Directions: Answer the following questions in order & as neatly as possible.
1. What are economics models? What are they used for?
2. What are “economic resources”? Briefly describe each—in particular, what is meant by (and not meant by) “capital”?
3. Sketch the (simple) circular flow diagram. Describe the different flows. Breakdown & apply the (expanded) equation of exchange (i.e. MV≡PQ≡WX) to your diagram.
4. Explain the laws of supply & demand. What is the difference between change in quantity supplied & a change in supply. Do the same on the demand-side.
5. Macro-stabilization policies: Briefly compare & contrast fiscal & monetary policy—who sets them; what are they used for; and what do the policy setters “use”?
6. Using the “expenditures approach” to national income accounting, list & briefly describe each component of GDP.
7. What are the four phases of the business cycle? What are their respective characteristics?
8. What are the three types of unemployment described in class & your text. When is the labour force at full-employment, and what is that unemployment rate known as?
9. What is meant by the term inflation? What are the two primary types, and their respective causes?