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ECONOMICS DEPARTMENT TUTORING CENTER
Frequently Asked Questions
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Here are a few of the most frequently asked questions at the Economics Tutoring Center. Remember, you can always stop by and ask for clarifications and other questions you may have. The questions below are classified according to class, but you may well find an answer to your specific question under another class. So, make sure you look up similar questions regarding some specific points that may cross disciplines!
Basic Microeconomics
- For the elasticities, remember that there is point elasticity and arc elasticity. when we look at an elasticity, we are getting (P/Q)(dQ/dP). dQ/dP is one term, you must always remember to multiply that by the ratio of P/Q and dQ/dP is simply percentage change in quantity over the percentage change in Price. Another way of looking at dP and dQ is by seeing changes, like P2-P1 and Q2-Q1 . You might have seen this notation in your book. There is also the notations with the "deltas". As you can see, the above formula is the Price elasticity of Demand.
Basic Macroeconomics
- Consider the LM and IS Curves. One thing to remember is that the curves do not actually give you the inflation rate. Inflation is only implied by the movement of the LM curve outwards (namely, an increase in the money supply). Even when this happens, we do not say that the inflation rate has changed, we rather allow the LM curve to shift donwards and thus we get a lower interest rate and a higher level of output. This may seem counterfactual, but remember, this is the actual prediciton of hte model, not the change in inflation rate as the Price level is kept constant!
- Considering the LM and IS curves, just a note of clarification on the movements. The curves can move either upwards or downwards. We can laso say that they shift either to the left or the right. Perhaps the best way to look at it is that The LM curve will shift outwards when the money suplly is increased and inwards otherwise. The IS curve will move outwards in response to an increase in expenditures or will shift inwards in response to a decrease in expenditures.
Basic Statistics
Statistical Decision Making
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Copyright 2003, 2002, 2000, 1999, 1998, 1997 by Fordham University. All rights reserved.
Last Updated - April 9th, 2003. |
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