Chapter 1 ECON MIDTERM
Key d
practice questions
definition economics
of
-
I trade offs factors of
production
-
are required because wants are unlimited andresources are scarce
-
v
2. factors
ofproductions are land, labour, capital opportunity COSA -
⑤
3.
Society's resources o ften
are divided categories:land,
into labour and capital budgetconstraint -
v
H. the of thetotal cash expenditure need for the
movie value time PPB
opportunity cost
going toamovie of
your
-
w
flow
5. Whatd oes the circular flow ilustrate:households
diagram are sellers forms
and arebuyers circular
diagram-
w
A. If produces milk, but benefits
health ofKombucha consumers micro and dif.-
an
economy lombuchaand coconut the
change macro
preferences, would
It more the
economy along the pos
7. periods of when prospects for getting
enrollment
university i s higher
during high b ecause
unemployment a job are poor,
the opp. of is lower
university
cost to
going
8. If a fire destroys many forests
in Canada, Canada's pass shifts inward
18. from PRB from employment
the ofpreviously resources
a more inside the to the
boundary c ould
itself be idle
11. downward
the
sloping line in
diogram
the shows
spending on and
health education, if
spending is given by B,a
point move A
point
to
means less spending on education
FaB
12. If there is a move inwards, there is less spending in total
textbook notes
What
is econ
What
is economics? -> economics is the study use
ofthe of
scarce resources to
satisfy unlimited human wants
->
scarcity
is inevitable, central all countries economic problems
circular flow model
·
to
resources divided labour, capital
-
are land,
into -
shows basic decision makers and flaws of
i ncare and expenditure
I
land arable =
land, forests, lakes, crude oils, minerals -
The red line flow
shows the
goods
of services;the
+
blue line
labour:all and human resources
physical entrepreneurial
paymentsmadetopurchase
mental
including capacity shows the these
capital manufactured production
aids to tools, machinery, buildings the pricesthataredetermined these markets deter
·
ex.
in
produced goods and services, satisfy
-
What
is which ppl use to their wants the incanes that are earned
costs:the
->
opportunity opp cost
of
choosing one alternative is the the
value of a lternative that
nextbest is
given up
-
&
is the
It t he
slope of line PPB
budget on
PPR:the
·
negative sloped boundary reflects the
combinations that
a re attainable when all resources are used
efficiently
the PPB illustrates three scarcity, and
-bythenegatesecondary
-
concepts: choice app cost
↓ &>
indicates
straight line
boundary need
-
a unattainable to choose
alternative
among the
thatt he
opp. o fone
cost good stays
↓
points
constant, no matter how much is produced
4 economic problems Production and trade
how?
-
Adam Smith:specialization and division lab car
of
1. Whati s produced and
2. What
is consumed and by when? Specialization -> anation
specializing in
producing what
they make most
efficiently t
3. -division specialization within
production ofa
Why are resources sometimes Idle? labour
of the process particular product custo
-
4. few
Is productive growing?
capacity specialization mustb e accompanied by trade. PPI whoc a n
only produce a
things
trade with others obtain
everything
·
must to
macro vs. micro command
econo
microeconomics what
-
is produced and how whati s consumed authority
Cuba
·
ofproduction
is the
study
-> ex.
It t he
of determination prices
of and quantities ofspecific products and factors
macroeconomics-idleness of
resources and the growth economys
oft he productive capacity Free Market eco
->
study determination
oft he of
e conomic
aggregates,such as total output, total employment made c en
without
, ECON MIDTERM
Chapter 4
practice questions key d
1. an upward trend in real national incare over extended period of
t ime is economic
growth economic vs
growth
2. reference fluctuations, peak refers downturn
In short-term
to the the
to
high point ofeconomic
activity
prior a
to
3. potential GDP is 20 billion and actual GDP is 19.2 billion. There is a
recessionary gap equal 4.0
to (28-19.2/20 x 105) us
growth fuctuations:
4. potential/full employmentoutput the GDP that
would produced ifthe recessions, depressions, exp
be economy resources were
fully employed the
-
is at
of fluctuations caused
intensity
-
normal use are by
5. Ys Y* means that there is an
inflationary gap-actual is more than potential output political events/financial i
C. When
countryi s
the full
at employment, actual and
output potential outputw ill be the
same number (6.3.)
