PRINCIPLES OF ECONOMICS EXAM B
UPDATED ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS
◉ Macroeconomics.
Answer: -Looks at the economy as a whole, not as individual parts
-We aggregate (add up) the micro parts to come up with the overall
picture
Examples:
-GDP
-CPI
-Inflation and Deflation
-Total employment and unemployment
◉ Gross Domestic Product (GDP).
Answer: total output of all goods and services produced within the
boundaries of a country (tangible(food, clothing, cars) and
intangible goods (haircuts, house cleaning, doctor's visits))
◉ Consumer Price Index (CPI).
Answer: The average level of prices of all consumer goods and
services
,◉ Economics.
Answer: the study of how scarce resources are allocated among their
competing uses
-it's about limited resources and unlimited wants
◉ Factors of production (resources).
Answer: land, labor, capital, entrepreneurship (LLEC)
◉ Land.
Answer: -encompasses the land that production takes place and all
natural resources: water, sheep, cows, metal, timber, minerals
-Renewable and non-renewable resources
◉ Labor.
Answer: -the physical and mental abilities of workers
-Quantity and quality (human capital)
-Fixed wages
◉ Capital.
Answer: -goods produced in the economy that are used to produce
other goods and services
, -Machines, tools, structures (buildings, factories)
◉ Entrepreneurs.
Answer: -An individual who organizes resources for production,
might introduce new products or techniques.
-Returns vary: reaps the rewards (profits) or bears the
consequences (losses)
-Hallmark of the entrepreneur is innovation and risk taking.
◉ Supply and Demand.
Answer: -determines how we use resources
-this also determines the market value
◉ Adam Smith.
Answer: -The Father of Modern Economics
-The Wealth of Nations in 1776
-Invisible hand: Households and firms interacting in markets guided
by process and self-interest, Leads to the most efficient outcomes
-Wrote about producers benefitting through specilozation in trade
and Absolute advantage
◉ Efficiency.
UPDATED ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS
◉ Macroeconomics.
Answer: -Looks at the economy as a whole, not as individual parts
-We aggregate (add up) the micro parts to come up with the overall
picture
Examples:
-GDP
-CPI
-Inflation and Deflation
-Total employment and unemployment
◉ Gross Domestic Product (GDP).
Answer: total output of all goods and services produced within the
boundaries of a country (tangible(food, clothing, cars) and
intangible goods (haircuts, house cleaning, doctor's visits))
◉ Consumer Price Index (CPI).
Answer: The average level of prices of all consumer goods and
services
,◉ Economics.
Answer: the study of how scarce resources are allocated among their
competing uses
-it's about limited resources and unlimited wants
◉ Factors of production (resources).
Answer: land, labor, capital, entrepreneurship (LLEC)
◉ Land.
Answer: -encompasses the land that production takes place and all
natural resources: water, sheep, cows, metal, timber, minerals
-Renewable and non-renewable resources
◉ Labor.
Answer: -the physical and mental abilities of workers
-Quantity and quality (human capital)
-Fixed wages
◉ Capital.
Answer: -goods produced in the economy that are used to produce
other goods and services
, -Machines, tools, structures (buildings, factories)
◉ Entrepreneurs.
Answer: -An individual who organizes resources for production,
might introduce new products or techniques.
-Returns vary: reaps the rewards (profits) or bears the
consequences (losses)
-Hallmark of the entrepreneur is innovation and risk taking.
◉ Supply and Demand.
Answer: -determines how we use resources
-this also determines the market value
◉ Adam Smith.
Answer: -The Father of Modern Economics
-The Wealth of Nations in 1776
-Invisible hand: Households and firms interacting in markets guided
by process and self-interest, Leads to the most efficient outcomes
-Wrote about producers benefitting through specilozation in trade
and Absolute advantage
◉ Efficiency.
