Date of test/due date for study guide:

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1 Economics Fall 2018 Unit 3A Macro Study Guide Name: Date of test/due date for study guide: Old topics that will be on this test: 1. Factors of Production: Explain and give examples of the 4 factors of production or productive resources. a. b. c. d. 2. Explain human capital. PPF: 3. Explain the purpose of a production possibilities curve what does it show? 4. Explain each of the labeled points on the production possibilities curve above. a. b. c. d. 5. Opportunity Cost: Define and give an example of opportunity cost. 6. Circular Flow Diagram: Draw and label the circular flow diagram. Include: product market, resource/factor market, and government.

2 New MACROECONOMIC topics that WILL BE on this test: Gross Domestic Product 7. GDP measures a nation s economic activity and growth. What is the exact definition of GDP? 8. What is the formula for Gross Domestic Product (GDP) and what does each part of the formula stand for? 9. What is the GDP for the following country? i. Local Government spending: $5 million ii. National Government spending: $30 million iii. Intermediate goods: $100 million iv. Consumer spending: $400 million v. Used goods: $5 million vi. Business improvements: $150 million vii. Net exports: $75 million viii. Black market goods: $20 million 10. What are net exports? 11. What is NOT part of GDP (not counted)? 12. Name an example of an intermediate vs. a final good. 13. What does Real GDP mean? 14. How do you calculate GDP per capita? 15. Compare the GDP per capita for the following countries. Country Real GDP 2011 Population 2011 Bangladesh 1,030,000, ,000,000 Turkey 960,000,000 80,000 a. Which has the highest GDP per capita? b. Which has the lowest GDP per capita? 16. GDP per capita is one way to measure a country s of.

3 Business Cycle 17. Draw and label the 4 stages of the business cycle: peak, contraction, expansion/recovery, trough 18. What stage has: (write the stage by the examples below) a. Rising GDP b. Employment at an all-time low. c. End of the expansion phase. d. Increasing inflation e. Consumer spending decreases by 75%. f. Unemployment is at an all-time high. g. Recession. h. Increasing Unemployment Rates. i. Lowest Production of Products. 19. What is the long-term trend of the Business Cycle (at least in the US)? 20. What is a recession and in what phase of the business cycle would it occur? 21. How is a depression different from a recession? AS & AD 22. Define Aggregate supply: 23. Define aggregate demand: 24. Which way did the average price level move in the graph below - up or down? Is that deflation or inflation?

4 Inflation 25. Provide a definition for each term: Term Definition (from your notes): Inflation Deflation Purchasing Power Hyperinflation Stagflation 26. What is the CPI and how is it used? 27. What are the steps for calculating CPI? Unemployment 28. Match the term with the correct answer, then write in a definition in the right column: Type of unemployment Examples Definition Cyclical Frictional Seasonal Structural a. You have been laid off due to declining sales. b. Your job has been outsourced to another country. c. Your job has been replaced by a machine that can do it faster and cheaper. d. You are holding out to get a job that matches your college degree. e. You are a construction worker out of work because few new homes are being built right now.

5 f. You are moving to another city and so you quit your job. g. Your job is only around a holiday and the holiday is over. h. Your job is only in the summer and it s winter. 29. What is the formula for calculating unemployment? 30. What is the definition of unemployed for purposes of calculating the unemployment rate? 31. Who is in the civilian labor force? 32. Name two reasons someone would NOT be counted in the labor force. 33. What is the unemployment rate for the following town? (warning: it is NOT 7.5%) Laid off due to recession: 5 people Laid off due to factory moving to China: 10 Employed part time: 50 Employed full time: 150 Full-time students: 25 Discouraged unemployed: 10