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Final

ECON 2133 Final: ECON 2133 final study guide

8 Pages
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Department
Economics
Course Code
ECON 2133
Professor
Elsawaf

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Final Exam • Chapter 1 and 2 o Ten Principles o Definitions o CIRCULAR FLOW MODEL • Chapter 3 o Comparative v. absolute o Pattern of specialization o PPF Model • Chapter 5, 6, and 10 (FORMULAS TOO) o GDP (5) ▪ Who prepares data, how often, different ways of managing o CPI (6) ▪ Price level and inflation rate o Identify weaknesses of each method o Real v. Nominal GDP ▪ Real is better, doesn’t account for non-economic activity or underground economic activity o Unemployment (10) ▪ Define and examples of each type • Chapter 11 o Monetary theory o Function of money, money supply, types of reserves o How does central bank control monetary policy? PRINCIPELES OF MACROECONOMICS ECON 2133 Final review questions: 1. A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests. || (B) A. This statement is true B. This statement is false. 2. In a negative externality: || (B) A. Less of a product is produced than economically warranted. B. More of a product is produced than optimal. C. Market allocates society’s resources better than governments D. Only B and C. i. There is an excess of the product that they made; something they do not want/need 3. When the "invisible hand" guides economic activity, prices of products reflect: || (C) A. only the values that society places on those products. B. only the costs to society of producing those products. C. both the values that society places on those products and the costs to society of producing those products. D. none of the above. 4. The assumption that people do not intentionally make decisions that would leave them worse off is known as the economic welfare assumption. || (B) A. This statement is true. B. This statement is false. 5. In the circular-flow diagram, firms own the factors of production and use them to produce goods and services. || (B) A. This statement is true. B. This statement is false. 6. The opportunity cost of attending college might best be described as: || (B) A. the money that must be paid in order to attend college. B. the most–valued alternative use of the student’s time. C. the least –valued alternative use of the student’s time. D. the value that the student attaches to learning. 7. The scientific method is: || (C) A. the use of modern technology to understand the way the world works. B. the use of controlled laboratory experiments to understand the way the world works. C. the dispassionate development and testing of theories about how the world works. D. only A and C 8. Which of the following is (are) normative statement(s)? || (B) A. An increase in consumer income will cause a rise in the demand for beef. B. A lower income tax rate should encourage more savings. C. As society increases its wealth , the problem of scarcity disappears. 9. When a country has a comparative advantage in producing a certain good, || (D) a. the country should import that good. b. the country should produce just enough of that good for its own consumption. c. the country’s opportunity cost of that good is high relative to other countries’ opportunity costs of that same good. d. None of the above. 10. If an economy has 60,000 labor hours available to produce cars and butter. If one car can be produced using 125 labor hours and one pound of butter can be produced using 25 labor hours, what is the maximum number of cars that this economy can produce? || (B) a. 240 cars b. 480 cars c. 500 cars d. 1200 cars 11. In the above problem, if the economy splits its resources evenly between the production of the 2 goods, what is the maximum number of pounds of butter that can be produced? || (C) a. 2400 lbs. b. 2000 lbs. c. 1200 lbs. d. 1000 lbs. 12. If you can cook a meal in one hour and fold a laundry basket in 2 hours. Whereas your roommate can cook a meal in one hour and fold a laundry basket in 3 hours, which of the following is true. || (D) a. You have a comparative advantage in laundry folding. b. You have an absolute advantage in laundry folding. c. Both of you have an absolute advantage in cooking a meal. d. All of the above. 13. The gains from trade take place because of: || (D) a. Absolute advantage b. Comparative advantage c. Specialization d. Only b and c 14. The theory of comparative advantage is attributed to David Ricardo: || (A) a. This statement is true. b. This statement is false. 15.U.S. GDP includes the market value of rental housing, but not the market value of owner-occupied housing. || (B) a. This statement is true. b. This statement is false. 16. National income could be measured using: || (D) a. the spending approach b. the factor income approach c. the expenditure approach d. all of the above 17. The Investment component of GDP measures; || (D) a. capital equipment b. inventor
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