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Economics Final | review sheet
Directions: Answer questions on a separate sheet of paper (BE SURE TO INCLUDE CHAPTER AS HEADING &
NUMBER THEM). You may type it.
Chapter 1
1. Define: economics
2. Define: scarcity
3. Describe: Paradox of Value
4. Identify: Adam Smith
5. Explain why the study of economics is important.
6. Explain the fundamental problem that economics tries to solve.
7. Explain the difference between a trade-off and opportunity cost.
8. Explain a production possibilities curve and what it illustrates.
9. Identify and describe the four factors of production.
10. Identify the three economic questions every society must answer.
Chapter 2
1. Identify and describe the characteristics of a market, traditional, command and mixed economy.
2. Identify the characteristics of a free enterprise economy.
3. Identify two characteristics of the American economy.
4. How are goods, services and consumers related?
5. Identify the role of the consumer, entrepreneur and government in a free enterprise economy.
Chapter 3
1. Define: horizontal merger
2. Define: vertical merger
3. Identify and describe the advantages and disadvantages of a sole proprietorship, partnership, and
corporation.
Chapter 4
1. Define: microeconomics
2. Describe: The Law of Demand
3. Define: The substitution effect
4. Define: demand elasticity and inelasticity
5. Describe the difference between a demand curve and a demand schedule.
6. Describe the relationship between the price of an item and the quantity demanded.
Chapter 5
1. Define: The Law of Supply
2. Define: supply elasticity
3. Define: fixed costs
4. Define: variable costs
5. Define: total cost
6. Define: The theory of production
7. What is the difference between marginal cost and marginal revenue?
8. Identify and describe the three stages of production.
9. Describe the difference between a supply curve and the supply schedule.
10. Describe the difference between quantity supplied and change in quantity supplied.
Chapter 6
1. Define: rationing
2. Define: equilibrium price
3. Define: minimum wage
4. Describe the role of shortages and surpluses in competitive markets.
5. Why are prices an efficient way to allocate goods and services?
Chapter 7
1. Define: perfect competition
2. Define: laissez-faire
3. Explain the difference between perfect and imperfect competition.
4. Describe the difference between an oligopoly and a monopoly.
Chapter 8
1. Define: theory of negotiated wages
2. Explain how the market theory of wage determination reflects the forces of supply and demand
3. Identify and describe the four types of union arrangements.
4. Identify and describe three ways in which labor disputes can be resolved if collective bargaining fails.
5. Identify and describe two ways firms renegotiate union contracts.
6. Explain the differences between unskilled, semiskilled, skilled and professional labor.
Chapter 9
1. Define: Medicare
2. Define: Social Security
3. Define: Payroll taxes
4. Define: Individual income tax
5. Describe and provide examples for each type of tax: proportional, regressive and progressive.
6. Identify the advantages and disadvantages of the flat tax and the value-added tax.
Chapter 10
1. Define: federal budget
2. Define: crowding-out effect
3. Define: mandatory spending
4. Define: discretionary spending
5. Identify and describe three types of government spending.
6. Identify three ways in which government spending impacts the economy
7. Identify and describe the five largest federal government expenditures.
8. Identify and describe five ways the national debt can affect the economy.
Chapter 11
1. Define: mutual fund
2. Define: financial system
3. Define: 401(k) plan
4. Define: Dow Jones Industrial Average
5. Explain the difference between a bear market and a bull market.
6. Identify and describe four factors one should consider when investing.
Chapter 12
1. Define: Gross Domestic Product (GDP)
2. Define: Gross National Product (GNP)
3. Define: disposable income
4. Identify and describe two things that are excluded from the GDP.
Chapter 13
1. Define: depression
2. Define: recession
3. Define: expansion
4. Define: inflation
5. Define: market basket
6. Explain why the unemployment rate is not an accurate measure of how many people are out of work.
7. Explain the consumer price index (CPI) and how it measures inflation.
8. Identify and describe four causes of inflation.
9. Identify and describe the four possible causes of a business cycle.
Chapter 14
1. Define: Federal Reserve System
2. Define: monetary policy
3. Define: quantity theory of money
4. Define: easy money policy
5. Define: fiat money
6. Explain the three functions of money.
7. Explain the Federal Open Market Committee and its responsibilities.
8. Explain the functions of the Federal Reserve and how it was an improvement to the banking system.
9. Explain who controls the money supply and the methods used to increase the money supply.
Chapter 15
1. Define: macroeconomics
2. Define: aggregate supply
3. Define: aggregate demand
4. Define: macroeconomic equilibrium
5. Define: fiscal policy
6. Define: automatic stabilizers
7. Explain the concept of supply-side economics.
Chapter 16
1. Define: absolute advantage
2. Define: comparative advantage
3. Define: trade deficit
4. Define: trade surplus
5. Identify two factors involved in determining exchange rates.
6. Explain the goals of a government when levying a protective tariff and a revenue tariff.
7. Explain the significance of NAFTA and how it benefits the United States.
8. Explain why international trade is important for the American and the world economy.
Chapter 17
1. Define: developing countries
2. Define: International Monetary Fund (IMF)
2. Identify and describe the five stages of economic development.
4. Identify and describe four obstacles to economic growth in developing countries
Chapter 18
1. Define: globalization
2. Identify four renewable and four nonrenewable resources.
3. Explain three ways in which environmental concerns, developing nations, and growing economic
interdependence will affect a growing global economy.