CALIFORNIA STATE UNIVERSITY, SACRAMENTO
Department of Economics
Prof. A. R. Gutowsky
Economics 1A
Chapters 1 and 2
Do a quick read.
Chapter 3
Do a quick read of pages 31-42.
Chapter 4
1. Define the term: Scarcity
2. Why does scarcity require choices?
3. Why does the choice result in a cost?
(A) Define the term: opportunity cost.
4. Explain why each choice has both a benefit and a cost attached to it?
5. Define the term: efficiency.
6. What is a production possibilities schedule (PPS)?
(A) What determines the frontier of the PPS?
(B) What causes the PPS to shift to the right?
Left?
7. The slope of the PPS provides one with one kind of information?
(A) What does a movement along the PPS signify?
8. What is the principle of increasing cost?
(A) How does the principle of increasing cost
affect the PPS?
Hint:
see Figure 4-3.
9. What does a point on the PPS mean?
(A) What does a point inside the PPS mean?
(B) What does a point to the right of the PPS
mean?
10. Define the term: economic growth
(A) How can the PPS be used to illustrate
economic growth?
(B) How can the PPS be uised to illustrate a
recession?
(1) When the economy goes into a recession what will happen to the unemployment rate?
11. All economies have to perform three functions. What are these functions?
12. All economies have to answer three basic questions. What are these questions?
(A) Which questions are related to which
functions?
13. What are the "desired" outcomes of each function?
14. Answer questions 5-7 on page 65.
Chapter 5
1. What is a dependent variable? an independent variable?
(A) What is the direction of causuality between
these variables?
(B) What is the meaning of the following
equation: X = F(A,B,C)
2. What is the difference between "a movement along" and a "shift"?
3. What is a demand schedule?
(A) What are the determinants of demand? (See
pages 71-73)
(B) What determinant(s) will cause a movement
along the demand schedule?
(C) What determinant(s) will cause a shift of
the demand schedule?
4. What is a supply schedule?
(A) What are the determinants of supply? (See
pages 71-73)
(B) What determinant(s) will cause a movement
along the supply schedule?
(C) What determinant(s) will cause a shift of
the supply schedule?
5. What is an equilibrium price?
(A) Given the following information: Qd = 100 -
10P Qs = 10 + 10P
(1) What is the equilibrium price and quantity?
(2) Graph the two equations.
6. Answer questions 1-6 on pages 88-89, 15
Chapter 6
1. What is GDP?
(A) What the difference between a final good
and an intermediate good?
(B) What is meant by a "market
value?"
2. What is the difference between money and nominal GDP? Between real and money GDP?
Between GDP in current dollars and GDP in constant dollars?
3. Answer question 5 on page 111.
Chapter 7
1. What is potential GDP?
(A) What are the determinants of potential GDP?
(B) What is a production function? Output =
F(Inputs)
(1) What are the inputs?
2. What is actual GDP?
(A) What are the determinants of actual GDP?
(B) Is GDP in real or nominal terms?
3. Define the term: productivity.
(A) What is output per manhour
(B) Why is productivity important?
(C) What is the "Rule of 72?"
(D) Between 1973 - 1994, what happend to
productivty? Why?
(E) What has happened to productivity since
1995? Why?
4. What are the costs of unemployment?
(A) Know the following terms: discouraged
worker, unemployment, employment, labor force participation rate,
frictional, structural and cycilical unemployment
(B) What is full employment?
5. What are the costs of inflation?
(A) What is the difference between a money and
real wage?
(B) What is the difference between a real
versus nominal rate of interest?
6. Read and be sure to understand the material on pages 136-138.
7. Answer questions 1-5 on page 139.