ECONOMICS UNIT 3: MACROECONOMICS PRE-STUDY GUIDE

ECONOMICS UNIT 3: MACROECONOMICS PRE-STUDY GUIDE As we go through the unit, fill out your study guide by summarizing the questions that are given wit...
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ECONOMICS

UNIT 3: MACROECONOMICS PRE-STUDY GUIDE As we go through the unit, fill out your study guide by summarizing the questions that are given with the individual standards. Some will be answered directly through class notes; others will be answered through reading and critical thinking.

SSEMA1 GDP: pg 301-305 Aggregate Supply and Demand: pg 307-308 Inflation: pg 338-343 Unemployment: pg 331-336 Business Cycle: pg 310-316 Debts and Deficits: pg 403- 408

SSEMA3 Fiscal Policy- pg. 387-401

SSEMA2 Federal Reserve Organization- pg 415-418 Fed Functions- pg 420- 423 Monetary Policy- pg 425-434

GEORGIA PERFORMANCE STANDARDS INTERNATIONAL ECONOMICS : Macroeconomic Concepts

SSEMA1 The student will illustrate the means by which economic activity is measured. a. Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports.

Describe and explain how a stimulus bill passed by the Federal Government would increase economic activity in all sectors of the market: __________________________ ________________________________________________________________________ ________________________________________________________________________

b. Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and aggregate supply and aggregate demand. Gross Domestic Product (GDP): ______________________________________________ ________________________________________________________________________ Economic Growth: ________________________________________________________ ________________________________________________________________________ Unemployment: __________________________________________________________ ________________________________________________________________________

Inflation: ________________________________________________________________ ________________________________________________________________________ Consumer Price Index (CPI): ________________________________________________ ________________________________________________________________________ Stagflation: ______________________________________________________________ ________________________________________________________________________ Aggregate Supply (AS): ____________________________________________________ ________________________________________________________________________ Aggregate Demand (AD): ___________________________________________________ ________________________________________________________________________

c. Explain how economic growth, inflation, and unemployment are calculated. Explain how GDP is measured using the Expenditure Approach: ___________________ ________________________________________________________________________ ________________________________________________________________________ Why is GDP the best way to measure economic growth? _________________________ ________________________________________________________________________ Explain the effects of inflation: ______________________________________________ ________________________________________________________________________ Describe the causes of inflation: _____________________________________________ ________________________________________________________________________ ________________________________________________________________________ List the requirements to be part of the National Labor Force: _____________________ ________________________________________________________________________ How is unemployment rate calculated? _______________________________________ ________________________________________________________________________ Explain why an increase in Aggregate Demand will cause inflation: ________________ ________________________________________________________________________

d. Identify frictional, structural, cyclical, and seasonal unemployment. Define **make sure you include ALL parts of definition** Frictional Unemployment: _________________________________________________ ________________________________________________________________________ Structural Unemployment: _________________________________________________ ________________________________________________________________________ Cyclical Unemployment:____________________________________________________ ________________________________________________________________________ Seasonal Unemployment: __________________________________________________ ________________________________________________________________________

e. Define the stages of the business cycle, include peak, contraction, trough, recovery, expansion as well as recession and depression. Business cycle: ___________________________________________________________ ________________________________________________________________________ Peak: ___________________________________________________________________ ________________________________________________________________________ Contraction:_____________________________________________________________ ________________________________________________________________________ Trough:_________________________________________________________________ _______________________________________________________________________ Recovery:________________________________________________________________ ________________________________________________________________________ Expansion: ______________________________________________________________ ________________________________________________________________________ Explain the difference between a Recession and a Depression: ____________________ ________________________________________________________________________ ________________________________________________________________________

f. Describe the difference between the national debt and government deficits. Describe what the Federal Budget is and why it is important to keep it balanced: ________________________________________________________________________ ________________________________________________________________________ Annual Deficit: ___________________________________________________________ ________________________________________________________________________ Annual Surplus: __________________________________________________________ ________________________________________________________________________ National Debt: ___________________________________________________________ _______________________________________________________________________ Explain why it is often necessary to run an Annual Deficit: _______________________ ________________________________________________________________________

SSEMA3 The student will explain how the government uses fiscal policy to promote price stability, full employment, and economic growth. a. Define fiscal policy. Fiscal Policy: _____________________________________________________________ ________________________________________________________________________

b. Explain the government’s taxing and spending decisions. Describe the 3 types of Government Taxes. Identify which is our National Income Tax. ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ Give several examples of what Government Expenditures ($) go towards: __________ ________________________________________________________________________ Describe the two Expansionary policies and their intended goals: _________________ ________________________________________________________________________ ________________________________________________________________________ Describe the two Contractionary policies and their intended goals: ________________ ________________________________________________________________________ ________________________________________________________________________ Why would the government ever want to SLOW down the economy? ______________

SSEMA2 The student will explain the role and functions of the Federal Reserve System. a. Describe the organization of the Federal Reserve System. Describe the decision-making body of the Federal Reserve System: ________________ ________________________________________________________________________ Describe the role the 12 District Banks and their Presidents: ______________________ ________________________________________________________________________ Describe the 4 main functions of The Fed: _____________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

b. Define monetary policy. Monetary Policy: _________________________________________________________ _______________________________________________________________________ Open Market Operations: __________________________________________________ ________________________________________________________________________ Discount Rate: ___________________________________________________________ ________________________________________________________________________ Reserve Requirement: _____________________________________________________ ________________________________________________________________________

c. Describe how the Federal Reserve uses the tools of monetary policy to promote price stability, full employment, and economic growth. List the 3 ways that the Fed can increase the money supply and aggregate demand. ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ List the 3 ways that the Fed can decrease the money supply and aggregate demand. ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________

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