🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000CA160,000

ECON 201- Final Exam Guide - Comprehensive Notes for the exam ( 23 pages long!)

255 views23 pages
School
Concordia University
Department
Economics
Course
ECON 201
Professor
Ivan Tchinkov

For unlimited access to Study Guides, a Grade+ subscription is required.

favianw937 and 38423 others unlocked
ECON 201 Full Course Notes
19
ECON 201 Full Course Notes
Verified Note
19 documents

Document Summary

Notes - chapter 1: intro to key ideas. Interessting note - p. 3: finance ministers and banks urge households to increase savings in order to reduce high debt to income ratio. However, when one household is spending another household is making. When a household increases their savings from 5% to 10% a year they are reducing their spending by 5%. However, if all households decided to commit to lower spending then there is a decrease in purchased goods sold, in turn services produced by the economy and in turn will potentially reduce employment and national incomes. With a lower household income the debt-to-income ratio will not fall, that is why a household in isolation can save more maybe but it is not the case for all households. When these interactions and feedbacks are created in an economic system, a. A theory is a rational view of how things work, formulated on the basis of.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Documents

ECON 201 Lecture 1: NOTES - CHAPTER 1: INTRO TO KEY IDEAS
fuchsiawoodchuck17
ECON 201 Lecture Notes - Lecture 3: Opportunity Cost, Price Floor, Peach
redcicada624
ECON 201
Final Exam
Study Guide
ECON 201- Final Exam Guide - Comprehensive Notes for the exam ( 63 pages long!)
skyreindeer620

Related Questions

A 'shocker' for retail spending as consumers shut wallets

Peter Martin

Published: October 6 2017 - 8:12AM
Low wage growth, higher electricity and gas bills and out-of-cycle mortgage rate increases have been

blamed for a slump in consumer spending in July and August - the worst since 2010. Retail spending slid 0.6 per cent in August after sliding 0.2 per cent in July.

Spending in cafes and restaurants and on takeaway food plunged 1.3 per cent in August to be only a little higher than it was the previous August, and lower per person after taking into account population growth.

Spending on household goods slid 1 per cent in August after sliding 2.1 per cent in July. Spending on food slipped 0.6 per cent, and spending on clothing 0.2 per cent after slipping 0.4 per cent. The only sectors where spending climbed were department stores, where spending climbed 0.7 per cent after sliding for three consecutive months, and "other retailing" where spending climbed 0.1 per cent.

"Apparently, Australians were dieting over August," said Bank of Melbourne senior economist Janu Chan. "There were sizeable declines in food retailing and cafes restaurants and takeaway. The slow pace of wage growth, rising household debt are constraining retail spending. The falling household savings ratio also suggests a limit on how much households can tap into savings for additional consumption."

Commonwealth Bank senior economist Gareth Aird was more blunt.

"The report is a shocker," he said

"We are always reticent to put too much emphasis on any one data print, but it now looks increasingly likely that strong sales growth in April and May were the anomaly in 2017. The other six months have so far been weak."

Annual sales growth was just 2.1 per cent, the slowest in four years and barely above the population growth rate of 1.6 per cent. Unusually, the weakness was present in all eight states and territories, with NSW bearing up the best in August with a drop of 0.2 per cent and Victoria and Queensland the worst with a drop of 0.8 per cent.

Commonwealth Securities chief economist Craig James said the apparent decline in spending might reflect lower prices as a result of trimmed margins. Or it might be that weighty electricity and gas bills were forcing consumers to cut discretionary and non-essential spending.

"Consumers are also still adjusting their mindset to lower wage growth," he said.
"Wages are still outpacing prices, but the slower nominal wage growth makes consumers feel poorer."

Mr James said the economists who had tipped a Reserve Bank rate rise in early 2018 might be "going back to their calculators". JP Morgan economist Ben Jarman said the retail slump increased the likelihood that the Reserve Bank would cut rates rates further before it raised them.

Mr Aird said households were devoting more of their wallets to health, education and electricity and gas.

"Consumers have a finite amount of disposable income and even with the assistance of a falling savings rate, record low wages growth has weighed significantly on the discretionary parts of retail trade," he said.

The slow growth in online retailing was helping consumers by pushing down prices but hurting retailers by depriving them of business.

Peter Martin is economics editor of The Age. Follow Peter Martin on Twitter and Facebook

This story was found at: http://www.smh.com.au/business/the-economy/a-shocker-for-retail- spending-as-consumers-shut-wallets-20171005-gyuwb3.html

a) Using the AD-AS framework, demonstrate the impacts of the change in consumer spending described in the article on output and inflation in the short-run and explain what part of the business cycle we are likely to be in. (5 marks)
b) Explain the likely impact state government expenditure on renewable energy infrastructure will have on output and inflation in the short-run, whether it’s a good time to undertake this type of policy, and what impact this will eventually have on Australian output. (5 marks)

Question 6: Which of the following economic goals focuses on equal opportunities for education? (5 points)

-Equity

-Freedom

-Growth

-Security

Question 7: Marcel takes out student loans and works part-time to put himself through college. In time, he earns an advanced medical degree and goes to work in an understaffed city -hospital. Marcel's economic decisions benefit the goal of efficiency by (5 points)

-making his own job

-related decisions

-paying back loans to reduce the debt

-contributing to the nation's productivity

-taking advantage of equal opportunities

Question 8: Two countries produce milk and dairy products efficiently. Neither has an absolute advantage. However, Country A exports milk to Country B, and Country A imports cotton from Country B. Which of the following is inferred? (5 points)

-The opportunity cost of producing milk is lower for Country A.

