Question regarding Macroeconomics for Course II

[ookawasan]

Hi all,

So far my biggest problem is Macroeconomics. Am I right in assuming that Chapter III of the study note is by far the most important chapter? All I have been doing is trying to understand the IS-LM curves. Of course I also memorized the basic GDP formula, a few formulas in chapter two, MPC, Money Multiplier, Exchange rates, and the formula about Money velocity. I noticed that since the new exams, there hasn't been ONE problem on price indices.

Any other suggestions? Your help is greatly appreciated. :wink:

[Macroman]

Nov 2000 #10 is an index number problem. An understanding of index numbers can also help with solution for problem #50 Nov '00.

Almost all of the ISLM problems do not really require understanding of the ISLM theory. Very few people are going to understand the ISLM theory stanting from scratch in 3 weeks, especially on their own.

Most problems referencing ISLM really require application of basic Keynesian principals vis-a-vis fiscal or monetary authority and stimulus to combat a recession/depression or tightening to combat inflation.

Other important macroeconomic topics:

1. Quantity theory of money MV = PY , relating inflation, monetary growth and economic growth.

2. Savings = Investments identities

3 National income accounting
Y = C + I + G + NX(net exports)

4. Multipliers- figuring the effect on GNP of changes to automnomous investment, government spending, tax rate etc

5. methods of economic intervention
*stimulative actions and who can implement them
*contractive actions and who can implement them

6. The Phillips Curve- proposed relation between inflation and unemployment- and the implications of different shaped Phillips curves

I would say that I have listed these roughly in decending order of importance.

[ookawasan]

Macroman:

are you sure # 10 and # 50 on the Nov 00 exam are index questions? I find #10 a problem chapter 2 material from PriceTheory and # 50 from chapter 3 material from Price theory. The only thing close would be # 51, dont you think. Thanks for your info about what to concentrate on though!

By the way, did you mean to say that it's hard to study ISLM theory on your own, or that the exam questions will not be particulary difficult, or both? :D

[Macroman]

ISLM as a topic in a Macroeconomics class would take about 10 hours of instruction time. I would classify the ISLM model as an advanced topics. Furthermore, actually working through a problem in the ISLM framework requires drawing 2 or 3 graphs, transferring values from one graph to the other, at least 5 steps in total typically. The questions asked and the alternative answers given have not, to date, required actual use of ISLM. Post a problem if you would like a specific example.

Problem #50- This is basically a micro problem, but an alternative way to work it would be to compute a 1997 price index with 1998 as the base year. You can then see that the subject had higher real income in 1997 than 1998 resulting in being better off in 1997. This is half of the answer to #50.

Problem #10, I think, was a basic index number problem. The Price Theory book may explain how to do the problem.

Problem #51 is an interest theory problem...

[Macroman]

******bump******