Macroeconomics CLEP I

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craigm427
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Macroeconomics CLEP I
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2014-12-23 12:25:35
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Macroeconomics CLEP I
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  1. Who is considered the founding father of economics and authored the book "The Wealth of Nations" in 1776?
    Adam Smith
  2. The 4 different general viewpoints of how markets behave
    • 1. Classical
    • 2. Keynesian
    • 3. Monetary
    • 4. Neo-Classical
  3. The fundamental reality of economics that makes humankind decide what wants and needs to satisfy and which ones go unfulfilled
    Scarcity and Economic choice
  4. When increased production of one good incurs a cost in the form of reduced production of another good.
    Trade-off or Opportunity Cost
  5. What three models help understand the effects of trade-offs?
    • 1. Production Possibilities Frontier Curve (PPF)
    • 2. Law of Diminishing Marginal Returns
    • 3. Law of Increasing Opportunity Cost
  6. Production Possibilities Frontier Curve (PPF)
    When one product is sacrificed to produce more of a different product what is the term to describe the cost incurred?
    Opportunity Cost
  7. Type of economics in which hypotheses are formed to determine cause and effect relationships that lead to generalized principles or laws that predict outcomes for economic actions.
    Theoretical economics
  8. Economic methodology that means "all other things being equal." It eliminates the impact that changes in other variables might have on a study topic.
    Ceteris Paribus
  9. Economic methodology fallacy that assumes what applies in one instance applies all the time.
    Fallacy of Composition
  10. Economic methodology fallacy that assumes since one event follows another the former is the cause.
    "Post Hoc" Fallacy
  11. An economic methodology major analytical tool that determines the impact of one more or one less variable on an economic outcome. Ex: how much hiring a new worker increases production
    Marginal Analysis
  12. Law that states that production will increase along with increased inputs, but at a point, continuing to increase inputs will decrease the total output of production.
    Law of Diminishing Marginal Returns
  13. Law that states when productivity diminishes, the cost of production increases.
    Law of Increasing Opportunity Costs
  14. Raw materials, labor, capital, and entrepreneurship are all examples of what?
    Determinants of Supply
  15. In a free market system our income limits our ability to satisfy out desires. What is this called?
    Rationing Power of Prices
  16. Law that states an inverse relationship between price and quantity demanded. Ex price of a good goes up and qty demanded goes down.
    Law of Demand
  17. Law that states that the inverse relationship between quantity and satisfaction. Ex as consumers have higher qty of a product their satisfaction level is lower.
    Law of Diminishing Marginal Utility
  18. What can cause a change in demand at any time?
    Consumer sovereignty
  19. This group of factors cause changes in demand and are referred to as what?
    -Tastes and Preferences
    -Income
    -Price/Availability of substitute and complementary goods
    -Future price/qty expectations
    -#of buyers
    -Gov. Regulation
    Determinants of Demand
  20. Price and qty at which the market clears, the price stabilizes and the product is available.
    Equilibrium Price
  21. When considering Consumer and Producer surplus as it relates to supply and demand where is the maximum total surplus represented?
    Equilibrium Price
  22. Production of all goods and services require what 4 resource inputs?
    • 1. Land - raw materials
    • 2. Capital - means of produciton
    • 3. Labor - human resources (manual/intellectual)
    • 4. Entrepreneurship
  23. The 4 main economic systems are?
    • 1. Free Market - consumers producers are unregulated
    • 2. Traditional - society doesn't change methods of production/consumption
    • 3. Command - gov. regulates production/consumption
    • 4. Mixed - blends free/traditional/state

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