Preparation for ECO304L Final Spring 00: This will be revised daily until the exam. Check it every day.

Final incentive system: If you earn 68 points on the final you earn a C in the course. You might consider getting a tutor.

Final is Sat, 13 May from 7-9pm in the room at the time specified on the exam sheets. You will have 2 hours. The exam will be 6 pages long and have a similar structure as the second exam. There will be one review session on Fri 12 May in the Economics (BRB) building room 1.120 from 12 noon to 2 pm.

We shall focus on the basics for those students that need to pass. If you have already passed the course and are trying for an A or B I think that is great, but I will not help you. My concern is to reduce the high casualty rate. The basic rule of grade grubbing is "Go with your winners!!!" Exam will be straightforward up to 80 points and challenging, but not impossible above 80. Be hungry if you are going for an A or B.

I. Page 1: 10 multiple choice questions. Make sure you can answer all questions of both copies of the 2nd exam( answers will be posted in the internet). Also, consider the questions from the first exam as possible multiple choice questions.

II. The forty points of math consist of the following:

1. (15 pts.) IS/LM model. Calculations, graphs and explanations Similar to Exam 2, except no multiple choice. You will have to draw the graphs and write a short paragraph explaining what is going on.
2. (15pts.) Expansion/Contraction of the money supply. Similar to Exam 2
3. (10pts.) Dynamic two equation model. Come to the review sessions if you do not understand this.

This model is the dynamic model on your model I handout

5. (5 pt BONUS) Determine the multiplier for a two country trade model.

III. Technical essay (20 pts) 1 page

• Fiscal and monetary policy:

  • Objectives: According to the book what are the two major objectives of monetary and fiscal policy. Is there a conflict in these objectives. What important objective, emphasized by the supply siders do the authors ignore.

  Fiscal

  • What are the most important fiscal instruments.
  • What is the Keynesian policy for the business cycle
  • How do political incentives limit politicians ability to conduct rational fiscal policy.

  Monetary

  • What are the most important instruments of the FED?
  • Can the Fed simultaneously control the money supply and the interest rate? Discuss the issues involved.
  • Who should control the FED? Why? How do political incentives limit the governments ability to rationally coordinate monetary and fiscal policy.

  New alternatives

  • What are the most important differences between the Keynesian, monetarist, supply sider and neoclassical approach to policy.
  • Why is growth ignored under the Keynesian system?

IV. Current events.

• Focus on Welfare, International Agenies, Nafta, and Euro from Exam 2
• What is the difference between EU and Nafta.
• Discuss two other trade blocks around the world.