ECON 1202 1st Edition Lecture 16 Outline of Last Lecture I. Economic Growth over Time and Around the WorldII. What Determines How Fast Economies Grow?III. Economic Growth in the USIV. Why Isn’t the Whole World Rich?Outline of Current Lecture I. Review SessionII. Chapter 1III. Chapter 2IV. Chapter 3V. Chapter 4VI. Chapter 8VII. Chapter 9VIII. Chapter 10IX. Chapter 11 X. Federal Budget SheetCurrent LectureI. Review Sessiona. 50 multiple choice questions on examb. Get to discussion section 10 minutes earlyc. Mostly simply facts, little bit of applicationII. Chapter 1a. Basic Economic Problem: human wants are greater than human needsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.i. Therefore scarcity is an issueb. Normative vs. Positive Economic III. Chapter 2a. Productions Possibilities Frontieri. Capacity, under-capacity b. Concept of Comparative Advantagei. Connection with opportunity costc. Concept of Circular Flowi. Parts of the economyii. How it operatesd. Marketsi. What is necessary for their successIV. Chapter 3 (12 questions)a. Law of Demand and Supplyi. Know how the change of each effects the market ii. Determinants of demand and how they effect the marketiii. Determinants of supply and how they effect the marketV.Chapter 4a. How might price controls affect the market?i. Price ceilings and price floors1. Price Ceiling: problem when set below equilibrium (called binding)2. Price floor: problem when set above equilibrium a. i.e. Minimum wageii. Consequences of price controlsb. Consumer and Producer Surplus c. Market Efficiencyd. How taxes affect the marketi. Surplus diminishes VI. Chapter 8a. 4 components of GDPi. Household sector, business sector, government sector, and foreign sector)ii. How they relate to circular flow chartiii. Shortcomings of GDP (what GDP can’t show or tell us)VII. Chapter 9a. What is unemployment?i. How is it calculated?ii. Who is considered “unemployed”?b. Labor force participationc. Types of unemployment (3 types)i. Frictional, Structural, Cyclical1. Frictional and Structural unemployment will ALWAYS be arounda. Known as “Natural Rate of Unemployment”2. Cyclical Unemployment is the most problematica. People are actively seeking work but can’t find itd. Inflationi. How it is measured? Generally CPIii. What is CPI?iii. Relationship between inflation and unemployment (opposite)iv. Stagflation is direct correlatione. Nominal vs. Real Interest Ratesi. How you can determine between the twoii. Nominal: what it isiii. Real: nominal minus inflation rate VIII. Chapter 10a. Standard of Living: measured best by real GDP per capita (real GDP divided by population)i. You get mixed information when you get this ii. To find strongest economy: look at real GDPiii. To find standard of living: look at real GDP per capitab. Rule of 70c. How various parts of the business cycle affects the economyi. Everything in the economy is interconnected1. No separate entitiesd. Ebenezer Scrooge storyIX.Chapter 11a. Economic growth for the last 1 million yearsi. The affect of the Industrial Revolutionb. Determinants of Economic GrowthX. Federal Budget Sheeta. Revenue vs. Spendingb. Major Spending Categoriesc. 2013 deficit and the total deficitd. How would you balance the