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. Dont try to squish a lot of definitions here. Scarcity Profit trade Opportunity Cost Feudalism Incentive Goods cost benefit Macroeconomics Profit motive Microeconomics Entrepreneur Traditional Economic System Free 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 A. EXPLANATION/OTHER NAME FOR, AND EXAMPLES

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. B. C. D.

A.

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. Dont forget to include good and service in your responses. A.

B. C. D.

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

B. Description

C. 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 A. DESCRIPTION

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

Terms and Concepts to Understand (you may want to make flash cards for these. Dont try to squish a lot of definitions here. 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) examples A. B. C.

why people

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

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 governments 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 various
investment 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 What is it? What is it? BONDS MUTUAL FUNDS What is it?

Types of

Types of

Types of

Advantages

Advantages

Advantages

Disadvantages

Disadvantages

Disadvantages

ROR Rate of Return (annually)?

ROR Rate of Return (annually)?

ROR Rate of Return (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? How do you know? Is Halliburton a Small Cap, Mid-Cap, or Large Cap company?

HOW TO CHOOSE A COMPANY TO INVEST IN Identify some of the important stock choosing strategies we learned in class:

SUPPLY AND DEMAND

Terms and Concepts to Understand (you may want to make flash cards for these. Dont try to squish a lot of definitions here. 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 What was it? What happened? Child Labor What was it? What happened?

What was the result?

What was the result?

Money and Banking

The 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 How does it work? Money Markets How does it work? Certificates of Deposit 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 Nations 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 FEDs 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 What is it? What is it? CREDIT CARDS

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 $508 Monthly State Income Tax $334 Monthly Social Security Tax (FICA) $256 Monthly 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 Diagram The 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

How easy is it to start? Explain

How easy is it to start? Explain

Advantages

Advantages

Advantages

Disadvantages

Disadvantages

Disadvantages