Download STUDY GUIDE FOR ECONOMICS FINAL EXAM

STUDY GUIDE FOR ECONOMICS FINAL EXAM:
UNIT ONE (Chapters 1,2,3) STUDY QUESTIONS for December final exam, ECONOMICS:
Kate has saved $180. The total cost of the items she wants to purchase comes to $200. What basic
economic fact does this situation illustrate?
You go to a restaurant and order a veggie sandwich on wheat bread. The water that a farmer used to irrigate
the wheat and vegetables is best categorized as which factor of production?
The President proposes reducing military spending in order to make money available for new healthcare
programs for young children. This is a classic example of what concept?
A production possibilities curve can be used to illustrate what?
What are the three key economic questions that every society must answer?
Other than businesses and private citizens, does government play a role in answering those three key
economic questions?
If you are growing your own vegetables, is that an example of a market in action?
The circular flow model that shows government in the middle of that circular flow indicates what type of
economic system?
If you are receiving a paycheck from a firm, are you considered to be part of the factor market or part of the
product market?
If there was a choice between an economic system that had all property owned by the government or had
all property in the hands of private firms and private citizens, which economic system do you think Karl
Marx would have preferred?
The U.S. Constitution was deliberately designed, in part, to protect property and contract rights. What type
of market activity is this design intended to encourage?
Under the principle of “eminent domain,” can the government force a property owner to sell that owner’s
land to the government?
If the government bails out General Motors, what economic goal does the government have in mind? What
factor of production is most being considered by following this strategy?
A state government uses federal grant money to build a dam to supply electricity to local citizens. This is
an example of what good?
If government patents are intended to stimulate economic growth, what type of incentive does a patent
provide for innovators?
If there is no such thing as a free lunch, then what choices must you make? What are the trade-offs?
Regardless of what individuals do in the U.S. can’t we ALL be referred to as consumers in this particular
economy that we have agreed to participate in?
When the Soviet Union was in existence as a communist state, what two systems did both the Soviet Union
and China have in common? One system is governmental, and the other is an economic system. What are
the names of those type of systems that were linked for both the Soviet Union and for China prior to 1993?
UNIT TWO (Chapters 4,5,6,7):
When shoes at a local shoe store went on sale at 50 percent off the regular price, the store sold almost every
pair of shoes it had in less than a day. By the time the stock was replenished, the sale was over and shoes
were being purchased at a much slower rate. Which law does this illustrate? Law of demand or law of
supply?
Would deregulation be most likely to increase competition or decrease competition?
If Mariah’s income increases dramatically, will she most likely continue to buy inferior goods at the same
demand level?
If delivered pizza delivery goes up 40 percent, would you have substitutes that might be more attractive to
your demands? If so, is your demand for delivered pizza elastic or inelastic?
According to the law of supply, when the price goes up, does quantity produced go up or down?
(remember, I said price, not cost…)
What type of schedule is used to help an entrepreneur determine how much to charge for her product?
To calculate profits, a firm subtracts total costs from total revenues. Total costs include fixed costs and
what one other type of costs?
Suppose you are running a pie company with five employees. Orders increase, so you hire a sixth pie
maker. Your profits go down. Has your marginal product of labor decreased or increased?
Subsidies, excise taxes, and regulation are ways that government can influence what? Supply or demand –
which one?
Is Rent Control (as government policy or law) a way to at least ATTEMPT to control the high COST of
living?
Will the economic impact of a holiday fad that has faded will this result in a negative change in the
demand graph or will it cause a rapid shift to the right in a market demand curve?
Factors that make it difficult for new firms to enter a market are called
what to entry? (fill in the blank)
When a supplier determines which goods or services to offer, that supplier has found a way to fulfill
consumer what for the product that the supplier has chosen to supply?
Both buyers and sellers benefit when the market is at what?
UNIT THREE (Chapters 8,9):
You open a dog-walking business. You own the business, you do the work,
and you keep all the profits. How is it that you would be considered to be a
“sole proprietor?”
What are the disadvantages of being a sole proprietor?
What does L.L.P. stand for?
Why are owners of certain fast-food restaurants considered to be franchise owners? What are they required
to pay if they own a franchise?
What do we call certificates of ownership in a corporation that are traded on the open market?
When consumers are members of a store that provides discounts for members only, what type of
cooperative to we call that store?
Is your community bank considered to be an example of a nonprofit organization?
Is a 13 year old that provides babysitting service for the neighborhood considered to be part of the U.S.
private sector labor force?
What type of technology has been in use by greater than half of all U.S. workers since the year 2000?
If a small town with only one shopping mall grows and then a second shopping mall opens, that means that
that demand for labor has shifted to the right. When that happens what happens to wages for all retail
workers, in a competitive labor market?
Would a janitor, technically speaking in economic terms, be considered a semi-skilled laborer or a
skilled laborer?
Can anti-discrimination laws limit the factors that can be used to determine wages?
In a collective bargaining session between union leaders and company managers, which of these would be
saying the following in these negotiations: “We need to eliminate the night shift to cut costs?”
What is assured for all business organizations that have both capital and profits in common?
UNIT FOUR (Chapters 10,11):
When you pay a cashier at a store for a new pair of shoes, you are using your money as a medium of what?
You have cash in your wallet and you travel to California to stay at a beachside hotel. What two
characteristics of money does this example represent?
Look at a dollar bill. What words on the dollar bill tell you that it is “fiat money?”
Why did Thomas Jefferson say these words: “A centralized National Bank would place too much power in
the hands of a few wealthy bankers?” What was his alternative idea?
In 1850, there were several different currencies circulating in the U.S. What happened to currencies in our
economy after the Civil War?
What does FDIC stand for and when was it created?
If you consider your 20 dollars to be a demand deposit, where are you depositing that 20 dollars?
When banks make profits by charging interest on loans, this system is called the (fill in the blank) “what“
reserve system?
What do we call the card that you use to give permission to a gas station to take money from your checking
account when you buy gas?
One example of a financial intermediary is a bank. With whom does a bank (or any other financial
intermediary) link savers?
Why are all types of bonds called loans?
What type of bond would a school district issue if it was asking for money to build a new high school?
Would the following headline apply to a bear market or a bull market? “Dow Drops.”
When an entrepreneur takes risks and earns a profit, what type of gains has that entrepreneur made?
When the financial crisis emerged in 2008, how had banks gotten into such serious trouble?
UNIT FIVE (Chapters 12,13):
What is taken into account when converting nominal GDP to REAL GDP?
If the GDP drops, what happens to the price level?
Think about businesses now – do businesses borrow less or more when interest rates go up?
When you learn how to use a new computer program at work, what happens to your capital – does it
deepen or get shallower?
If you want to contribute most directly to economic growth, you are promoting capital deepening. So what
will you do with your paycheck before you spend any of that paycheck?
If a country has a growing population but declining capital stocks, what happens to the GDP per capita (per
person)?
If you choose to leave your job for any reason, you are considered to be frictionally what?
If no jobs are available for which you have skills, what type of unemployment do we call that situation?
Why would you advise the president to take no action when the employment rate is at 5 per cent? The
nation is considered to be a what type of employment?
What does CPI stand for? Remember it only indicates increases in the costs of a selection of common
products from month to month or year to year…
In order to determine whether or not a family is living below the poverty threshold, you must look at both
the size of the family and that family’s what?
What has happened to the gap between rich and poor in the last 12 years?
What does the BLS do?
UNIT SIX (Chapters 14,15,16):
What is the difference between a progressive tax and a regressive tax?
What type of income tax is the single largest source of federal revenue?
Your gross pay on your paycheck is 160 dollars, but your take-home is only $138.47. What is being
withheld from your paycheck?
When it comes to federal spending, what is an entitlement? Which accounts for the largest share of federal
spending, entitlements or national defense?
The Social Security taxes taken from your paycheck are being given by the government to which group of
people?
The largest percentage of tax revenues to pay public school teachers comes from what type of tax, most
commonly?
If the government wants to influence economic growth, what type of policy does it formulate to do that?
Is the president intending to get the economy speeded up or slow it down when he uses “expansionary”
fiscal policy?
“During economic hard times, the government should use its powers to help the nation reach its full
productive capacity.” Which economist would have been most likely to agree with these words?
The Federal Reserve System, or the Fed, is best described as a group of private
banks that are under control of what?
Will the Fed guarantee your deposit if you deposit your paycheck in a local
bank?
If the Fed chooses a monetary policy to restrain inflation (the money supply),
will they raise or lower bank reserve requirements?
Fed conducts monetary policy; fiscal policy is conducted by what?
Economists believe that what supply (fill in the blank) is THE most important
part of our economy.
Is the bank your or any other consumer’s friend?
UNIT SEVEN (Chapters 17,18):
Does the U.S. have absolute advantage over other nations in agricultural production? If so, how is that so?
When it comes to production and comparative advantage, remember the element of opportunity costs!!
If the U.S. is a major importer and exporter of a variety of goods, then must it be a significant part of a
world that is economically interdependent?
If you want tariffs to be raised to protect American jobs, are you a protectionist or are you a free trade
marketer?
What does NAFTA stand for? (particularly the letters “F” and “T”)
Which dollar (national currency or regional currency) is the exchange-rate system pegged to?
If the elderly population of an impoverished country continues to grow faster than any other age group,
what will happen to the development of this country?
What does it say about human capital when a 16 year old girl must leave school to care for her younger
siblings and work the family farm?
What is an LDC? What are the receivers of benefits from the IMF expected to do with money that they are
not required to pay to debt-collectors?
Russia and China have changed their economic goals since the late 1990s. What type of economy existed
for these two countries before the move towards greater privatization and moves toward more of a market
system?
With the rapid economic development in India, what has happened to the gap between the rich and poor in
India?
Is deforestation good for sustainable development?
Increased competition in the global economy has affected overall prices to be reduced or raised for most
goods?
Has increased free trade in the world increased the pace of globalization?