The Circular Flow Diagram CORRECT ANSWER Green arrows represent the flow of money and red represents to flow of goods/services
Production possibilities Frontier/ Curve PPF: PPC CORRECT ANSWER The curve shows what is possible within an economy
D- impossible
A&B - feasible efficient
C - feasibl...
the circular flow diagram correct answer green arrows represent the flow of money and red represents to flow of goodsservices production possibilities frontier curve ppf ppc correct answer the cur
ECN 211 ASU FINAL EXAM QUESTIONS WITH
CORRECT ANSWERS
The Circular Flow Diagram CORRECT ANSWER Green arrows represent the flow of
money and red represents to flow of goods/services
Production possibilities Frontier/ Curve PPF: PPC CORRECT ANSWER The curve
shows what is possible within an economy
D- impossible
A&B - feasible efficient
C - feasible & inefficient
PPF shifts out when... CORRECT ANSWER the economy can produce more of
everything
Opportunity Cost CORRECT ANSWER the cost of what you give up to get something
else in terms of time, money, or other goods
Absolute Advantage CORRECT ANSWER Who can make most of that good
Comparative Advantage CORRECT ANSWER The lowest opportunity cost for that good
What would allow Panama and Canada to trade? CORRECT ANSWER They want to
trade within their opportunity cost
Demand CORRECT ANSWER The amount consumers are willing and able to purchase
Supply CORRECT ANSWER The amount that producers are willing and able to
produce
Law of demand CORRECT ANSWER Demand always slopes down
Law of supply CORRECT ANSWER Supply always slopes up
Equilibrium CORRECT ANSWER Where the two curves meet
Demand shifters CORRECT ANSWER - Price of substitute or complement
- Consumer preference
- population growth
- Income and expectation of future income
Supply shifters CORRECT ANSWER - Price of input
- Technological advancement
- Number of producers
, - Producer expectation
Solve for Equilibrium Price and Quantity CORRECT ANSWER Make both sides equal to
each other
Ex. Q = 100 - 6P & Q = 28 + 3P
100 - 6P = 28 + 3P
72 - 9P
P=8
28 + 3(8)
28 + 24
52 = Q
Economic Growth is measured... CORRECT ANSWER Growth is measured in many
ways, usually GDP (the market value of all final goods and services produced in a
nation's borders) Productivity (output/labor hours)
What causes productivity? CORRECT ANSWER - Human Capital
- Natural Resources
- Physical Capital
- Technological Knowledge
Human Capital CORRECT ANSWER Knowledge and skills of workers (education,
training)
Natural Resources CORRECT ANSWER Anything that comes from nature (timber, oil,
coal)
Physical Capital CORRECT ANSWER All the physical tools and machines used to do
business
Technological Knowledge CORRECT ANSWER The general knowledge of the world
GDP Equation CORRECT ANSWER GDP = G + C + I + NX = ALL PRODUCTION =
ALL CONSUMPTION
Consumption (C) CORRECT ANSWER Things purchased for final use
Investment (I) CORRECT ANSWER Things purchased to use to make more money
later
Government Spending (G) CORRECT ANSWER Any money the government uses
Nominal GDP CORRECT ANSWER is this year’s prices * this year’s quantity
Real GDP CORRECT ANSWER is base years' prices * is years’ quantities
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