final review

final review - Intro Macro - Sheflin Essential Questions in...

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Intro Macro - Sheflin Essential Questions in Intro Macroeconomics 11/21/2010 Many/most Final Exam multiple-choice questions will deal with these issues (as did the HW assignments in one form or another). If you can answer these in words, you should have no trouble with the multiple choice questions on the final. If you cannot, look up the answers and if still having trouble, post on the FINAL EXAM RELATED chat room that will be available after Thanksgiving. Graph means show the appropriate graphical analysis – aggregate Supply and Demand, Money Supply and Demand, Yield Curve, etc. Arrow diagram means be able to trace out steps - M ↑→ i ↓→ I ↑→ D ↑→ P ,Y Equation means be able to write out a related equation NOTE THAT WE HAVE NOT COVERED ALL OF THIS YET BACKGROUND AND MICRO ISSUES 1. How do economists measure the value of anything? - 2. What determines the price and quantity of any good or service? Graph - Supply and Demand 3. What is opportunity cost and why is there no free lunch? - Opportunity cost : price of next best alternative- more micro - Why no free lunch? Everything has an opportunity cost 4. What does the invisible hand mean, and why does it suggest laissez-faire? - Invisible hand: free market capitalism is efficient - Free market: capitalism: market, price, competition, invisible hand theory (a competitive market leads to an efficient optimal economy), laissez fair (government should stay out) 5. What are the three questions answered by any economic system and how are they answered under a market-based system - Demand Micro- what, how, who, role of prices Macro- how much to produce, GDP, CPI - Determines exchange rate- supply/ demand 6. What is the difference between capitalism, socialism, communism Free market : capitalism : market, price, competition, invisible hand theory (a competitive market leads to an efficient optimal economy), laissez fair (government should stay out) Command Economics: - Socialism – government own means of production- cuba- outcome was equitable Communism: a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state. 7. What is the definition of Microeconomics? Macroeconomics? Economics? Micro economics founder - Adam Smith- individual entities (markets, firms, and households, monopoly; self interest is good- benefits economy Macroeconomics - overall performance of the economy- John Maynard, Keynes made macro what it is today (1936 AKA in Great Depression): Economics: the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals CIRCULAR FLOW,NATIONAL INCOME ACCOUNTING AND OTHER MEASUREMENTS 1. 2 Important points of the Circular flow model Circular Flow Chart
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- Increase in GDP is good more final goods in the U.S. -
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final review - Intro Macro - Sheflin Essential Questions in...

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