Download final exam review packet with answers for jan 2014 exam

ECONOMICS
MRS. SURIAN
FINAL EXAM REVIEW SHEET
EXAM on
WED 1/22 & TH 1/23
Bring a PENCIL & PEN
NO ELECTRONIC DEVICES ALLOWED IN CLASSROOM!
MICROECONOMICS
Ch 1-Life is Economics
*Four factors of production- natural resources, capital, labor, entrepreneur
*Scarcity- the central problem in economics; why is everything considered to be scarce?
*Tradeoffs v. Opportunity costs- secondary effect = consequence (+ or -)
Choice
Value of second choice (What you could have done.)
Ch 2- Economic Systems
*Capitalism- 5 pillars: consumer sovereignty, free/private enterprise, private property, competition,
profit motive
*Types of Economies (command, market, mixed market; characteristics of each)
What is produced?
How it is Produced?
For when is it
produced?
command
government
government
government
market
consumer
producer
producer
Ch 3- Demand (think “consumer”)
*Demand-based on consumers wants and needs; demand shown when people buy . . .
*Law of Demand/DemandCurve- negative slope; as price increases, demand decreases
*Law of Supply/Supply Curve- positive slope; as price increases, supply increases
*Elasticity/Inelasticity- Rule of thumb: “expensive, elastic . . .” amount D in Demand
Demand
Supply
Ch 4- Supply (think “producer”)
*Circular Flow Model-rules of; 4 sections of the CFM*Fixed v. Variable costs of a business-E.g. variable
= inventory, wages Fixed = salary, rent
*Profit motive-the main driving force or motivator in a market economy
SURIAN-ECONOMICS FINAL EXAM REVIEW SHEET
Ch 5- Prices
*Equilibrium price(point)-the price at which the demand and supply curves meet
*Surplus/ shortage-when does each occur? Where is price forced?
Ch 6-Market Structures
*Monopoly- one producer of a product (>90% industry)
*Oligopoly-few suppliers of one type of product. E.g. 12, 20 eg. Gas stations, airlines
*Laissez Faire-Gov’t “Government Hands Off”
*Antitrust legislation-Sherman Antitrust Act (1890) Makes monopolies ILLEGAL! except for:
**Natural monopoly = LIPA & SCWA
Ch 7-Business Organizations
*Sole proprietorship, partnership, corporation (differences between them) see chart in notebook
*Limited/unlimited liability-levels of responsibility in certain types of businesses
“Liability” = responsibility
“Life” = will the business still exist?
Ch 8- Labor and Wages
*Federal Minimum wage- currently $7.25 What groups of people usually receive it? Youth and Elderly
*NYS Min. Wage- currently $________
*Salary v. wage-salary is a fixed income whereas a wage is a/an hourly income
SURIAN-ECONOMICS FINAL EXAM REVIEW SHEET
Ch 9- Sources of Capital & Credit
(EE bonds)
*Time deposits-has a maturity date e.g. certtificate of deposit(CD) 6 months, 12 months etc…
*types of banking accounts e.g. savings, checking, money market
*”Rule of 72”-divide interest rate by 72 # of years to double your money in the bank
*Important terms to know about Credit- e.g. grace period, Card Act of 2009, minimum pmt.
APR, FICO score =credit score
*Bankruptcy-aka “filing chapter 11”
to improve disclosure(information) to consumers
*Loans- Mortgage loan term ______ yrs, Auto/car loan term- ______ Student loan term- ______
*What loan NEVER gets erased? Student loans
*Amortization (calculator) What does it calculate/show you? amt. of payments, # of payment,
can play around and change the length (term) and interest rate to see what you can afford
MACROECONOMICS
Ch 10- Economic Performance GDP = Gross Domestic Product
*GDP and problems with calculating its accuracy; durable/ non-durable goods Know formula:
*4 phases of the business cycle:
Ch 11-Economic Challenges
*4 types of unemployment Cyclical, structural, seasonal, frictional
*Inflation- increase in price level *Hyperinflation extreme decrease in value of money
How is it measured? by CPI = Consumer Price Index (Market basket of goods/services)
What is the “base year?” base year = 0, general increase in price level
*Income v. Wealth- income = flow of value of value v. wealth = accumulation of value of value
*Poverty threshold (poverty line)- $ amount (based on # of people in household) whereby if fall below
that $, you are “poor”( according to the government) Eligible for food stamps, welfare etc..
*Minimum Wage- currently $ 7.25 hour; NYS =$8.00 per hour as of 1/1/14
*Pros/Cons of raising min. wage- Affect on worker???? Affect on business owner????
Ch 13- $Money
*What is fiat money? Money that has value simply because people all believe it does=faith
*3 functions of money- store of value, measure of value, medium of exchange
*4 characteristics of money acceptable, portable, divisible, stable value
*FDIC-Federal Deposit Insurance Corporation- currently insures $250,000 per depositor
SURIAN-ECONOMICS FINAL EXAM REVIEW SHEET
Ch 14- The Federal Reserve and Monetary Policy
*Federal Reserve System (“The Fed”)- main function of? -to maintain a stable $ supply; raise and
lower interest rates as it sees fit (if want to motivate people to spend= lower interest rates)
*Reserve Requirement- banks must keep 10% of all deposits in the bank ; cannot lend out/invest
*3 ways banks make money- loans (interest), invest in stock market (cap gains), circulate $
Ch 15- Fiscal Policy & Taxes (FISCAL = having to do with MONEY)
*Fiscal Policy- monetary policy (having to do with money and the economy)
*Federal budget-US Government spending of funds to benefit the nation
*Fiscal year (Oct 1st to Sept 30th)
*National debt-total deficits from years past to the present day (17.3 TRILLION! As of 2014)
*Deficit-yearly debt: calculated annually; when outlays exceed revenue ($ spent > $ earned) OR O>R
*Taxable year (Jan 1st to Dec 31st)
(spend
income)
*Taxes-types of taxation-income, property, gift, cap. gains, corporate income, “sin” taxes etc
*Gross (total) vs. net pay (taxes taken out of one’s paycheck) “net is what you get” (after taxes)
*FICA (Social Security) and other taxes from paycheck, etc. (medicate, unemployment insurance)
OTHER TOPICS:
*Investing Unit
*Capital gain/loss-gain- money made (gain)/lost (loss) from the sale of stock
*Dividend-money paid to a stock holder from corporate profits (usually a small amount per share)
*Diversification-investing in various industries (stocks); lessens risk
*Bull/Bear market-Bullish (high) / Bearish (low)
*DOW Jones Industrial Avg. –index of 30 common stocks; represents “market health”
*Job of the Securities and Exchanges Commission (SEC)- Gov’t regulatory agency; regulates insider
trading, corruption in stock market etc.
*401K, 403b, 529 Plan and other deferred compensation plans
401, 403b- retirement accts. 529 Plan- college savings acct.
IRA= individual retirement acct.
IPO-=initial public offering; when a stock is offered to the public for the first time
*Outsourcing- contracting a business function to someone else; usually outside the country
*Advantages and disadvantages of outsourcingAdv-cheap labor= lower prices, faster production,
Disadv.- removes US jobs; gives jobs to other nations; less $ in/to U.S.
*Who we use for outsourcing? China, India, many other nations with a willing workforce
*Examples of companies that outsource- Apple (China-Foxcomm factory,) other “American”
companies, most clothing companies etc
SURIAN-ECONOMICS FINAL EXAM REVIEW SHEET
ADDITIONAL NOTES:
SURIAN-ECONOMICS FINAL EXAM REVIEW SHEET