exam study guide 2011-2012

8/3/2019 Exam Study Guide 2011-2012

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STUDY GUIDE FOR 2012 EXAM

This is what you will need as you prepare for your Economics Exam!

• All quizzes and Big Tests this past semester.

• All notes, assignments, and handouts from this past semester.

• All your class notes on loose-leaf paper, too.

Introduction to Economics

Terms and Concepts to Understand (you may want to make flash cards for these. Don’t try to squish a

lot of definitions here.

Scarcity

Profit

trade

Opportunity CostFeudalism

Incentive

Goods

cost

benefit

Macroeconomics

Profit motive

Microeconomics

Entrepreneur

Traditional Economic SystemFree Market Economic System

Services

Competition

Wants vs. Needs

Markets

Command Economic System

WRITE - What does the expression “There is no such thing as a Free Lunch” mean – BE ABLE TO

EXPLAIN:

WRITE - the definition of ECONOMICS that we learned in class:

WRITE – What is the Basic Economic Problem as societies face?



TRADE

• Trading _______ _______ guarantee happiness. Economists merely maintain that trade will continue if

people ___________________ that they will be better off after the trade than if they do not trade at all.

• After a trade – What has been traded away is called the ________________ of the trade. What was

received is called the __________________.

• Trade is a voluntary __________________ of goods and services. The decision to trade is made

because two or more people involved in the exchange expect to __________. When one or both of the

trading partners believe they can no longer gain from trading, the exchanges will _____________.

• When people buy something, they ______________ it _______________ than it costs them; when

people sell something, they value it ______________ than the payment they receive.

• Why do people trade? People trade to get something of _______________ value by giving up

something of _________________ value.

Factors of Production

The Factors of Production are also called the ________________________________________________.

What are the Factors of Production we discussed in class? You will need to EXPLAIN them as well.

TYPE OF RESOURCE EXPLANATION/OTHER NAME FOR, AND EXAMPLES

A.

B.

C.



D.

EXAMPLE EXAM QUESTION:Pigs Can Fly Corporation, started by Mr. I. M. Apigg, produces widgets for kids of all ages. Mr.

Apigg came up with a way to produce his widgets by using only iron ore, cotton, and fish. BGI

can produce about 1000 widgets a day. The widgets are moved to markets around the world

by trucks, trains, or ships. The widgets are assembled by hand by specialized workers. Orders

are coming through on company computers day and night.

•

FIRST – identify each of the productive resources in the boxes below.• SECOND - Please place each resource you find in the paragraph above under the

appropriate category below.

A. B. C. D.

Natural resources come from the earth. They are either __________________ or ____________________

• What is the difference between microeconomics and macroeconomics? Explain, Give Examples

MICROECONOMICS MACROECONOMICS

LIST - the four basic economic questions. Don’t forget to include good and service in your responses.A.



B.

C.

D.

Economic SystemsWRITE – the definition of an ECONOMIC SYSTEM that we learned in class:

What was Feudalism? Why did we study this in class? How did it work? Why are there no feudal

societies today?

Economic Systems – you will need to understand what these are and the advantages/disadvantages of each.

A. B. C.

Description Description Description

Advantages Advantages Advantages



Disadvantages Disadvantages Disadvantages

Examples of (people, countries) Examples of (people, countries) Examples of (people, countries)

How well do you know the Free Market system? Can you name and describe the 6 characteristics of

the Free Market System? Be able to discuss each characteristic, using info given in class….

CHARACTERISTIC DESCRIPTION

A.



B.

C.

D.

E.

F.

• What is another name for the Free Market or Free Enterprise system (the name for our version of

the free market system)?



• The economic systems found in countries today are actually a ___________________ of economic

systems.

ADAM SMITH vs. KARL MARX – what were there economic and political beliefs/philosophies? Include

books they wrote and make bullet points for their ideas. Use the boxes below!

Adam Smith

Karl Marx

Stock Markets and the World of Investing





• Capital Gains

• ten percent

• Capital Loss

• Bull Market

• brokerage

• Bear Market

• selling short

•

Pigs

• Stocks

• Bonds

• speculate

• Securities

• dividends

• stock split

• Stock Broker

•

Mutual Funds

Why is it unwise to keep your life savings in a mattress in your home? (Discuss two

different reasons)

a. b.

Describe three good reasons besides making money (we know this already) why people

invest in the stock markets? Think of three overall categories that we discussed. Give

examples…

A. B. C.

Corporations issue stock to RAISE money, but money for what – do you

remember all of the reasons? EXPLAIN

A. B. C. D.



A reporter on the Evening News says, “Today the DOW hit record lows, tumbling 400

points.”

What is the DOW?

What is the Federal government’s role in the stock market? What does it do or not do?

*

*

Identify the 3 largest stock exchanges in our country:

A. B. C.

INVESTMENTS – WHAT ROUTE WILL YOU TAKE IN LIFE? Below you will explain the variousinvestment choices people have to choose from in life. You will want to be detailed in your

preparation. I will give you many bullet points to fill in to help you have an idea of how much

information should be included.

