ECON2000 Intermediate Macroeconomics
The Complete Exam Bible · S2 2026ECON2000 Overview
- University of Adelaide
- Semester 2 2026
- In person final
- Closed book final
Intermediate Macroeconomics connects three questions that are often revised separately: why living standards grow over decades, why output and employment fluctuate over shorter horizons, and how monetary or fiscal policy changes those paths.
- Model sequence Long-run growth feeds labour, demand, supply and policy analysis
- Hardest step Keep transition timing and curve shifts tied to their equations
- Revision method Rebuild each model with fresh numbers and labelled axes
What you get in the full ECON2000 Exam Bible
- 10 chapters, 40 pages — every examinable topic
- 33 original practice questions, each with a model answer in the Final Exam format
- 10 worked examples, solved the way ECON2000 marks
- 13 computed figures, redrawn from the course’s own numbers
- Exam-morning plan for the Final Exam (50%) — what to revise last, where marks are lost
Free on this page: assessment table, chapter map, one worked example, key terms, FAQ. The rest is in the full exam bible.
How ECON2000 is assessed
| Component | Weight | Format |
|---|---|---|
| Weekly Problem Sets (8 submissions) | 20% | Weekly except the two extension weeks; the best four scores contribute |
| Assignments (2 submissions) | 30% | Two submissions, each worth 15%, during the extension weeks |
| Final Exam (in-person, closed-book) | 50% | University Exam Period; exact date and duration are on MyLearning |
The weights and final format come from the Semester 2 2026 course syllabus. The published numeric rows total 100%.
What other students are asking about ECON2000
- Where can I find lecture notes or study guides for ECON2000 at adelaide?
- The ECON2000 study guide in AskSia Library covers Intermediate Macroeconomics in 10 chapters, with the assessment table, a chapter-by-chapter topic map, key terms and a worked example, free to read on this page.
- Is there a final exam in ECON2000, and how much is it worth?
- Yes. In the offering this AskSia Library guide is built from, Final Exam (in-person, closed-book) carries 50% of the ECON2000 mark; the full split is Weekly Problem Sets (8 submissions) 20%, Assignments (2 submissions) 30%, Final Exam (in-person, closed-book) 50%.
- What does ECON2000 cover on solow capital dynamics?
- In AskSia Library's ECON2000 guide, the Solow Capital Dynamics chapter explains capital timing, steady states, comparative statics and transition paths.
- What does ECON2000 cover on convergence and productivity?
- In AskSia Library's ECON2000 guide, the Convergence and Productivity chapter explains conditional convergence, development accounting, misallocation and TFP.
- What does ECON2000 cover on endogenous growth and inequality?
- In AskSia Library's ECON2000 guide, the Endogenous Growth and Inequality chapter explains aK growth, ideas, creative destruction, distribution and mobility.
What ECON2000 covers
Move from long-run growth to labour and inflation, then assemble the short-run policy model.
Models, Income and Growth Accounting
National income, logarithms, Cobb-Douglas production and the TFP residualThis chapter separates three layers that are easy to collapse: national income identities, behavioural models and empirical decompositions.
- National income and expenditure
- Levels, per-capita values and growth
- Log-change approximation
- Cobb-Douglas production
- Weighted factor contributions
- TFP residual and its limits
Solow Capital Dynamics
Capital timing, steady states, comparative statics and transition pathsThe Solow model turns production, saving and depreciation into a dynamic path for capital.
- Production and resource constraints
- Capital law of motion
- Within-period timing
- Steady-state condition
- Comparative statics
- Transition dynamics
Convergence and Productivity
Conditional convergence, development accounting, misallocation and TFPConvergence questions ask whether initially poorer economies grow faster and catch richer economies.
- Distance from steady state
- Absolute convergence
- Conditional convergence
- Cross-country testing
- Development accounting
- Misallocation and TFP
Endogenous Growth and Inequality
AK growth, ideas, creative destruction, distribution and mobilityBaseline Solow growth fades because capital has a diminishing marginal product. Endogenous growth models change that mechanism by introducing an accumulable factor that need not face diminishing returns at the aggregate level.
- Diminishing returns
- AK production
- Sustained-growth threshold
- Ideas and non-rivalry
- Creative destruction
- GDP and welfare
Labour Markets and Unemployment
Frictional and structural unemployment, worker flows and steady statesLabour-market analysis begins by distinguishing employment, unemployment and non-participation, then separates frictional, structural and cyclical unemployment.
- Employment status measurement
- Natural and cyclical unemployment
- Frictional unemployment
- Structural unemployment
- Finding and separation rates
- Spell duration
Inflation and Business Cycles
Price measurement, Fisher effects, Phillips dynamics and cyclical gapsInflation is the percentage growth of the price level, so disinflation means prices rise more slowly rather than fall.
