a change in government spending on the economy.
22. Analyze the effect of expansionary and contractionary monetary policy on the
equilibrium price level and real GDP.
23. Know the economic policies that are required to reduce the inflation rate.
24. Differentiate between comparative advantage and absolute advantage.
25. Know how to calculate the official unemployment rate.
26. Understand the relationship between net investment and economic growth.
