Econ 201 UMD Exam Questions and
Answers 100% Pass
Economics - ✔✔the study of how best to allocate scarce resources among competing
uses.
Microeconomics - ✔✔is the study of how households and firms make decisions and
how they interact in markets.
Macroeconomics - ✔✔the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
Assumptions - ✔✔simplify the complex world, make it easier to understand.
models - ✔✔to study economic issues. It is a highly simplified representation of a more
complicated reality.
positive statements - ✔✔which attempt to describe the world as it is
scientific method - ✔✔the dispassionate development and testing of theories about how
the world works
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,normative statements - ✔✔which attempt to prescribe how the world should be, this is
a value judgment, cannot be confirmed or refuted.
Which can be refuted, positive or normative statements? - ✔✔Positive statements can be
confirmed or refuted, normative statements cannot
Positive Statements - ✔✔describes a relationship, could use data to confirm or refute
Must a statement be true in order to be a positive statement? - ✔✔Nope
The Circular-Flow Diagram - ✔✔A visual model of the economy, shows how dollars
flow through markets among households and firms.
Factors of Production - ✔✔are the resources that the economy uses to produce goods &
services. They include:
- labor - land - capital (buildings & machines used in production)
The Production Possibilities Frontier - ✔✔A graph that shows the combinations of two
goods the economy can possibly produce given the available resources and the
available technology.
Points on the line of the PPF are? - ✔✔- possible - efficient: all resources are fully
utilized
Points under the line (to the left) of the PPF are? - ✔✔- possible
- not efficient: some resources underutilized (e.g., workers unemployed, factories idle)
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, Points above the line (to the right) of the PPF are? - ✔✔-not possible
opportunity cost - ✔✔of an item is what must be given up to obtain that item
Moving along a PPF involves - ✔✔shifting resources (e.g., labor) from the production of
one good to the other.
The PPF slope tells us - ✔✔The slope of the PPF tells you the opportunity cost of one
good in terms of the other
Economic growth shifts the PPF .. - ✔✔outwards
Why may a PPF be bow shaped? - ✔✔-when different workers have different skills,
different opportunity costs of producing one good in terms of the other
-when there is some other resource, or mix of resources with varying opportunity costs
Demand schedule - ✔✔A table that shows the relationship between the price of a good
and the quantity demanded.
Quantity demanded - ✔✔is the sum of the quantities demanded by all buyers at each
pric
Demand Curve Shifters (5) - ✔✔-# of buyers
-income
-prices of
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Answers 100% Pass
Economics - ✔✔the study of how best to allocate scarce resources among competing
uses.
Microeconomics - ✔✔is the study of how households and firms make decisions and
how they interact in markets.
Macroeconomics - ✔✔the study of economy-wide phenomena, including inflation,
unemployment, and economic growth
Assumptions - ✔✔simplify the complex world, make it easier to understand.
models - ✔✔to study economic issues. It is a highly simplified representation of a more
complicated reality.
positive statements - ✔✔which attempt to describe the world as it is
scientific method - ✔✔the dispassionate development and testing of theories about how
the world works
100% Pass Guarantee Olivia West, All Rights Reserved © 2025 1
,normative statements - ✔✔which attempt to prescribe how the world should be, this is
a value judgment, cannot be confirmed or refuted.
Which can be refuted, positive or normative statements? - ✔✔Positive statements can be
confirmed or refuted, normative statements cannot
Positive Statements - ✔✔describes a relationship, could use data to confirm or refute
Must a statement be true in order to be a positive statement? - ✔✔Nope
The Circular-Flow Diagram - ✔✔A visual model of the economy, shows how dollars
flow through markets among households and firms.
Factors of Production - ✔✔are the resources that the economy uses to produce goods &
services. They include:
- labor - land - capital (buildings & machines used in production)
The Production Possibilities Frontier - ✔✔A graph that shows the combinations of two
goods the economy can possibly produce given the available resources and the
available technology.
Points on the line of the PPF are? - ✔✔- possible - efficient: all resources are fully
utilized
Points under the line (to the left) of the PPF are? - ✔✔- possible
- not efficient: some resources underutilized (e.g., workers unemployed, factories idle)
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, Points above the line (to the right) of the PPF are? - ✔✔-not possible
opportunity cost - ✔✔of an item is what must be given up to obtain that item
Moving along a PPF involves - ✔✔shifting resources (e.g., labor) from the production of
one good to the other.
The PPF slope tells us - ✔✔The slope of the PPF tells you the opportunity cost of one
good in terms of the other
Economic growth shifts the PPF .. - ✔✔outwards
Why may a PPF be bow shaped? - ✔✔-when different workers have different skills,
different opportunity costs of producing one good in terms of the other
-when there is some other resource, or mix of resources with varying opportunity costs
Demand schedule - ✔✔A table that shows the relationship between the price of a good
and the quantity demanded.
Quantity demanded - ✔✔is the sum of the quantities demanded by all buyers at each
pric
Demand Curve Shifters (5) - ✔✔-# of buyers
-income
-prices of
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