Final Exam Review Sheet
Economics
What is the difference between a good and a service?
What are the three big economic questions all systems must answer?
What is the difference between a trade-off and opportunity cost?
Define each of the following factors of production and give an example:
Human capital:
Financial capital:
Physical capital:
Land:
Labor:
What is the law of demand?
What is the law of supply?
Determinants of Demand
Determinants of Supply
Draw a production possibilities curve.
Label above: underutilization (inefficiency), efficiency
Under what two circumstances could an economy produce outside of their PPC?
What does the guns and butter model illustrate?
Define each of the market structures and provide an example of for each:
What is the difference between a franchise and a corporation?
Perfect
Imperfect
Oligopoly
Monopoly
What are the three economic indicators?
What is the difference between a bull and bear stock market?
What is the purpose in establishing the Federal Reserve?
What are the six characteristics of money?
Identify what each form of inflation is below:
_______________________
_________________________
__________________________
There is too much money
circulating in the economy thus
decreasing the value of our
currency
There is a shortage of supply,
therefore prices increase to
remedy which causes inflation
The cost of inputs rises and
those costs are passed onto the
consumer thus causing an
increase in price of goods
(inflation)
Supply and Demand Shifts. Show/label the shift and the determinant.
A tax has been added to clothing
A subsidy has been granted to car production
A new advertising campaign touts the danger of leather
The price of ice cream has decreased
Malaria has killed 1/3 the population of Boston
Traditional
Market
Mixed
Command
Steak and Tofu are substitutes. The price of Steak goes up. Show the impact on Tofu.
DVD players and DVDs are complementary goods. DVD players are on sale. Show the impact on DVDs
A snow storm is forecast to occur next Friday
You own a bakery. Cost of flour has increased 5%.
Seasonal
Unemployment
Cyclical
unemployment
Structural
unemployment
Frictional
unemployment
What types of goods are calculated into GDP?
List two advantages and two disadvantages of each business type:
Sole proprietorship
Franchise
Corporation
What are the three functions of money?
Define each and list characteristics:
Federal Reserve Action
Result on Economy
Partnership
Buy bonds
Sell bonds
Increase discount rate
Decrease discount rate
Increase reserve requirement
Decrease reserve requirement
Define each of the following:
Normal good
Inferior good
Final good
Intermediate good
GDP
Interest
Dividend
Liquid
Money Market Account
Certificate of Deposit
Savings Bond
Treasury Bond
Municipal Bond
Corporate Bond
Stock
IPO
NASDAQ
Blue Chip
Equilibrium
Shortage
Surplus
Laissez-faire
Invisible hand
Commodity
Circular flow of money
Business cycle
Progressive tax
Regressive tax
Proportional tax