- Price level and inflation
- Disinflation and deflation
- Expected inflation
- Fisher relationship
- Phillips curve
- Output gaps
Consumption and Investment
Income horizons, heterogeneous households, real rates, q and financeConsumption responds to current disposable income, expected lifetime resources, wealth and access to credit.
- Consumption function
- Marginal propensity to consume
- Life-cycle hypothesis
- Permanent income
- Hand-to-mouth households
- Real rates and investment
Keynesian Cross and IS-MP
Planned expenditure, multipliers, IS derivation and policy rulesThe Keynesian Cross solves a price-fixed goods market by setting planned aggregate expenditure equal to output. Consumption, investment, government purchases and net exports contribute autonomous and income-induced components.
- Planned aggregate expenditure
- Consumption and investment components
- Goods-market equilibrium
- Multiplier
- Inventory adjustment
- IS derivation
Aggregate Demand and Supply
AD derivation, labour-based supply and full-model shock transmissionAggregate demand is derived by repeating IS-MP equilibrium at different inflation rates. Higher inflation triggers a higher policy rate under the monetary rule, which weakens interest-sensitive spending and lowers output.
- AD derivation from IS-MP
- AD slope and shifts
- Labour-market supply
- Inflation expectations
- AS slope and shifts
- General equilibrium
Monetary and Fiscal Policy
Transmission channels, fiscal multipliers, the zero bound and trade-offsMonetary policy affects the economy through short-term rates, longer yields, credit conditions, asset prices, exchange rates and expectations.
- Policy rate transmission
- Money creation
- Fiscal multipliers
- Crowding out
- Term structure
- Zero rate bound
The course begins with national income measurement, logarithms and growth accounting, then uses the Solow model to distinguish capital deepening from productivity growth. Conditional convergence, development accounting and endogenous growth extend that long-run framework before the course turns to labour-market flows, inflation and business-cycle evidence.
Consumption and investment microfoundations then feed the Keynesian Cross and the IS-MP model. Aggregate demand is derived from those goods-market and policy relationships, while aggregate supply is connected to the labour market and inflation expectations. The final model tracks output, inflation, interest rates and employment after demand, supply and policy shocks.
This guide follows that order because each curve is easier to reconstruct when its underlying equation is still visible. It emphasises worked calculations, transition timing and causal sentences that explain why a curve moves. The published final is in person and closed book, so revision should prioritise model skeletons, sign checks and the ability to rebuild a diagram from assumptions rather than memorising a completed page.
Worked example · free
Solow steady state from investment and depreciation
- +1Set saving-financed investment equal to depreciation: 0.36 square root of k = 0.09k.
- +1Divide by square root of k to obtain square root of k = 4.
- +1Square both sides: steady-state capital per worker is 16.
- +1Substitute into production: steady-state output per worker is 4.
- +1Below the steady state, investment exceeds depreciation, so capital and output rise.
- +1Growth slows as diminishing returns narrow the investment-depreciation gap.
Key terms
- Aggregate demand
- The schedule relating inflation to goods-market equilibrium output after the monetary-policy response is applied.
- Aggregate supply
- The short-run inflation-output relationship derived from labour, wage and price setting.
- Conditional convergence
- The prediction that economies grow faster when farther below their own parameter-dependent steady states.
- Development accounting
- A decomposition of cross-country income differences into measured factor gaps and a productivity remainder.
- Growth accounting
- A decomposition of output growth into weighted input contributions and total factor productivity growth.
- IS curve
- The combinations of interest rates and output that clear the goods market.
- MP curve
- The monetary-policy rule linking the policy interest rate to macroeconomic conditions.
- Natural unemployment
- The frictional and structural unemployment present apart from cyclical weakness.
- Planned expenditure
- Desired spending on consumption, investment, government purchases and net exports at each income level.
- Solow steady state
- A capital position where saving-financed investment exactly replaces break-even investment.
- Tobin's q
- The ratio comparing the market value of installed capital with its replacement cost.
- Total factor productivity
- The production contribution left after measured factor inputs are accounted for under the chosen model.
ECON2000 FAQ
How is Intermediate Macroeconomics assessed?
Weekly Problem Sets contribute 20%, two Assignments contribute 30%, and the in-person closed-book Final Exam contributes 50%. The problem-set component uses the best four scores from eight submissions, while each assignment contributes 15%. Check MyLearning for current submission instructions and the exact exam timetable.
What should I memorise for the closed-book final?
Memorise the skeleton of each model: variables, core equations, axes and the direction of the main behavioural relationships. Then practise rebuilding steady states and shock paths. A memorised finished diagram is brittle; a model reconstructed from saving, depreciation, expenditure, policy and wage-setting relationships survives unfamiliar wording.
Why are Solow transition dynamics difficult?
Capital is predetermined at the start of a period, while consumption and investment can jump when the saving rule changes. Students often move capital immediately or compare only the old and new steady states. Writing the within-period timing sequence first keeps the impact response separate from later accumulation.