7. You 2 80,000 salary (4%)
are affered jobs. She is in
montreal, and one is 95,000 in taranto. The CPI for montreal is 121 potential output an
andToronto
is 150. is
What real
the
salary both?
of
gap
-output is X-Y*
salaryi nmontreal:(80,000/121)
real x 100 24, 115.70:. montreal
purchasing power greater in
=
is
real
salary in toronto: (95,000/150) 1 00
x 63,334.33
=
unemployment
8. Ift he CPI from 15 to 122, the rate inflation 3% rece
changes of is
-cyclical:When the
economy enters a
5 latest
(PI-beginning (P)
180
x structural:ppl lose jobs because they lack
beginning CPI
frictional:when leave their old jobs
-
workers
9. If a bank wants a 5% real rate of
return, and anticipates inflation rate of4.1, s hould
it
make the nominal rate
interest 9.1. (real interest -
inflation rate:nominal interestrate productivity
-
real GDP
10. The Canadian number
the canadian dollars needed of currencies
exchange rate
is of to
buy one unit
foreign
-levels ofemployment
11.
unemploymentrate:unemployed people divided by labor
the force x100 1/10
+
10%
=
11. types of
unemployment 1) him justgraduated and for Frictional
-> is
looking a
job:
-> a recession caused a
factory lay
to offworkers:
cyclical
-> and truck
thousands b us
of drivers lose their jobs:structural
perminently
->
hundreds of outsourced India:structural
to
legal jobs are
permanently w hen
lost legal work is
13. Calculate ofthe market
t he cost basket:
quantity x price for all products, add together
↳CPI the
for base
year IS 100, so F CPI in2015 was 115.4,: 100 1 00
x
=
15.4%
II. Ifthe labar force is494,
population is 802.3, and unemployment rate IS 7..., then the
number ofunemployed is35.0T
and employed 459 =
19. Inflation rate:
beginningcp1x100:00-2
1C. find and real rates?If
interest know inflation the
nominal and real rates should be 2% from
nominal you the rate IS
2%, apart
17. and for job, NOTdiscouraged workers, retired,
to number of
unemployed, look number ofPPI
looking for a students
18. and of
labour force, full those for job (labor force employed employed)
to size add up part and time workers
looking un
-
a
+
-
19. force total
ppl available for
7
labour # of x100 70%
participation rate work
=
-
I
population
20.
unemploymentrate number
-
ofunemployed
total number in labar force
x100
7x100 14.3%
=
=
21. for her first
Who is classified as
unemployed?new college graduate actively looking job
22. When the economy goes a
into recession, Real GDP falls and unemploymentrises
23. Workers with marketable skills sometimes quit a job and become unemployed, but
hope find
to a better job, this is called frictional unemployme
textbook notes
output and income Interestra
nominal interestra
namnal national income:add up values of products (prices xquantities)
Poptal real interestr ate
"Fine,
resis
real quantities benice (prices do
changel purchasing power
incession
national incare measures a not
the
real abo-measures the
avantity
oft al outhtproduced during and
exchange
required to
purchase
Potential Output+Output
Gap a wise in th
e
Key d
practice questions
definition economics
of
-
I trade offs factors of
production
-
are required because wants are unlimited andresources are scarce
-
v
2. factors
ofproductions are land, labour, capital opportunity COSA -
⑤
3.
Society's resources o ften
are divided categories:land,
into labour and capital budgetconstraint -
v
H. the of thetotal cash expenditure need for the
movie value time PPB
opportunity cost
going toamovie of
your
-
w
flow
5. Whatd oes the circular flow ilustrate:households
diagram are sellers forms
and arebuyers circular
diagram-
w
A. If produces milk, but benefits
health ofKombucha consumers micro and dif.-
an
economy lombuchaand coconut the
change macro
preferences, would
It more the
economy along the pos
7. periods of when prospects for getting
enrollment
university i s higher
during high b ecause
unemployment a job are poor,
the opp. of is lower
university
cost to
going
8. If a fire destroys many forests
in Canada, Canada's pass shifts inward
18. from PRB from employment
the ofpreviously resources
a more inside the to the
boundary c ould
itself be idle
11. downward
the
sloping line in
diogram
the shows
spending on and
health education, if
spending is given by B,a
point move A
point
to
means less spending on education
FaB
12. If there is a move inwards, there is less spending in total
textbook notes
What
is econ
What
is economics? -> economics is the study use
ofthe of
scarce resources to
satisfy unlimited human wants
->
scarcity
is inevitable, central all countries economic problems
circular flow model
·
to
resources divided labour, capital
-
are land,
into -
shows basic decision makers and flaws of
i ncare and expenditure
I
land arable =
land, forests, lakes, crude oils, minerals -
The red line flow
shows the
goods
of services;the
+
blue line
labour:all and human resources
physical entrepreneurial
paymentsmadetopurchase
mental
including capacity shows the these
capital manufactured production
aids to tools, machinery, buildings the pricesthataredetermined these markets deter
·
ex.
in
produced goods and services, satisfy
-
What
is which ppl use to their wants the incanes that are earned
costs:the
->
opportunity opp cost
of
choosing one alternative is the the
value of a lternative that
nextbest is
given up
-
&
is the
It t he
slope of line PPB
budget on
PPR:the
·
negative sloped boundary reflects the
combinations that
a re attainable when all resources are used
efficiently
the PPB illustrates three scarcity, and
-bythenegatesecondary
-
concepts: choice app cost
↓ &>
indicates
straight line
boundary need
-
a unattainable to choose
alternative
among the
thatt he
opp. o fone
cost good stays
↓
points
constant, no matter how much is produced
4 economic problems Production and trade
how?