-The opportunity cost of producing cotton is higher for Country B.

-Country A has a natural resource advantage in cotton.

-Country B has a natural resource advantage in milk.

Question 9: Worker hours to produce one unit of natural gas; Worker hours to produce one unit of oil; Brazil 4 9; Argentina 2 10; Mexico 3 7; United States 1 6. According to the chart, which country has the comparative advantage in oil production? (5 points)

-Brazil

-Mexico

-Argentina

-United States

Question 10: The United States can manufacture books at a much more rapid pace than manufacturers in Indonesia. Which of the following is a reason? (5 points)

-Indonesia, as a developed country, has a highly paid and experienced workforce

-Indonesia, as a developing country, has a less advanced manufacturing infrastructure

-The United States, as a developing country, has a high comparative advantage in manufacturing.

-The United States, as a developed country, has a lower cost of living than Indonesia

Question 11: A group of nations establishes a free-trade zone. What is the most likely effect? (5 points)

-Cost of trade increases

-Exports decrease

-Imports decrease

-Trade increases

Question 12: The United States may have a tariff on cotton products from China in order to (5 points)

-prevent Chinese manufacturers from losing profit because of low prices

-protect the business of the American cotton growers and manufacturers

-stop trade due to political disagreement on economic policy

-promote sales in the United States of cotton products from China

Question 13: A Chinese international salesperson hoping to increase exports to the U.S. may worry about the inflation of the U.S. dollar because the inflation may (5 points)

-increase the United States' supply of Chinese products

-decrease tariffs on Chinese products sold to the United States

-increase taxes on the United States' products sold to China

-reduce the United States' demand for Chinese products

Question 14: How would a strong U.S. dollar impact the trade of grain produced in the United States? (5 points)

-U.S. grain exports decrease

-U.S. grain exports increase

-U.S. grain imports decrease

-U.S. grain imports stagnate

Question 15: Which of these can be a result of inflation? (5 points)

-Businesses grow cautious about spending

-The government has to cut spending

-The price of household items increases

-Workers benefit from a lower cost of living

Question 16: If the inflation rate increases faster than their income, people will most likely (5 points)

-use a higher proportion of their incomes on basic needs

-spend a lower proportion of their incomes on basic needs

-get more goods and services for less money

-obtain fewer goods and services for less money

Question 17: To increase your standard of living, your wages must (5 points)

-rise faster than the inflation rate

-rise more slowly than the inflation rate

-keep pace with the inflation rate

-have a negative inflation rate

Question 18: Look at the map showing the European Union (EU) and its free-trade agreement (FTA) countries. Which is true about most current EU free-trade agreements? (5 points)

-The European Union's free-trade agreements are with all of the most developed nations in the world.

-The European Union's free-trade agreements include agreements with both developed and developing nations.

-The European Union's free-trade agreements focus on nations with access to overland trade routes

-The European Union's free-trade agreements focus on the Southern Hemisphere, as distant countries have access to goods not grown in Europe.

1. The Houston Chronicle reported that in Houston, the average price of new homes has decreased, while at the same time, the number of new homes sold has increased. This situation could be explained by which one of the following: (draw curves before answering)

  1. An Increase in demand
  2. An Increase in supply
  3. A Decrease in demand
  4. A Decrease in supply

2. In another market, the average price of new homes fell, while at the same time, the number of new homes sold decreased. The situation would best be explained by (Draw the curves before answering)

  1. An Increase in Demand
  2. An Increase in Supply
  3. A Decrease in demand
  4. A Decrease in supply

3. A consumer is said to have achieved maximum total utility when:

  1. Purchases of Good A give the same satisfaction as purchases of Good B.
  2. Purchases of the last dollar spent on Good A give the same satisfaction as purchases of the last dollar spent on Good B.
  3. The average purchases per dollar of Good A give the same satisfaction as the average purchases per dollar of Good B.
  4. The total utility derived from Good A is the same as the marginal utility derived from Good B.

