Download Economics EOCT Test Review

The Principles of Economics: EOCT Review
1) What is scarcity? How is scarcity different from shortages?
2) What are the three factors of production:
3) Define "labor" and give an example:
4) Define "land" and give an example:
5) Describe the two types of capital and provide an example for each:
6) What role do entrepreneurs play in the economy?
7) What is the opportunity cost of a decision?
8) How do economists use the phrase "guns or butter"?
9) What does it mean to perform marginal analysis?
10) What is illustrated by a production possibilities curve?
11) What is the function of an economic system?
12) What determines the distribution of goods and services in a market economy?
13) What are the key features of a market economy?
14) What is division of labor?
15) How does specialization lead to increased productivity?
16) What are the key features of a command economy?
17) Why are command economies inefficient and usually doomed to failure?
18) What is the primary difference between a free-market economy and a mixed free-market economy?
19) What are some upsides to governmental deregulation of the economy? What are some downsides?
20) What are some examples of government safety nets?
21) What is the factor market?
22) What is the product market?
23) Explain how the factor market and the product market work together in the free market economy:
24) What are the benefits of specialization?
25) How does competition benefit consumers?
26) What did Adam Smith mean by the "invisible hand" of the marketplace?
27) Explain the concept of consumer sovereignty:
28) What is the role of the incentive in the command economy?
29) Explain the laissez-faire approach to economic regulation:
30) What is a mixed economic system?
31) Explain the concept of profit motive:
32) Explain the importance of private property rights in a free enterprise system:
33) Provide the GDP formula with an explanation for what each of the variables stands for:
34) How does GDP measure economic growth?
35) What are the phases of the business cycle?
36) How does the introduction of new technology affect economic performance?
37) What is the difference between a positive externality and a negative externality?
38) Explain the concept of the free rider problem:
39) What is the Law of Demand?
40) Identify and define eight factors that can lead to shifts in the demand for a product:
41) What is one good that can be considered a complement to another?
42) What are two goods that can be considered substitutes for one another?
43) Explain elasticity of demand. What is a product that has elastic demand? Inelastic demand?
44) What is the Law of Supply?
45) Explain "elasticity of supply". What is an item that has elastic supply? Inelastic supply?
46) How do subsidies affect supply?
47) Why does the government impose excise taxes?
48) How does government regulation affect supply?
49) What has been achieved when price equilibrium is reached?
50) How is a price floor different from a price ceiling?
51) Provide an example of a price floor:
52) What usually results from price floors?
53) Give an example of a price ceiling:
54) What usually results from price ceilings?
55) What is rent control?
56) Describe characteristics and give an example of perfect competition:
57) What are start-up costs? Give an example:
58) What is a monopoly?
59) What are some characteristics of monopolistic competition?
60) Give three examples of non-price competition:
61) What is price fixing and collusion? Do these practices help producers or consumers?
62) What is the purpose of antitrust legislation?
63) What is a sole proprietorship?
64) What are fringe benefits?
65) What are the characteristics of a partnership?
66) How does a corporation differ from a sole proprietorship or a partnership?
67) What is stock?
68) What is a merger? How do horizontal mergers differ from vertical mergers?
69) How does a business franchise work?
70) What is a nonprofit organization?
71) What groups of people does the government consider to be in the labor force?
72) What groups of people does the government consider to be employed?
73) What groups of people does the government consider unemployed?
74) How does the screening effect differ from the learning effect?
75) What generally happens to the equilibrium wage when demand for workers is low and the supply is high?
76) How does a debit card differ from a credit card?
77) What is measured by the liquidity of an investment?
78) Explain this statement: "The higher the potential return on an investment, the higher the risk":
79) In terms of banking, what is the difference between interest earned and interest paid?
80) How does a CD differ from a money market account?
81) What are the benefits and risks associated with purchasing stock?
82) What is a bond?
83) What is a mutual fund?
84) What is measured by GDP?
85) If aggregate demand rises, what happens to GDP?
86) What is stagflation?
87) How does real GDP differ from nominal GDP?
88) What is measured by per capita GDP?
89) How do frictional and structural unemployment differ? Give an example of each:
90) When does cyclical unemployment take place?
91) How is the unemployment rate calculated?
92) How does inflation affect purchasing power?
93) What is measured by the Consumer Price Index?
94) How does demand-pull inflation differ from cost-push inflation?
95) Explain the quantity theory of inflation:
96) Why do governments impose taxes?
97) What is the difference between a progressive tax and a regressive tax?
98) What is a proportional tax?
99) Explain the pay-as-you-earn tax system:
100) In terms of the taxation process, what is withholding?
101) What programs are funded by FICA?
102) What is a government expenditure?
103) How does the government collect revenues?
104) What is a budget deficit?
105) What is a budget surplus?
106) How does the US budget deficit differ from the national debt?
107) What are the two components of fiscal policy?
108) What are the two components of expansionary fiscal policy? What is the goal of such a policy?
109) Which branch of government is given the responsibility controlling the nation's fiscal policy?
110) What are the two components of contractionary fiscal policy? What is the goal of such a policy?
111) Which agency of the government is given the responsibility of controlling the nation's monetary policy?
112) What are the three components of monetary policy?
113) What is the required reserve ratio?
114) What can the Federal Reserve do the expand the money supply?
115) What are government securities? How is the money supply affected when the government sells securities? What
the government buys securities?
116) What can the Federal Reserve do to contract the money supply?
117) What is the goal of easy money policy?
118) What is the goal of tight money policy?
119) What is the central idea of classical economics?
120) What is the difference between Demand-Side Economics and Supply Side Economics?
121) How is the money supply effected when the Federal Reserve lowers the discount rate?
122) How does comparative advantage differ from absolute advantage?
123) Explain the difference between an import quota and a tariff:
124) What is an embargo?
125) Explain the concept of protectionism:
126) Explain the central argument of those who favor protectionist policies:
127) What is the primary argument in favor in Free Trade?
128) Why do you need to know the exchange rate when you travel to a foreign country?
129) What is a trade deficit? How would you describe the current balance of trade in the United States?
130) To what regional trade organization does the US belong?
131) To what regional trade organization does much of Europe belong?
132) To what regional trade organization does parts of Southeast Asia belong?
Write the term that best fits the definition:
133) Good and services brought from other nations.
134) Goods and services sold to other nations.
135) The ability to make more of a product than another nation.
136) The ability to make something at a lower opportunity cost than another nation can.
137) A situation that exists when a nation's imports are worth more than its exports.
138) A situation that exists when a nation's exports are worth more than its imports.
139) The difference between a nation's imports and a nation's exports.
140) The difference between all US expenditures in other nations and all foreign expenditures in the United States.