Midterm study guide.docx - ECO-111 MACROECONOMICS Midterm Exam Study Guide EXAM STRUCTURE The exam consists of multiple-choice and essay questions The

Midterm study guide.docx - ECO-111 MACROECONOMICS Midterm...

This preview shows page 1 - 3 out of 7 pages.

ECO-111: MACROECONOMICS Midterm Exam Study Guide EXAM STRUCTURE The exam consists of multiple-choice and essay questions. The multiple-choice questions will require you to identify, define, and understand the concepts found in the course. The essay questions will require you to apply concepts, analyze data, and defend your conclusions. KEY CONCEPTS* Externalities- the impact of one person’s actions on the well-being of a bystander; the welfare implications if market activity depend on more than just the value obtained by the buyers and the cost incurred by the sellers The primary focus of economics- 1. The primary focus of the study of economics is with: making the most efficient use of scarce productive resources. How economic activity is guided in a market economy- Market economy is based on "Invisible hand" hypothesis. Thus hypothesis suggests that production in an economy is guided by the self-interest of the individuals and it is prices that make individuals to utilize resources in production process. Thus, in a market economy, economic activity is guided by self-interest and prices. Scarcity- the limited nature of societies resources; Scarcity is the basic economic problem which shows unlimited human wants over limited resources. Scarcity is central to the study of economics because it finds different methods to have fuller utilization of resources so that unlimited wants can be fulfilled with limited resources. Standard of living, how it is determined, and how it changes: Almost all variation in living standards is attributable to differences in countries’ productivity- that is, the amount of goods and services produced by each unit of labor input. Market failure- a situation in which a market left on its own fails to allocate resources efficiently
Image of page 1

Subscribe to view the full document.

Inflation vs. deflation vs. recession : Inflation occurs when the prices of goods and services rise, while deflation occurs when those prices decrease, recession: a period of declining real incomes and rising unemployment “There is no such thing as a free lunch” that resources used up in producing the lunch are not available to satisfy other wants; There is no such thing as a free lunch” is used to describe the cost of decision making and consumption. If an
Image of page 2
Image of page 3

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes