Download Econ - Final Exam Review

ECONOMICS
FINAL EXAM REVIEW
This assignment is to help you prepare for the Final exam. Use all past homework portfolios, as well as the
textbook to answer the following questions. This is due the day of your final and is worth 50 points.
CHAPTER 1
1. Why are scarcity and choice the basic problems that economists attempt to explain?
2.
What are the four factors of production? What are the differences in the benefits of physical and
human capital?
3.
What roles do entrepreneurs play in the use of resources?
4.
Why do economists believe all resources are scarce?
5.
How does the concept of opportunity cost relate to the concept of choice?
6.
How does the analysis of costs and benefits apply when one “thinks at the margin”?
7.
What is illustrated by a Production Possibilities Curve (Frontier)? Explain how the PPC illustrates
the following:
a. Underutilization
b. Opportunity Cost (constant and increasing)
c. Economic Growth
CHAPTER 2
1. Explain the differences in a market, command, and mixed economy based on
a. How they each answer the three key economic questions
b. How their societal values affect those questions
c. The characteristics of each
2.
What happens in each market as illustrated by the circular flow?
3.
How does the free market regulate itself? What are its advantages?
4.
How is a centrally planned economy organized? What are the issues within a centrally planned
economy?
5. What have been the reasons for the rise of mixed economies in recent times?
CHAPTER 3
1. What are the basic principles of the free enterprise system? What roles are played by the
consumer and the government?
2.
How does the government attempt to influence the business cycle in the U.S. economy?
3. In what ways does the government promote the following:
a. Employment
b. Growth
c. Stability
d. Technological progress
e. Productivity
4. What are public goods? How does market failure explain the need for public goods?
6.
What are positive and negative externalities, and how does the government attempt to control
them?
CHAPTER 4
1. What is the Law of Demand?
2.
How do the substitution and income effects influence demand decisions?
3.
What is the relationship between price and quantity on a demand curve?
4.
What is the difference between a change in quantity demanded and a change in demand?
5.
What are the five changes in market conditions that cause a change in demand?
6.
What is the difference between a normal good and an inferior good?
7.
What is the difference between two goods that are complements and two goods that are
substitutes?
8. How would you determine if a good had elastic demand? Inelastic demand?
CHAPTER 5
1. What is the Law of Supply?
2.
What is the relationship between price and quantity on a supply curve?
3.
What are the seven changes in market conditions that would cause a change in supply?
4.
What is the marginal product of labor? How do the concepts of increasing, diminishing, and
negative marginal returns relate to this concept?
5.
What are fixed costs? Variable costs? Total costs?
6. What is marginal cost?
CHAPTER 6
1. How is equilibrium determined in the market?
2.
What is a surplus? A shortage? How would the market correct these situations?
3.
What are price ceilings? Price Floors? Give an example of each and explain in what situation the
government would use each.
CHAPTER 7
1. What are the four conditions that exist in a perfectly competitive market structure?
2.
What are start-up costs? What are the two barriers that prevent firms from entering any market?
3.
How are price and quantity arrived at in a perfectly competitive market?
4.
What are the characteristics of a monopoly?
5.
What is the difference between a government and a natural monopoly?
6.
What are patents, franchises, and licenses, and how do they help to create monopolies?
7.
Where will a firm make its maximum profit?
8.
What are the four forms of price discrimination, and what are the three conditions that must exist
for price discrimination to work?
9.
What are the four conditions for monopolistic competition to exist?
10. What are the four forms of non-price competition that exist in monopolistically competitive and
oligopolistic markets?
11. What are the characteristics of an oligopoly?
CHAPTER 9
1. What is the labor force? Who is excluded from it?
2.
What are the three occupational trends that exist in the U.S. economy in the 21 st century?
3.
How has the labor force changed in the last 50 years? What are the trends in wages and benefits?
4.
How are supply and demand for labor derived?
5.
What are the four wage and skill levels? What is the relationship between wages and the quantity
of workers as skill level increases?
6.
What four factors affect wages?
7.
What affects do union have on wages?
8.
Why has the labor union movement declined in the U.S. since the 1940’s?
9. What are collective bargaining, arbitration, and mediation?
CHAPTER 10
1.
What are the three uses of money?
2.
What are the six characteristics of money?
3.
What is the difference among commodity, fiat, and representative money?
4.
How did the Federal Reserve System reorganize the federal banking system?
5.
What is the difference between M1 and M2?
6.
What are the five functions of financial institutions?
7.
How do banks make a profit?
8.
What are the five innovations that electronic banking has brought to the financial system?
CHAPTER 12
1. What is Gross Domestic Product, and what are the four categories that are counted as part of the
expenditure approach to calculating GDP?
2.
What is the difference between nominal and real GDP? How is real GDP calculated?
3.
What four types of transactions are not counted as part of GDP?
4.
What are the four phases of the business cycle?
5.
What is Real GDP pre capita, and what do economists believe that it measures?
6.
How do the following cause Real GDP per capita to increase?
a.
b.
c.
d.
e.
f.
Capital deepening
Savings and Investment
Population Growth
Government policies
Foreign Trade
Technological Progress
7. What are the five causes of technological progress?
CHAPTER 13
1.
What is the definition of unemployment?
2.
What are the four types of unemployment?
3.
What are the five causes of structural unemployment?
4.
What is the labor force, and how is it determined?
5.
What is the formula for calculating the unemployment rate?
6.
How would someone know if the economy has reached full employment?
7.
What are underemployment and discouraged workers? How do they affect the unemployment
rate?
8.
What is inflation? What is the CPI and how is it calculated?
9.
What categories of goods and services are used to determine the CPI?
10. How is the rate of inflation calculated?
11. What are the three theories of inflation?
CHAPTER 14
1. Where does Congress get its power to tax? What are the limits on that power?
2.
What are the differences among a proportional, regressive, and progressive tax?
3.
What are the four characteristics of a “good tax”? Describe each.
4.
Why are income taxes called “pay-as-you-earn” taxes?
5.
What is taxable income? What is the difference between a marginal tax rate and the average tax
paid?
6.
Describe each of the following taxes:
a. Corporate income tax
b. Social Security tax
c. Medicare tax
d. Unemployment tax
e. Excise tax
f. Estate tax/Gift tax
g. Import tax
CHAPTER 15
1. What is fiscal policy? What are its two tools?
2.
3.
When a government uses an expansionary fiscal policy, at what stage of the business cycle is that
economy in? What are the two actions the government takes during an expansionary fiscal
policy?
When an economy uses a contractionary fiscal policy, at what stage of the business cycle is that
economy in? What are the two actions the government takes during a contractionary fiscal policy?
4.
What effect does each type of fiscal policy have on the budget balance?
5.
How would one know if the government is running a budget surplus, or a budget deficit?
6.
What is the difference between the budget deficit and the national debt?
7.
What are the two ways a government can pay for its budget deficits? Which one has the United
States used?
CHAPTER 16
1.
Describe the Federal Reserve Act of 1913.
2.
How is the Federal Reserve structured. Describe the functions of the following
a. Board of Governors
b. Federal Reserve District Banks
c. Federal Open Market Committee
3.
Describe monetary policy
4.
How do banks create money?
5.
What are open market operations and how do they affect the money supply?
6.
If the Fed uses an expansionary monetary policy, how does that affect interest rates, aggregate
demand, and GDP?
7.
If the Fed uses a contractionary monetary policy, how does that affect interest rates, aggregate
demand, and GDP?
8.
What are the discount rate and the federal funds rate?
CHAPTER 17
1. What is the difference between absolute advantage and comparative advantage?
2. What does it mean when a currency depreciates or appreciates against another currency?