Exam # 3 Study Guide Lectures: 18 – 24Overall Review of the topics covered on TEST #3Supply-Side EconomicsGoal:Grow the economy How?Lower tax rates = tax revenues Laffer curve Fewer regulations on business Mortgage meltdown Consumption functionC = A + MPC (Yd)From a graph From a table Spending multiplier Impact on equilibrium GDP/Output Keynesian cross diagram Equilibrium GDP occurs when consumption and investment equal real disposable income or real GDP. Tax Impact on equilibrium output:Consider MPC before calculating Inflation:2 types:Demand-push inflation: Aggregate demand is greater than the short run aggregate supply. Cost push inflation: Short run aggregate supply decreases. Graphical representation of the two is important. Fiscal Policy:ProblemsDefinition Types: Discretionary and Automatic Stabilizers MoneyFederal Reserve System Functions of the bankFDIC M1 vs. M2 Econ 2305Topics not covered on the Test: APC Money Multiplier Bank T-accounts Laffer curve Appendix to Chapter 13 Great Seal – Dollar
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