ECON EXAM REVIEW

FOUNDATIONS OF ECONOMICS

WHAT IS ECONOMICS?

• The main problem in economics is...
• The four factors of production are...
• What is a market?
• What is a trade off?
• What is an opportunity cost?

ECONOMIC SYSTEMS

• What three questions must every economic system answer?
• Who controls the factors of production in a command, pure market, traditional, and mixed economy?
• What are advantages and disadvantages to these economic systems?

THE AMERICAN FREE ENTERPRISE SYSETM

• 6 goals of the American free enterprise system?
• Explain economic stability, and why is it important?

Production possibilities curve

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MICROECONOMICS

KNOW YOUR MARKET STRUCTURES!

• How many sellers?
• What kind of products? (Same, diff, similar, unique)
• Easy or hard to enter
• Example

MARKET STRUCTURE:

MARKET STRUCTURE:

MARKET STRUCTURE:

MARKET STRUCTURE:

DEMAND AND SUPPLY

DEMAND.

• Which way does the curve slope?
• What is the law of demand?
• Quantity Demanded vs. Demand
• What does utility measure?
• Law of diminishing marginal utility

DETERMINANTS OF DEMAND

• Complementary goods
• Substitute goods
• Change in income
• Change in population
• Change in preference

SUPPLY.

• Which direction does the supply curve slope?
• Law of supply
• Quantity Supplied vs. Supply
• Law of diminishing marginal return

DETERMINANTS OF SUPPLY

• Taxes
• Price of inputs
• Number of firms
• Technology

Equilibrium price
Surplus
Shortage

Macroeconomics

Circular Flow of Economic Activity

THE ECONOMIC BUSINESS CYCLE

NATIONAL INCOME ACCOUNTING

• Gross domestic product (definition and how to calculate)
• Inflation
• Market Value
• Intermediate goods, Capital Goods, Final Goods
• Inflation

THE FEDERAL RESERVE

THE FEDERAL RESERVE

• What is it?

Monetary Policy

• Controlled by Federal Reserve
• Interest rates
• FOMC

Fiscal Policy

• Controlled by Federal Government
• Taxes
• Budget
• Legislative/Executive Branches