1. Production Possibilities Curve (see board)

  1. Any point along line A – A indicates what?
  1. A shift to line B-B would indicate what?
  1. A shift to line A-B would indicate what?
  1. A shift to line B-A would indicate what?
  1. Which would be better for the overall growth of the economy, a shift to AB or to BA? Why?
  1. What does point x represent?
  1. What does point y represent?
  1. What does point z represent?

2. Specialization and trade

  1. What is opportunity cost?
  2. What is the formula for determining opportunity cost?
  1. What is absolute advantage?
  1. What is comparative advantage?
  1. Why can a country never have both? (AA and CA)
  1. What is Couchville’s OC for Toilet Paper? For Doritos?
  1. What is Kirbytown’s OC for Toilet Paper? For Doritos?
  1. Who has AA in TP? In Doritos?
  2. Who has CA in TP? In Doritos?
  3. Who should produce TP? Refritos?
  1. What would be favorable trade terms?

  1. What is The People’s Republic of Persails’ OC for Shamwows? For Adult Diapers?
  1. What is Schneiderville’s OC for Shamwows? For Adult Diapers?
  1. Who has AA in SWs?ADs?
  2. Who has CA in SWs?ADs?
  1. Who should produce Shamwows?ADs?
  1. What would be favorable trade terms?

3. The Business Cycle

  1. What does the Long Run Growth Trend represent?
  2. Why is the LRGT angled at 45 degrees?
  1. Point A represents what?
  1. Point B represents what?
  1. Point C?

4. Supply and Demand

  1. Why does line S have a positive slope?
  1. Why does line D have a negative slope?
  1. What is meant by positive and negative slope?
  1. What might cause a shift from D to D1?
  1. What might cause a shift from S to SI?
  1. What is the difference between a shift in S or D and a movement along S or D?

If peanut butter and bread are complimentary goods:

Draw the effects of: an unusually long and productive peanut growing season

On 37. peanut butter38. bread 39. tunafish40. jelly

If Chinese food and Pizza are substitutes:

Draw the effects of a new and effective advertising campaign by the pizza industry.

Slogan is “Pizza is quite tasty and affordable!”

On 41. moo goo gai pan42. cardboard boxes43. chopsticks 44. Parmesan cheese

5. Circular Flow (with Government)

  1. Label it.
  2. What economic activities are included in the CFM?
  3. What economic activities are excluded (considered leakage)?

6. Gross Domestic Product

40. Give THE definition of GDP.

41. What are the components of GDP?

42. What are leakages from GDP?

43. What is NOT COUNTED as part of GDP?

COUNTS (if yes, as what?) /DOESN’T COUNT in GDP

44. pre-owned underwear

45. Toyota builds factory in Ohio

46. McDonald’s opens new franchise in China.

47. A new car

48. The tires on a new car

49. Government transfer payments like welfare, etc.

50. A purchase of 25 shares of Microsoft stock

51. Homemade underwear

52. A 2008 model car that sells in 2009.

7. Inflation and Price Indices

HAMS
# $ / Eye Patches
# $ / SPRAY CHEESE
# $ / GDPn / GDPr / CPI
2008 (base yr) / 10 / 10 / 50 / 1 / 25 / 2 / 200
2009 / 15 / 10 / 25 / 2 / 50 / 4
2010 / 10 / 20 / 25 / 4 / 50 / 4

53. % change (increase or decrease) in CPI from 2008 to 2009?

  1. % change (increase or decrease) from base yr to 2010?
  2. % change (increase or decrease) from 2009 to 2010?
  3. Give examples of those HELPED by inflation.
  1. Give examples of those HURT by inflation.

8. UNEMPLOYMENT

58. What is the formula for determining the Unemployment rate. employed

59. In order to be considered unemployed:

60. What is meant by the phrase “natural rate of unemployment” (NRU)?

61. What is the NRU in the United States, approximately?

  1. Why is the NRU never 0%?
  2. Full Employment basically means that there is no ______unemployment, only ______and ______unemployment.
  3. Define the 4 types of Unemployment:

Employed / Unemployed/ What kind of UE?

  1. Laid off due to recession.
  2. Retire at age 71.
  3. Leave work at ski-resort after ski season.
  4. You are world’s fastest manual typewriter user.
  5. In jail.
  6. waiting for best opportunity after you graduate from San Jac after 13 short years.

9. Aggregate Supply and Aggregate Demand

Why does SRAS slope upward (positively)?

Why does AD slope downward (negatively)?

Why is LRAS vertical?

The Y axis, which measures GDPr, can also be labeled: