FSU ECO 2013 - Macroeconomics Final Exam

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Economics

Economics

28 pages

Chapter 1

Chapter 1

34 pages

Exam II

Exam II

15 pages

Chapter 7

Chapter 7

10 pages

Exam 1

Exam 1

14 pages

TEST 1

TEST 1

7 pages

Chapter 7

Chapter 7

10 pages

Chapter 1

Chapter 1

26 pages

Chapter 1

Chapter 1

55 pages

Chapter 1

Chapter 1

10 pages

Chapter 1

Chapter 1

10 pages

Exam 2

Exam 2

13 pages

Chapter 1

Chapter 1

16 pages

Test 1

Test 1

8 pages

CHAPTER 1

CHAPTER 1

17 pages

Exam 3

Exam 3

14 pages

Exam 2

Exam 2

9 pages

Chapter 6

Chapter 6

21 pages

Exam 2

Exam 2

6 pages

Chapter 1

Chapter 1

19 pages

Exam 2

Exam 2

15 pages

Exam 1

Exam 1

12 pages

Chapter 1

Chapter 1

29 pages

Chapter 1

Chapter 1

22 pages

Chapter 1

Chapter 1

29 pages

EXAM 1

EXAM 1

17 pages

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Macroeconomics Final Exam Study Guide Unit 1 Chapters 1 3 units 2 4 below The study of how individuals make choices that are subject to scarcity o Scarcity is having unlimited wants but limited resources forces us to ration our resources eliminated Because we will always have unlimited wants scarcity cannot be There are 8 guideposts to the economic way of thinking 1 There are always trade offs a Opportunity cost the value of the next best alternative b There is no such thing as a free lunch 2 People are rational a This can be very subjective an individual makes a decision based upon their own subjective opinion as to what will benefit them the most 3 Incentives matter a More likely to do something when benefits are greater less likely to do something when there is a higher cost not necessarily monetary 4 Individuals think on the margin a Marginal benefit vs Marginal cost benefit must outweigh the cost 5 More information leads to better choices but is more costly a Mainly used for larger purchases i e car or house 6 Secondary effects a Unforeseen consequences 7 Value is subjective i Example Lighter cars are more fuel efficient but more accident prone a One person may want to spend on clothes while someone else would spend it on something else 8 Good theories should be able to predict behavior a What the average person would do Positive statements are factual and can be proven Normative statements are opinions o ought to should be Don t violate ceteris paribus hold all things constant Good intentions don t always lead to good outcomes Association does not mean causation What is good for the individual isn t always the best for the group Voluntary trade creates value for both parties Transaction costs reduce the gains from trade o Middlemen reduce transaction costs therefore they increase gains from trade Property rights create incentives to protect and conserve resources to those who value them the most The Productions Possibilities Curve PPC or PPF shows the maximum combination of two goods that can be produced from a set of fixed resources o You can only produce more of one good if you produce less of another tradeoff o An outward shift of the curve is caused by a technological advance that increases the amount of outputs while keeping the same number of inputs Outward shifts are also caused by Increased resources Improved technology Improved legal systems More working less leisure o A point inside the curve is inefficient o A point on the curve is efficient o A point outside the curve is unattainable o Land o Labor o Capital o Technology Specialization of labor allows an individual to focus on a specific task thereby leading to increased productivity and increased profit Individuals should produce goods for which they have low opportunity costs Opportunity costs differ among nations due to differences in A change in quantity demanded is a movement along the curve caused by a change in A change in demand is a shift of the entire curve caused by anything other than price price i e consumer income o Increase shift to the right o Decrease shift to the left Two goods are substitutes if an increase in the price of the first good leads to an increase in the demand for the second good Two goods are complements if an increase in the price of the first good leads to an increase of the demand for the second good Predicted future higher prices lead to increased demand shift right Predicted future lower prices lead to decreased demand shift left A change in quantity supplied is a movement along the curve caused by a change in price A change in supply is a shift of the entire curve caused by anything other than price o Changes in resource price Resource prices costs increase supply decreases Resource prices costs decrease supply increases o Changes in technology Increases supply because costs are driven down because production is cheaper due to the new technology o Changes in taxes Increased taxes decreased supply Decreased taxes increased supply o Political unrest and weather Market prices are determined where supply and demand curves intersect Equilibrium occurs when quantity supplied quantity demanded o When equilibrium is reached all gains from trade have been realized Graphs are helpful to see the following shifts An increase in supply increases Q decreases P A decrease in supply decreases Q increases P An increase in demand increases Q increases P A decrease in demand decreases Q decreases P An increase in supply and demand increases Q P rises falls or stays the same A decrease in supply and demand decreases Q P rises falls or stays the same An increase in supply and a decrease in demand increases P Q rises falls or stays the A decrease in supply and an increase in demand decreases P Q rises falls or stays the same same The invisible hand principle o Self interested individuals will produce what is valued by society the most without the direction of a central authority People will produce goods that are valued highly because those goods will make them the most money Unit 2 Chapters 7 10 Gross Domestic Product GDP is the market value of all final goods and services produced within a country Inflation is a general rise in prices o Two ways to measure inflation Consumer Price Index CPI Uses a market basket of consumer goods GDP Deflator Does not use a fixed market basket The GDP Deflator is a better way to adjust for inflation because it is more broad than the CPI Nominal GDP is a measure of GDP using prices from that year Real GDP is adjusted for inflation Real Nominal Inflation The change in nominal GDP always exceeds the change in real GDP when nominal GDP is increasing and prices are rising The business cycle refers to economic fluctuations o Highs occur during expansionary phases o Lows occur during recessionary phases o It is unpredictable however the average growth rate is usually 3 Expansionary is characterized by decreasing unemployment increasing real Recessionary is characterized by increasing unemployment decreasing real output output The civilian labor force includes all individuals that are over 16 and who are employed or unemployed o Household workers i e stay at home moms students retirees disabled under 16 institutionalized or not actively seeking work are not part of the labor force Someone who is unemployed is actively looking for a job or waiting to return to begin a job Unemployment can be good because it allows workers to better match their skills with potential


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