What is the difference between growth and development accounting?
Growth accounting decomposes change through time into input contributions and a productivity residual. Development accounting applies similar production logic across economies to explain income-level gaps. Both depend on the chosen production function, and neither turns the residual into a directly observed causal variable.
How do labour flows determine steady unemployment?
The separation rate moves employed workers into unemployment and the finding rate moves unemployed workers into jobs. At a steady state, those flows balance. A higher finding rate shortens expected unemployment duration and lowers steady unemployment; a higher separation rate does the reverse.
How are IS-MP and aggregate demand connected?
IS-MP finds output and the interest rate for a given inflation rate. Repeating that equilibrium calculation across inflation rates traces aggregate demand because the policy rule changes the interest rate and therefore consumption and investment. AD is thus derived from the underlying goods-market and policy system.
How should I answer a macroeconomic shock question?
Name the exogenous change, identify the first equation it enters, shift only the curve justified by that entry point, and report the new equilibrium directions. Finish with the transmission mechanism and any later adjustment. This sequence is especially important when policy reacts endogenously to inflation or output.
Questions students ask in each ECON2000 chapter
- Why use logarithms for growth rates?
- Log differences provide a convenient approximation to percentage growth, especially for small changes, and turn multiplicative production relationships into additive decompositions. They also make proportional changes easier to compare across series with very different levels. For large movements, calculate the exact percentage change as a check. Chapter 01 · Models, Income and Growth Accounting
- Why can investment jump while capital cannot?
- Current capital was created by earlier investment and is inherited when the period begins. A new saving decision can immediately change how current output is divided between consumption and investment. That additional investment affects capital only in the next period through the law of motion. Chapter 02 · Solow Capital Dynamics
- Do all poor countries grow faster?
- No. The Solow mechanism predicts faster growth when an economy is farther below its own steady state. A poor country can be close to a low steady state because of weak productivity or other parameters, while a richer country can be farther below a much higher destination. Chapter 03 · Convergence and Productivity
- Why does baseline Solow growth stop?
- Per-capita production is concave in capital, so the marginal product falls as capital accumulates. Saving-financed investment eventually meets depreciation or break-even investment at a finite steady state. Without continuing exogenous technology growth, per-capita capital and output then stop growing. Chapter 04 · Endogenous Growth and Inequality
- Why can unemployment fall without more jobs?
- People who stop actively searching leave both unemployment and the labour force. If employment is unchanged, this participation decline can mechanically lower the unemployment rate. Employment, participation and unemployment should therefore be read together before concluding that labour-market conditions improved. Chapter 05 · Labour Markets and Unemployment
- Does lower inflation mean prices fall?
- Not when inflation remains positive. A fall from 6% to 2% is disinflation: the price level continues rising at a slower pace. Prices fall only when the inflation rate becomes negative, which is deflation. Chapter 06 · Inflation and Business Cycles
- Why does a permanent income change affect consumption more?
- A permanent change alters expected lifetime resources by more than a temporary payment of the same initial size. A household that smooths consumption spreads that larger resource change across time, producing a bigger sustained consumption response. Chapter 07 · Consumption and Investment
- Why does planned expenditure determine output?
- With prices fixed and production responding to demand, firms adjust output when intended spending differs from production. Planned expenditure above output depletes inventories and encourages expansion; planned expenditure below output accumulates inventories and prompts cuts. Adjustment ends where the two are equal. Chapter 08 · Keynesian Cross and IS-MP
- Why does aggregate demand slope downward?
- Higher inflation prompts a higher policy rate under the monetary rule. The higher rate reduces interest-sensitive consumption and investment, so IS-MP equilibrium output is lower. Repeating that process across inflation rates gives the downward AD schedule. Chapter 09 · Aggregate Demand and Supply
- How does a policy rate change reach spending?
- The short rate influences other borrowing rates, expected real rates, asset prices, exchange rates, bank credit and expectations. Those intermediate variables change consumption, investment and net exports. Transmission is delayed and can be weak when banks, borrowers or expectations block a link. Chapter 10 · Monetary and Fiscal Policy
How to study for the exam
Revise in linked blocks. Begin with growth accounting and the Solow timing sequence until you can derive a steady state and explain a transition without notes. Add convergence and endogenous growth by comparing which return assumption produces each result. Next, solve the labour-flow steady state and keep inflation rates separate from price levels.
For short-run analysis, build the Keynesian Cross from planned expenditure, derive IS from the interest-rate channel and interpret MP as a policy rule. Only then move to aggregate demand and supply. For every diagram, write one causal sentence before drawing, label the axes, mark the initial equilibrium and state whether the shock creates a curve shift or a movement along a curve.
Finish each quantitative question by checking units, signs and whether components add back to the published total. Because the final is closed book, alternate reconstruction from memory with fresh numerical drills rather than rereading completed solutions.
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