Name______Period______Date______
Mid-Term Review – Part 2:
Use the production possibilities curve below to answer the following questions:
1. What is the opportunity cost of making the decision to move from point A to B?
2. What is the opportunity cost of making the decision to move from point C to A?
3. What point represents an inefficient use of resources?
4. What point is only attainable in the long-run?
5. List three factors that shift the demand curve:
6. List three factors that shift the supply curve:
7. If there is a shortage, what is greater (supply or demand) and what will happen to price (increase or decrease)?
8. Use the graph below to SHOW what would happen to price and quantity if government increases the tax on cigarettes:
9. On the graph below, draw a price floor and SHOW the surplus or shortage that is created. Also, indicate what will happen to price:
10. Define Gross Domestic Product:
The table below shows the total output for ReynaPiedraLand from 2010 to 2012. Use it to answer the following questions (Yes I realize popsicles and Takis are expensive in ReynaPiedraLand. Deal with it!):
Year / Price of Popsicles / Quantity of Popsicles / Price of Takis / Quantity of Takis2010 / $7 / 200 / $10 / 300
2011 / $8 / 220 / $11 / 400
2012 / $9 / 250 / $12 / 420
11. Calculate the nominal GDP for each of the three years:
12. Calculate the real GDP for each of the three years:
Use the money multiplier to calculate the increase in the money supply that will occur under the scenarios in question 13 - 15:
13. The Fed buys $20 billion worth of bonds and the reserve ratio (requirement) is 10%:
14. Amanda deposits $1000 in the bank and the reserve ratio (requirement) is 20%:
15. If the Fed buys $15 billion worth of bonds and the money supply increases by $300 billion, what was the reserve ratio (requirement)?
16. What is the only market structure where firms have no control over price (price takers)?
17. What market structure has the most control over price?
18. What market structure is dominated by a FEW large firms that control the entire industry?
19. List 3 things that would not be included in GDP:
20. What does the CPI measure?
21. What happens in the Circular Flow Diagram?
22. Which economist wrote about self-interest and the invisible hand?
23. What are some characteristics of a Command Economy?
24. What are some characteristic of a Mixed Market Economy?
25 Who is the Chairman of The Federal Reserve Bank?