(Upward-Sloping) Supply Curve
Absolute (Money) Price
Capital Consumption Allowance (Depreciation)
Consumer Price Index (CPI)
Consumers' Surplus (CS)
Cyclical Unemployment Rate
Dow Jones Industrial Average (DJIA)
Equilibrium Price (Market-Clearing Price)
Face Value (Par Value)
Government Transfer Payments
Gross Domestic Product (GDP)
Initial Public Offering (IPO)
Labor Force Participation Rate (LFPR)
Law of Demand
Law of Diminishing Marginal Utility
Law of Increasing Opportunity Costs
Law of Supply
Net Domestic Product (NDP)
Producers' (Sellers') Surplus (PS)
Production Possibilities Frontier (PPF)
Shortage (Excess Demand)
Surplus (Excess Supply)
Total Surplus (TS)
Who is considered the father of modern economics and the inventor of the term “invisible hand”? Name his most famous book, published in 1776. What does “invisible hand” mean?
b. Did economists in England in the 1800’s get to watch any major economic developments occur? List at least three.
c. One famous economist served as a delegate to the Versailles Peace Conference that ended WWI. He disagreed with the settlement terms imposed by his government and wrote a book that predicted WWII. Name him and the book.
d. Who was inspired by books like Friedrich Hayek’s like The Road to Serfdom and The Pretense of Knowledge?
e. What duo co-wrote a ground-breaking book on monetary policy? State the authors and the name of the book.
f. Describe Lucas’ view of Rational Expectations; what did his first wife expect after their divorce?
2) Draw a graph that depicts the balance between the marginal benefits of flossing your teeth in terms of the number of flossings per week and the marginal costs of flossing your teeth in terms of the expenditure of time. Label the efficient point and the areas on your graph where marginal cost and marginal benefits are unbalanced. In 100 words or less, explain how opportunity cost is related to your graph.
3) Draw and label a graph that shows the market for horses and how that market would change with a new law requiring everyone with a previous D.U.I. to travel only by horseback. Describe your result in 100 words or less, including how this is related to scarcity.
4) Draw and label a graph that shows the market for horse and how that market would change with a government imposed maximum price for horses below the market price for horses. Describe your result in 100 words or less, including how this is related to scarcity.
5) Draw and label a Production Possibilities Frontier with two items of your own choosing. Mark an intersection point (A) on the y-axis with 100 units of one good and an intersection point (B) on the x-axis with 100 units of the other good. Create and label a third point (C) roughly in the middle of the PPF. Mark a fourth point (D) that represents failure to maximize production.
6) Review the Law of Demand and the Law of Supply and the function of Prices. For the law of supply and the law of demand write the law, draw the standard associated graph and state why the line or curve its shape. For prices, state the two functions of price.
7) For A to E below, please refer to the following chart.
A) List, approximately, the highest and lowest Real GDP in the United States during this period.
B) List, approximately, the highest and lowest unemployment rates in the United States during this period.
C) Officially designated recessions are marked in pink on the chart. What seems to be true about unemployment and real GDP during these periods?
D) In 100 words or less, would a high inflation rate increase or decrease real GDP?
E) In 100 words or less, pick any year and explain why it would have been good or bad to be classified as a frictionally unemployed worker in that particular year, include the definition of frictional unemployment in your answer.
8) Draw and label the standard breakdown of population and labor force as a flow chart showing the various classes of the entire population necessary to accurately measure the unemployment rate. Utilize actual data for the State of Texas from the 2010 Census and from the Bureau of Labor Statistics website to fill in your exhibit. Below your exhibit show your calculations for the State of Texas’ 2010 unemployment rate, employment rate, and labor force participation rate.
9) Explain the difference between a stock and a bond. Then, provide the answers requested in A to E below:
A. State the formula for the yield on a stock
B. State the formula for the price – earnings ratio of a stock
C. Define the term face value or par value
D. Define the terms annual coupon payment and coupon rate
State the formula for yield or interest rate on a bond