ECN 211 ASU FINAL EXAM MARBURGER QUESTIONS
WITH VERIFIED ACCURATE ANSWERS
The Circular Flow Diagram - Answers -Green arrows represent the flow of money and
red represents to flow of goods/services
Production possibilities Frontier/ Curve PPF: PPC - Answers -The curve shows what is
possible within an economy
D- impossible
A&B - feasible efficient
C - feasible & inefficient
PPF shifts out when... - Answers -the economy can produce more of everything
Opportunity Cost - Answers -the cost of what you give up to get something else in
terms of time, money, or other goods
Absolute Advantage - Answers -Who can make most of that good
Comparative Advantage - Answers -The lowest opportunity cost for that good
What would allow Panama and Canada to trade? - Answers -They want to trade within
their opportunity cost
Demand - Answers -The amount consumers are willing and able to purchase
Supply - Answers -The amount that producers are willing and able to produce
Law of demand - Answers -Demand always slopes down
Law of supply - Answers -Supply always slopes up
Equilibrium - Answers -Where the two curves meet
Demand shifters - Answers -- Price of substitute or complement
- Consumer preference
- population growth
- Income and expectation of future income
Supply shifters - Answers -- Price of input
- Technological advancement
- Number of producers
- Producer expectation
, Solve for Equilibrium Price and Quantity - Answers -Make both sides equal to each
other
Ex. Q = 100 - 6P & Q = 28 + 3P
100 - 6P = 28 + 3P
72 - 9P
P=8
28 + 3(8)
28 + 24
52 = Q
Economic Growth is measured... - Answers -Growth is measured in many ways,
usually GDP (the market value of all final goods and services produced in a nation's
borders) Productivity (output/labor hours)
What causes productivity? - Answers -- Human Capital
- Natural Resources
- Physical Capital
- Technological Knowledge
Human Capital - Answers -Knowledge and skills of workers (education, training)
Natural Resources - Answers -Anything that comes from nature (timber, oil, coal)
Physical Capital - Answers -All the physical tools and machines used to do business
Technological Knowledge - Answers -The general knowledge of the world
GDP Equation - Answers -GDP = G + C + I + NX = ALL PRODUCTION = ALL
CONSUMPTION
Consumption (C) - Answers -Things purchased for final use
Investment (I) - Answers -Things purchased to use to make more money later
Government Spending (G) - Answers -Any money the government uses
Nominal GDP - Answers -is this years' prices * this years quantities
Real GDP - Answers -is base years' prices * is years quantities
GDP Deflator - Answers -Nominal GDP/Real GDP*100
Inflation - Answers -using GDP deflator = (this years deflator - last years' deflator) last
years' deflator
WITH VERIFIED ACCURATE ANSWERS
The Circular Flow Diagram - Answers -Green arrows represent the flow of money and
red represents to flow of goods/services
Production possibilities Frontier/ Curve PPF: PPC - Answers -The curve shows what is
possible within an economy
D- impossible
A&B - feasible efficient
C - feasible & inefficient
PPF shifts out when... - Answers -the economy can produce more of everything
Opportunity Cost - Answers -the cost of what you give up to get something else in
terms of time, money, or other goods
Absolute Advantage - Answers -Who can make most of that good
Comparative Advantage - Answers -The lowest opportunity cost for that good
What would allow Panama and Canada to trade? - Answers -They want to trade within
their opportunity cost
Demand - Answers -The amount consumers are willing and able to purchase
Supply - Answers -The amount that producers are willing and able to produce
Law of demand - Answers -Demand always slopes down
Law of supply - Answers -Supply always slopes up
Equilibrium - Answers -Where the two curves meet
Demand shifters - Answers -- Price of substitute or complement
- Consumer preference
- population growth
- Income and expectation of future income
Supply shifters - Answers -- Price of input
- Technological advancement
- Number of producers
- Producer expectation
, Solve for Equilibrium Price and Quantity - Answers -Make both sides equal to each
other
Ex. Q = 100 - 6P & Q = 28 + 3P
100 - 6P = 28 + 3P
72 - 9P
P=8
28 + 3(8)
28 + 24
52 = Q
Economic Growth is measured... - Answers -Growth is measured in many ways,
usually GDP (the market value of all final goods and services produced in a nation's
borders) Productivity (output/labor hours)
What causes productivity? - Answers -- Human Capital
- Natural Resources
- Physical Capital
- Technological Knowledge
Human Capital - Answers -Knowledge and skills of workers (education, training)
Natural Resources - Answers -Anything that comes from nature (timber, oil, coal)
Physical Capital - Answers -All the physical tools and machines used to do business
Technological Knowledge - Answers -The general knowledge of the world
GDP Equation - Answers -GDP = G + C + I + NX = ALL PRODUCTION = ALL
CONSUMPTION
Consumption (C) - Answers -Things purchased for final use
Investment (I) - Answers -Things purchased to use to make more money later
Government Spending (G) - Answers -Any money the government uses
Nominal GDP - Answers -is this years' prices * this years quantities
Real GDP - Answers -is base years' prices * is years quantities
GDP Deflator - Answers -Nominal GDP/Real GDP*100
Inflation - Answers -using GDP deflator = (this years deflator - last years' deflator) last
years' deflator