4. You are given the following information about a firm's present output position: MPP (Marginal Physical Product) of Land = 12; MPP of Labor = 16; Price of Land = $2; Price of Labor = $4. With no additional money to spend, this firm should:

5. A firm achieves the least cost in production by substituting factors until

  1. their factor prices are equal
  2. their marginal products are equal to the factor prices
  3. their marginal products are each equal to zero
  4. the ratios of their marginal product equal the ratio of their prices
  5. none of the above

6.The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything--more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is

  1. correct if he is assuming a rightward-shifting PPF.
  2. incorrect if he is assuming a rightward-shifting PPF.
  3. correct if he is assuming a PPF that does not change.
  4. none of the above

7. Assume your swimsuit business is at its maximum profit position, and one new change occurs: consumer incomes decrease. If swimsuits are normal goods, the equilibrium price of swimsuits will __________, and the CONSUMER surplus will ________.

  1. increase, increase
  2. decrease, decrease
  3. increase, decrease
  4. decrease, increase

8. Firms that shuts-down in the short-run still must pay:

  1. Marginal cost
  2. Variable cost
  3. Fixed cost
  4. Total cost

9. The term externalities refer to:

  1. Black-market economic activity.
  2. The impact on markets of imported goods.
  3. The costs and benefits of a market activity borne by a third party.
  4. The inequitable distribution of income.

10. If full external costs are not internalized, firms will tend to allocate more of society's scarce resources to produce than is societally warranted, and if full external benefits are not internalized, firms will allocate less of society's resources to produce than is societally justified. True/False.

11. Joe was very careful about smoking in his home until he bought a fire insurance policy. After buying the policy, he became careless. His attitude is: "I'm insured. What do I care if this place burns down; I'll just collect the money". Joe's attitude is an example of ______________.

12. Megatrust Bank had historically scrutinized loans very carefully and extended them, only to persons whom they considered very creditworthy. They made relatively few loans. However, after the government provided guarantees to sub-prime loans, Megatrust relaxed its standards and increased its loan volume. (And its default rate as well.) This is an example of _______________.

13. In the short-run, if a perfectly competitive firm finds itself operating at a loss, it will

  1. Reduce the size of its plant to lower fixed costs.
  2. Raise the price of its product.
  3. Shut down.
  4. Continue to operate as long as it covers its variable cost.

14. If income today is more equally distributed than it was in 1960, a Lorenz Curve depicting today's distribution would be

  1. More bowed and to the left of the 1960's curve.
  2. More bowed and to the right of the 1960's curve.
  3. Less bowed and to the left of the 1960' curve.
  4. Less bowed and to the right of the 1960's curve.

15. Which of the following statements is true?

  1. As output increases, the average fixed cost becomes smaller and smaller.
  2. Average fixed cost does not change as output increases.
  3. The marginal cost curve intersects the average fixed cost curve at its minimum point.
  4. When marginal cost is greater than average fixed cost, average fixed cost increases.
  5.  

16. A firm in any of the market structures we have studied will maximize its profit (or minimizes its loss) when its

  1. Average costs are at a minimum
  2. Marginal revenue and marginal cost are the same.
  3. Marginal revenue is less than marginal cost.
  4. Marginal revenue is zero.

17. If the demand for a good increase, when the price of other good increases, these goods are

  1. Capital goods
  2. Substitute goods
  3. Complementary goods
  4. Luxury goods

18. Which of the following pairs of products are complementary goods?

  1. mobile phones and laptops
  2. pens and pencils
  3. sugar and artificial sweeteners
  4. radios and television
  5. toothbrushes and toothpaste

19. The amount of a good that is given up to produce another good is:

  1. Scarcity
  2. Specialization
  3. Opportunity cost
  4. Trade
  5. Efficiency

20. The most important characteristic of the equilibrium price is that it:

  1. Guarantees that producers earn a profit.
  2. Increases the quantity demanded.
  3. Clears the market.
  4. Decreases the quantity supplied.

21. Rank the following market structures based on the number of participating firms: From the fewest number of firms to the most number of firms:

  1. Oligopoly
  2. Perfect Competition
  3. Monopoly
  4. Monopolistic Competition

22. If firms in a monopolistically competitive market are earning economic profits which of the following scenarios would best reflect the change facing incumbent firms as the market adjusts to its new equilibrium?

  1. an increase in demand
  2. a decrease in demand
  3. a downward shift in their marginal cost curve
  4. an upward shift in their marginal cost curve


23. If labor in Mexico is less productive than labor in the United States in all areas of production, 

  1. neither nation can benefit from trade
  2. Mexico can benefit from trade but the United States cannot
  3. Mexico will not have a comparative advantage in any good
  4. both nations can benefit from trade

24. Which of the following statements is false?

  1. The typical monopolistically competitive firm could reduce its average total cost if it produced more output.
  2. Monopolistically competitive firms advertise to increase the elasticity of the demand curve they face.
  3. Expensive advertising might help consumers if it is a signal that the product is good.
  4. Brand names acquired at great cost might help consumers by assuring quality.

25. Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigs in surrounding states. Which of the following principles does this best illustrate:

  1. people respond to incentives
  2. rational people think at the margin
  3. a trademark can make everyone better off
  4. markets are usually a good way to organize economic activity