EC114 Introductory Macroeconomics
Revision Lecture
J. James Reade
1st May 2015
Encouragement

- All the evidence suggests you already know as much economics as these three clowns.
- They may actually know some introductory macro:
- Unlike them, be prepared to show it when you get opportunity!
Introduction
- Exam is 2–4pm Tuesday 12 May in Palmer Building.
- Exam is same format as class test/midterm exam was.
- Three sections:
- Section A: Definitions.
- Section B: Choose one essay from choice of three.
- Section C: Compulsory question on exchange rates.
Exchange Rates: How I’d Revise
- Firstly, read the chapters (19–21) in the textbook.
- Remember, you’re expected to have done 121+39=160 hours of guided independent study.
- Don’t try and shirk by just reading your notes, or the slides.
- Re-read chapters and take notes whilst reading them.
- Re-write those notes, reducing them down eventually to one side per chapter.
- Write essays based on past paper questions:
- At first just write, and go back to notes if need be.
- After a while, start writing without notes, checking after.
- Write at least one essay under timed conditions.
- In the process, think about definitions:
- Be able to write out a definition for every term you come across.
- Maybe even a Word Cloud…

- Hence:
- Exchange rate (nominal): Rate at which two currencies are swapped at.
- Exchange rate (real): Ratio of price levels in two countries.
- Exchange rate (effective): Average of nominal exchange rates of a country with major trading partners.
- Currency: A system of money in general use in a country.
- Balance of payments: System of accounts for financial flows in and out of a country.
- Current account: All financial flows in and out of a country used for current consumption.
- Capital account: All financial flows in and out of a country used for investment purposes.
- Exports: Goods produced in a country sold to buyers from abroad.
- Imports: Goods produced in another country bought into a country to be sold.
- Uncovered interest rate parity:
- Covered interest rate parity:
- Purchasing power parity:
- Income:
- Price:
- GDP:
- Liberalisation:
- Reminder: Definitions are not gospel.
- They are single sentences that characterise essential features of something.
- Only the first sentence you write will be marked in the exam.
Essays
- You already have plenty of examples of essays and guideline solutions.
- There are no answers for essays:
- There is no single set of words that will get you 100 marks.
- There are basic principles for answering essays:
- Answer the question set, not what you want to answer.
- Define the concepts you make use of in your answer. Referring back to Section A not ideal, as the point is you are developing an argument within your essay to answer the question set.
- Time yourself, and be strict about moving on to parts (b) and (c).
All the best…
- There is no reason why you cannot pass and do well in this exam.
- Equally, there’s no reason why you will pass if you assume your A-levels will get you through.
- Between now and 12th, my office hours are:
- Tuesdays and Fridays, 1030–12.
- If I am not there, I’m sorry, please email me to arrange an alternative time.