Economics 101 - Key for Midterm #2
April 18, 2001
Parts a, b, c and d are worth 6, 12, 7 and 8, respectively for a total of 33 points.
The U.S. has a comparative advantage in the production of automobiles since it can produce
automobiles at a lower
Economics 101 - Key for Midterm #1
March 14, 2001
Each part is 7 points for a total of 28 points.
The economic problem is there are limited resources and unlimited wants - scarcity. Individuals
respond to the economic problem by making choices on h
VII. ECONOMIC FLUCTUATIONS AND MACROECONOMIC POLICY
A. Aggregate Demand and Prices
1. The aggregate demand/inflation (ADI) curve - graphical representation of the negative
relationship (downward sloping curve) between the inflation rate and the GDP gap.
VI. LONG-RUN ECONOMIC GROWTH
A. Employment and Production
1. Employment and unemployment
a. The unemployment rate is defined as the ratio of unemployed workers (those seeking
employment) to the labor force.
b. The natural rate of unemployment is the rate
V. INTRODUCTION TO MACROECONOMICS
A. The Importance of Economic Growth
1. Economic growth is the percentage increase in real gross domestic product (GDP).
2. Long-run versus short-run economic growth
a. Long-run economic growth is the average growth rate
IV. THE FIRM AND THE MARKETPLACE
A. The Firm's Objective
1. The firm is an institution that organizes production.
a. The firm hires land, labor, capital and entrepreneurial ability in the factor
b. The firm combines these factors of production to
II. SUPPLY AND DEMAND
Normally, the economic problem is not undertaken by one individual or a single group of
individuals, but rather is disconnected into two groups called buyers and sellers. Buyers are those
individuals looking to purchase a good or ser
A. General Concepts
1. The economic problem is that of scarcity - limited resources and unlimited wants.
a. Resources are land, labor, capital and entrepreneurial ability used to produce goods and
b. Wants are the desire to consu