Exam (elaborations)

Macroeconomics Final Exam Study Guide Questions With Verified Answers

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Microeconomics

Institution
Microeconomics

Macroeconomics Final Exam Study Guide Questions With Verified Answers What is the "fundamental economic problem" that exists in every economy? - answerScarcity- satisfying unlimited wants with limited resources. Forces people to make choices. Scarcity - answerInsufficiency of resources to sati...

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Uploaded on September 6, 2024
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macroeconomics final exam study guide questions wi

Institution Microeconomics
Course Microeconomics

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Macroeconomics Final Exam Study Guide
Questions With Verified Answers

What is the "fundamental economic problem" that exists in every economy? -
answer✔✔Scarcity- satisfying unlimited wants with limited resources. Forces people to make
choices.

Scarcity - answer✔✔Insufficiency of resources to satisfy people's unlimited wants

Economics - answer✔✔How people work to transform resources into goods and services to
distribute and satisfy wants

Difference between Macro and Micro economics - answer✔✔Micro- study of individuals or
specific firms or industries
Macro- study of the economy as a whole
What economic model depicts the flow of money, goods, and services between households and
firms? - answer✔✔Circular Flow Model

Opportunity Cost - answer✔✔quantity of goods that must be given up to obtain another good

PPC - what is looks like and be able to determine opportunity cost and graph it - answer✔✔One
good v another good
(look on study guide)

What shifts the PPC curve outward and inward - answer✔✔Inward- capital goods destroyed
(natural disasters or war)
Outward- Innovations, new resources, new technology

Absolute v Comparative Advantage - answer✔✔Absolute- who can produce more of a good
with fewer resources
Comparative- who can produce more of a good at a lower opportunity cost

Factors of Production - answer✔✔Land
Labor

, ©THEBRIGHTSTARS 2024
Capital
Entrepreneurship

Define and Illustrate the Law of Supply and Demand - answer✔✔Demand- as price goes up,
quantity demanded goes down and vice versa (inverse relationship between price and quantity
demanded)
Supply- As price goes up quantity supplied goes up and vice versa (direct relationship between
price and quantity supplied)
(See review for picture)

What causes a movement along the demand and supply curve - answer✔✔Changes in price

What are the determinants of supply and demand - answer✔✔Demand: change in income,
taste/preferences, price of substitute/complementary goods, future expectations, population size
Supply: technology, resource prices, prices of related goods, number of suppliers, expectations of
future prices
A Short-Run supply curve is drawn as _________ line. Long-Run is drawn as a _________line. -
answer✔✔Upward Sloping,
Vertical

What does the horizontal segment of the aggregate supply curve indicate - answer✔✔Real GDP
increase w/out affecting the economy's price level.
What are the determinants that would SHIFT the aggregate supply and demand curve -
answer✔✔AS: input changes, change in productivity, changes in ACTION of government (Not
gov't spending), environmental changes
AD: Changes in consumer spending, investment spending, gov't spending and net
exports(exports-imports) **C+I+G+(X-M)**
When would demand-pull inflation most likely occur? Illustrate Demand-Pull Inflation on the
aggregate model. - answer✔✔Aggregate demand curve increases pulling the price level up.
Usually as a result of military expansion (increase in government spending)
(See study guide for graph)
Cost-Push inflation will most likely occur during? Illustrate Cost-Push Inflation on the aggregate
model. - answer✔✔Aggregate supply curve decreases pushing the price level up. Usually as a
result of an increase in cost of basic goods (OPEC in 1970's causes Stagflation in U.S.)
(See study guide for picture)

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