UNC-Chapel Hill ECON 101 - Final Exam Study Guide (4 pages)

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Final Exam Study Guide

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Final Exam Study Guide


Study guide for the midterm (exam 3) questions from practice exam and relevant material are also included.

Study Guide
University of North Carolina at Chapel Hill
Econ 101 - Introduction to Economics
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Econ 101 1st Edition Final Exam Study Guide 1 How can we assume workers in developing countries are not as productive as US workers So the reason our GDP is higher is because their GDP is lower 2 What is the difference between government transfer payments and tax cuts o Tax cuts are when the government will have a decrease in their real income and the people whose taxes have been cut will have an increase in their real income Government transfer payments is a redistribution of income in the market system by the government Ex social security welfare 3 What is this graph an explanation of Explain 3 What is the difference between the Aggregate Demand Curve and the expenditure line and what are the slopes of each The slope of the expenditure line then is all the stuff being multiplied by Y though correct Formulas to memorize Y expenditure Yd disposable income Y T T taxes Tbar tY income tax Tbar poll tax C consumption a bYd a autonomous consumption e g food clothes etc b MPC marginal propensity to consume change in consumption change in Y I investment d eY e marginal propensity to invest change in investment change in Y are MPS and MPI the same thing MPI 1 MPC X exports IM imports SAVINGS MPIYd a Equilibrium Y C I G X M Y C is the same as Y a bY Y a b Y Tbar tY I G X M 4 What exactly is inventory and how does it work o Inventory refers to the amount of product that businesses keep on the shelves to sell When inventory decreases businesses will respond by producing more and may raise prices in the future If inventory piles up businesses will cut production and reduce prices until inventory reaches a reasonable level Equilibrium is reached when businesses no longer feel the need to adjust their levels of inventory Helpful hint MPC Marginal Propensity to consume how much you spend out of every dollar you earn For example if b 0 8 you will spend 80 cents and save 20 cents for every dollar you receive 5 What are factors that shift consumption 6 Regarding the supply side why does inflation increase with low economic growth 7 The GDP per capita of many developing countries is so much lower than that for the U S because a non market activity is not included in GDP b workers in developing countries are less productive than workers in the U S c inflation is higher in developing countries d both a and b are correct 8 In the above figure at 3 000 billion real GDP a spending falls short of output and firms will reduce production b inventories are rising c spending exceeds total output and inventories will fall d aggregate demand equals aggregate supply Remember to thoroughly look over algebra that was covered in lecture and emphasized

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