ECON 340 Exam 1 Study Guide

ECON 340 Exam 1 Study Guide - ECON 340 Exam 1 Study Guide...

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ECON 340 Exam 1 Study Guide 10 18 13 17 Chapter 1 Key Terms: International Independence International Economic Integration International Investment Economic Significance of Political Boundaries Theory of International Trade – Extends microeconomic analysis to international questions. Protectionist Policies – Restrict international trade to “protect” domestic producers from foreign competition. Open-Economy Macroeconomics – Applies macroeconomic analysis to aggregate international problems. Exchange Rates – Relative prices of different national currencies. Open Economy – A country that engages in international transactions. Closed Economy – A country that engages in no international transactions. Positive Analysis Normative Analysis
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Chapter 2 Key Terms: Mercantilism – Economic system of production, consumption, and distribution in which members encouraged exports and discouraged imports. Zero-Sum Game – Any gain in one party requires a loss the other party. Specie-Flow Mechanism Perfect Competition – Each buyer and seller is to small to effect price, each commodity is homogeneous, there is perfect information about market conditions, no barriers to entry. Marginal Cost (MC) – Change in total cost due to production of one additional unit of output. Autarky – A case of self-sufficiency or no trade within a system. Production Possibilities Frontier – Represents all the alternate combinations of goods X and Y a country could produce. Input Coefficient – (a LX and a LY ) – summarize the production technology. They tell us how many units of labor are required to produce one unit of each of the two outputs. Opportunity Cost – The number of units of good Y forgone to produce an additional unit of good X. Marginal Rate of Transformation (MRT) – The rate at which the economy can “transform” good X into good Y, by transferring labor out of the X industry and into the Y industry. Ricardian Model – Implies a straight-line production possibilities frontier. Constant-Cost Model – Opportunity cost is independent of the particular output combination being produced. Production Opportunity Set – Set of all possible combinations of X and Y the country could produce. Consumption Opportunity Set – The set of all possible combinations of X and Y its residents could consume. Utility – Level of satisfaction enjoyed by residents. Indifference Curve (IC) – A graphical technique that shows all the different combinations of goods X and Y that generate a given level of utility.
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Marginal Rate of Substitution (MRS) – Slope of the indifference curve, which represents the rate at which resients willingly trade off consumption of the two goods. Community Indifference Curve
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This note was uploaded on 06/11/2008 for the course ECON 340 taught by Professor Grayson during the Summer '08 term at Arizona.

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ECON 340 Exam 1 Study Guide - ECON 340 Exam 1 Study Guide...

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