Macroeconomic/Microeconomic terms

Microeconomics
Key Concepts and Questions:

* The concepts of supply and demand apply to markets of factors such as land, labor and capital, as well as product markets.
* The demand for factors of production is a derived demand.
* The demand for factors of production is influenced by the factors marginal product.
* Factor prices play a key role in determining the allocation of scarce resources.
* How are wage levels determined?
* How are employment levels determined?
* How do forces like the minimum wage, unions, and monopsony power influence competitive labor markets?
* What is economic rent?
* How do interest rates influence the supply and demand for investment funds in the credit market?
* The determination of factor prices can help explain income inequality in market economies.


Terms and Topics:

 Economic Resources
 Resource Payments
 Factors of Production (Land, labor, capital, entrepreneurship)
 Factor Payments (Economic rent, wages, interest, profits)
 Factor (Resource Demand) – Productivity, derived demand, substitution effect, output effect.
 Firm in the Middle
 Marginal Revenue Product (MRP)
 Marginal Resource Cost (MRC)
 Supply of Factors
 Demand for Factors of Production
 Input
 Output
 MRP formulas
 MRP ≥ MRC
 Profit Maximizing Combination
 Cost Minimizing Combination
 Nominal Wages
 Real Wages
 Salaries
 Commission
 Productivity and real wages
 Buyer's market – Monopsony, perfect competition.
 AFL
 CIO
 Collective bargaining
 Goals of Unions
 Rent (common usage)
 Supply of Natural Resources
 Rent Determination
 Single Tax Movement (Henry George)
 Economic functions of rent
 Money as Capital
 Loanable Funds
 Supply of Loanable funds
 Demand for Loanable funds
 Determining the interest rate
 Functions of interest
 Principal
 Why borrow money?
 Real Interest Rates
 Nominal Interest Rates
 Normal Profits
 Pure (economic) profits
 Factor Market
 Product Market
 MR vs. MRP
 MC vs. MRC
 Law of Diminishing returns
 Inflation
 How do interest rates influence savings, investment, spending, and economic growth?
 How can you change productivity?
 Theoretically, how much should a factor of production be paid?
 Minimum Wage












Macroeconomics
Key Concepts and Questions:
* What causes crowding out and how does it influence the economy?
* What are the basic ideas of the monetarism, and rational expectations theory?
* How do the views of the monetarists and Keynesians differ?
* What are the economic effects of government budget deficits?
* What kind of economic burden is created by the federal debt?
* What is the relationship between deficits, interest rates, and inflation?
* While the SRAS is upward sloping to the right, the LRAS is vertical.
* Monetary and fiscal policies have different impacts in the short run than in the long run.
* The Phillips curve illustrates the trade off between inflation and unemployment, though the trade off differs between the short run and the long run.
* How do inflationary expectations influence the economy and how do the new classical and Keynesian views of inflationary expectations differ?
* Long run economic growth can only be achieved by increasing the economy's production possibilities (illustrated by a shift in the PPC and/or the LRAS)
* How can policies intended to address inflation and unemployment influence long run economic growth?


Terms and Topics:

(Some old material has been included to emphasize its importance.)

 Monetary policy
 Money supply
 Fiscal policy
 Economic goals
 Interest rates
 Velocity
 Equation of exchange (MV=PQ)
 Monetarism
 The monetary rule
 Crowding out
 Phillips Curve
 Stagflation
 LRAS
 SRAS
 PPC
 Federal debt
 Budget deficit
 Economic growth
 Policies to encourage growth
 Problems caused by the debt/deficit
 Rational Expectations Theory
 Supply Side Economics
 Laffer Curve
 Marginal tax rates
 Economic performance over the past thirty years
 Comparison of monetary and fiscal policies


Terms you have to know for next week.
Source from Ms. Deeter- AP Economics
http://wyvern.k-o.org/deeter.t/