STOCKS BONDS MUTUAL FUNDS

What is it? What is it? What is it?



Types of Types of Types of





ROR – Rate of Return

(annually)?


(annually)?


(annually)?

Reading and Understanding a stock quote! (You will need to identify the parts of a stock quote:

Current selling price, how many shares traded, 52 week Hi and Low, how large the company is, if

the company pays a dividend, and if it is up or down in price for the day.

Using the example stock quote above, please answer these practice questions:

• What was the last price of Halliburton at the time this quote was made?

• Was it up or down for the day? How much?

• What was the lowest trading price for this stock this year?

• How many shares had traded when this quote was made?

• Does Halliburton pay a divided (share of profits)? If so, how much?

• Is Halliburton a Small Cap, Mid-Cap, or Large Cap company? How do you know?

HOW TO CHOOSE A COMPANY TO INVEST IN – Identify some of the important stock choosing strategies

we learned in class:



SUPPLY AND DEMAND



• Elastic Demand

• Inelastic Demand

• Profit Motive

• Variable costs

• Fixed costs

• definition of Supply

• definition of the Law of Supply

• definition of Demand

• definition of the Law of Demand

• Production Costs

The Level of Supply for a Good or Service can be changed! In other words, the amount of a good or

service that a producer supplies can change. Describe THREE ways it may change:

A. B. C.



The Level of Demand for a Good Service can change! In other words the amount of a good or service

that consumers may demand can change. Describe FOUR ways it may change:

Producers:

• Are motivated by?

• Like to keep Production Costs _____________.

WRITE - With your knowledge of supply and demand – explain how stock prices go up and down.

WRITE -Do you understand the main idea in the article Calling All Babysitters? Explain it then…

Definition of Supply Definition of Demand



Definition of the Law of Supply Definition of the Law of Demand

Taxes and the Role of Government in the Economy

You will need to be familiar with these terms:

• Luxury Tax

• Wealth Tax

• Property Tax

• Direct Tax

• Income Tax

• Indirect Tax

• Sales Tax

• Regressive Tax

• Excise Tax

• Progressive Tax

• Consumption Tax

• Gross Domestic Product

DO THE TIC TAC TAXES GAME – IT WILL HELP YOU WITH THE TAX SECTION ON THE EXAM!!

What is the difference between the public and private sectors?

The Public Sector The Private Sector



Where does each level get the majority of their tax revenue from?

Federal State Local

Social Security Program

What is it? Why was it made?

The Role of Government in the economy.

What four major roles does the government have in our economy? EXPLAIN and Give Examples

A.

B.

C.

D.



EXAMPLES of WORKPLACE SAFETY ISSUES – The Triangle Fire and Child Labor

Triangle Factory Fire Child Labor

What was it? What happened? What was it? What happened?

What was the result? What was the result?

Money and BankingThe Characteristics of Money – Explain and give examples

A. B. C. D.

What are the three types of money? Explain and give examples



BANKS OFFER CUSTOMERS DIFFERENT WAYS/OPTIONS TO SAVE MONEY. Do you know these?

Traditional Savings Account Money Markets Certificates of Deposit

How does it work? How does it work? How does it work?

KIVA!

Why is access to affordable loans

important?

What is micro financing? What was the point of the KIVA

Project?

How are Foreign Exchange Rates determined? EXPLAIN

A. B. C.

The Nation’s money supply consists of what three parts?



A. B. C.

WRITE – What is inflation? How does it happen? Use the bullet points below to explain the process of

how inflation happens…

*

*

*

*

*

*

The FED

What is the FED? Who is the head of the FED? What is the FED’s essential

mission?

The THREE responsibilities of the FED to carry out its mission!

A. B. C.



TRUE or FALSE = The FED prints money to help banks in our country.

What are the three Financial Institutions of this country?

A. B. C.

DEBIT vs. CREDIT CARDS – Compare and Contrast the two – advantages and disadvantages, too.

DEBIT CARDS CREDIT CARDS

What is it? What is it?

Advantage Advantages

Any Disadvantages? Any Disadvantages?

Buy Now _______________________ Buy Now _____________________

WRITE – what is a credit score?

Do you know how to calculate GAI, GMI, and NMI?

Using what you learned from our JA experience. Complete the following questions.



The Barnuckle family earns a combined annual salary of $75,000.

GMI $_______________________

Monthly Federal Income Tax $508Monthly State Income Tax $334Monthly Social Security Tax (FICA) $256Monthly Medicare Tax $176

Total Monthly Deductions $_______________________

NMI $_______________________

Entrepreneurship and Business Structures

WRITE - What is an entrepreneur? Why is entrepreneurship important to our economy?

The Basic Corporate Structure DiagramThe Corporate Structure USM Equivalent

A. A.

B. B.

C. C.

D. D.

E. E.

F. F.

Types of Legal Business Structures in our Economy

A. B. C.

Definition Definition Definition



% of all business % of all business % of all business

How easy is it to start?

Explain


Explain


Explain



exam study guide 2011-2012

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