L ECTURE 27 The Lessons and Tools of Economics May 5, 2020 - - PowerPoint PPT Presentation

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L ECTURE 27 The Lessons and Tools of Economics May 5, 2020 - - PowerPoint PPT Presentation

Dec 04, 2022 372 likes •781 views

Economics 2 Christina Romer Spring 2020 David Romer L ECTURE 27 The Lessons and Tools of Economics May 5, 2020 Announcements Suggested answers

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LECTURE 27

The Lessons and Tools of Economics

May 5, 2020

Economics 2 Christina Romer Spring 2020 David Romer

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Announcements

  • Suggested answers for Problem Set 6 are available
  • n the course website.
  • We have posted a sample final exam and very

rough sketches of the suggested answers.

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SLIDE 3

Final Exam Logistics

  • We sent you all an email over the weekend.
  • Please read it!
  • When: Monday, May 11th, 11:30 a.m.
  • You also have the option of taking it at 11:30

p.m. on the same day (to accommodate different time zones).

  • If you want to take the later exam, you need

to email Todd Messer (messertodd@Berkeley.edu) by 5 p.m. on Wednesday.

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Final Exam Logistics

  • The exam will be open book and open note, but

not open internet.

  • You may not consult with others or with non-

class resources.

  • Procedures
  • We will email you the exam.
  • You should write each answer on a separate

piece of paper.

  • You will then scan and upload your answers

to Gradescope.

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SLIDE 5

Final Exam Logistics

  • Timing
  • We will email you the exam at precisely

11:30 a.m. (or 11:30 p.m. for the late sitting).

  • You will have 2½ hours to complete it.
  • You will then have 15 minutes (plus a 5

minute grace period) to scan and upload your answers to Gradescope.

  • If you have technical problems, you need to

send a scan or photo of your exam to your GSI by 2:20, and then continue the uploading process.

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SLIDE 6

Final Exam Format and Content

  • Strictly shorter than two midterms.
  • Cumulative, but with one section specifically on

material since the second midterm.

  • Mixture of short-answer questions, problems, and

multiple choice questions.

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Some Advice on Taking the Final Exam

  • Read questions carefully.
  • Figure out what tool is appropriate.
  • Watch your time.
  • Always explain why a curve shifts or something

happens.

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SLIDE 8

Some Advice on Studying

  • Focus on the posted slides and your lecture notes.
  • Also the suggested answers to the problem

sets.

  • Study actively; don’t just keep reading over your

notes.

  • Redraw diagrams; think of different cases

and examples and then work them out.

  • Focus on really understanding the tools.
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SLIDE 9

Places to Get Help before the Final

  • GSI office hours:
  • Your GSI will hold their regular office hours

during RRR week, unless they tell you differently.

  • Professor office hours this week:
  • Wednesday (May 6th), 1–3 p.m.
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SLIDE 10
  • I. OVERVIEW
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  • II. LESSONS AND TOOLS OF MICROECONOMICS
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Lesson 1

  • Trade-offs are everywhere.
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Key Tool

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Lesson 2

  • There are gains from specialization and trade.
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Key Tools

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Lesson 3

  • In a market system, prices play a crucial role.
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Key Tool

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Lesson 4

  • Households and firms make choices to maximize

their well-being.

  • Corollary: People respond to incentives.
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Key Tools

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Lesson 5

  • A market system has important strengths.
  • Allocative efficiency.
  • Dynamic efficiency.
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Key Tools

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Lesson 6

  • Interfering with the market has consequences.
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Key Tool

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Lesson 7

  • Market failures are important, and government

interventions can often improve market outcomes.

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Key Tools

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Lesson 8

  • Market forces are a fundamental determinant of

what workers are paid.

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Key Tool

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  • III. LESSONS AND TOOLS OF MACROECONOMICS
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Lesson 1

  • In the long run, output is determined by the

inputs to the production process.

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Key Tool

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Lesson 2

  • Improvements in average labor productivity are

the key source of long-run growth, and technological progress is the key source of improvements in average labor productivity.

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Key Tools

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Lesson 3

  • Changes in planned spending cause output to

deviate from potential in the short run.

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Key Tool

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Lesson 4

  • Monetary and fiscal policy affect planned

spending, and so can cause or mitigate short-run fluctuations.

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Key Tools

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Lesson 5

  • Inflation responds gradually to the deviation of
  • utput from potential, and this behavior of

inflation (working through the Fed’s reaction function) brings the economy back to Y*.

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Key Tools

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Lesson 6

  • Net exports are determined by factors affecting

asset flows, not goods flows.

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Key Tools