-
Adam Smith:specialization and division lab car
of
1. Whati s produced and
2. What
is consumed and by when? Specialization -> anation
specializing in
producing what
they make most
efficiently t
3. -division specialization within
production ofa
Why are resources sometimes Idle? labour
of the process particular product custo
-
4. few
Is productive growing?
capacity specialization mustb e accompanied by trade. PPI whoc a n
only produce a
things
trade with others obtain
everything
·
must to
macro vs. micro command
econo
microeconomics what
-
is produced and how whati s consumed authority
Cuba
·
ofproduction
is the
study
-> ex.
It t he
of determination prices
of and quantities ofspecific products and factors
macroeconomics-idleness of
resources and the growth economys
oft he productive capacity Free Market eco
->
study determination
oft he of
e conomic
aggregates,such as total output, total employment made c en
without
, ECON MIDTERM
Chapter 4
practice questions key d
1. an upward trend in real national incare over extended period of
t ime is economic
growth economic vs
growth
2. reference fluctuations, peak refers downturn
In short-term
to the the
to
high point ofeconomic
activity
prior a
to
3. potential GDP is 20 billion and actual GDP is 19.2 billion. There is a
recessionary gap equal 4.0
to (28-19.2/20 x 105) us
growth fuctuations:
4. potential/full employmentoutput the GDP that
would produced ifthe recessions, depressions, exp
be economy resources were
fully employed the
-
is at
of fluctuations caused
intensity
-
normal use are by
5. Ys Y* means that there is an
inflationary gap-actual is more than potential output political events/financial i
C. When
countryi s
the full
at employment, actual and
output potential outputw ill be the
same number (6.3.)
7. You 2 80,000 salary (4%)
are affered jobs. She is in
montreal, and one is 95,000 in taranto. The CPI for montreal is 121 potential output an
andToronto
is 150. is
What real
the
salary both?
of
gap
-output is X-Y*
salaryi nmontreal:(80,000/121)
real x 100 24, 115.70:. montreal
purchasing power greater in
=
is
real
salary in toronto: (95,000/150) 1 00
x 63,334.33
=
unemployment
8. Ift he CPI from 15 to 122, the rate inflation 3% rece
changes of is
-cyclical:When the
economy enters a
5 latest
(PI-beginning (P)
180
x structural:ppl lose jobs because they lack
beginning CPI
frictional:when leave their old jobs
-
workers
9. If a bank wants a 5% real rate of
return, and anticipates inflation rate of4.1, s hould
it
make the nominal rate
interest 9.1. (real interest -
inflation rate:nominal interestrate productivity
-
real GDP
10. The Canadian number
the canadian dollars needed of currencies
exchange rate
is of to
buy one unit
foreign
-levels ofemployment
11.
unemploymentrate:unemployed people divided by labor
the force x100 1/10
+
10%
=
11. types of
unemployment 1) him justgraduated and for Frictional
-> is
looking a
job:
-> a recession caused a
factory lay
to offworkers:
cyclical
-> and truck
thousands b us
of drivers lose their jobs:structural
perminently
->
hundreds of outsourced India:structural
to
legal jobs are
permanently w hen
lost legal work is
13. Calculate ofthe market
t he cost basket:
quantity x price for all products, add together
↳CPI the
for base
year IS 100, so F CPI in2015 was 115.4,: 100 1 00
x
=
15.4%
II. Ifthe labar force is494,
population is 802.3, and unemployment rate IS 7..., then the
number ofunemployed is35.0T
and employed 459 =
19. Inflation rate:
beginningcp1x100:00-2
1C. find and real rates?If
interest know inflation the
nominal and real rates should be 2% from
nominal you the rate IS
2%, apart
17. and for job, NOTdiscouraged workers, retired,
to number of
unemployed, look number ofPPI
looking for a students
18. and of
labour force, full those for job (labor force employed employed)
to size add up part and time workers
looking un
-
a
+
-
19. force total
ppl available for
7
labour # of x100 70%
participation rate work
=
-
I
population
20.
unemploymentrate number
-
ofunemployed
total number in labar force
x100
7x100 14.3%
=
=
21. for her first
Who is classified as
unemployed?new college graduate actively looking job
22. When the economy goes a
into recession, Real GDP falls and unemploymentrises
23. Workers with marketable skills sometimes quit a job and become unemployed, but
hope find
to a better job, this is called frictional unemployme
textbook notes
output and income Interestra
nominal interestra
namnal national income:add up values of products (prices xquantities)
Poptal real interestr ate
"Fine,
resis
real quantities benice (prices do
changel purchasing power
incession
national incare measures a not
the
real abo-measures the
avantity
oft al outhtproduced during and
exchange
required to
purchase
Potential Output+Output
Gap a wise in th
e
