This document is a study guide for an economics final exam covering four units: the fundamental economic problem, factors of production and economic systems; microeconomics concepts including demand, supply, and market structures; government finances including taxes and expenditures; and macroeconomics topics such as GDP, business cycles, unemployment, and monetary policy. It provides definitions, concepts and terms to review for the exam across these units in economics.

1. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
Unit 1 (Chapters 1-3)
 The fundamental economic problem facing all societies is _________________
 Identify the four factors of production, briefly explain each one, and provide two examples each
1.
2.
3.
4.
 Define trade-offs and opportunity cost
1.
2.
 Identify what a production possibilities frontier/curve is: sketch an example using guns and
butter and identify where on the frontier fully employed resources are being utilized
 Who determines the products that a free enterprise economy produces?
 What type of economic system best describes the United States?

2. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
 Identify the three types of economic systems: what are the functions, purposes, and examples?
1.
2.
3.
 Identify the three types of business organizations: outline the advantages and disadvantages
Advantages Disadvantages
1.
2.
3.

3. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
Unit 2 (Chapters 4-7)
 What does the study of microeconomics follow? What groups?
 In demand, price and quantity have an ________________ relationship
 Draw a basic demand curve: label price, quantity, and demand
 Define supplementary and complementary goods: provide an example for each
1.
2.
 Demand shifts: indicate if the curve shifts left or right
__________ Income increases __________ Income decreases
__________ Price of substitute increases __________ Price of substitute decreases
__________ Price of complement increases __________ Price of complement decreases
__________ Positive taste/fashion __________ Negative taste/fashion
__________ Positive expectations __________ Negative expectations
 The relationship between P and Q supplied states that Q goes ________ when P goes up
 Draw a basic supply curve: label price, quantity, and supply
 Supply shifts: indicate if the curve shifts left or right
__________ Cost of inputs increases __________ Cost of inputs decreases
__________ Productivity increases __________ Productivity decreases
__________ New technology __________ Granted a subsidy
__________ Higher taxes/govt. intervention __________ Lower taxes/govt. intervention
__________ Positive expectations __________ Negative expectations

4. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
 Combine the relationship between demand and supply with a graph and clearly indicate where
you would find the following: equilibrium, shortage, and surplus
 Define Laissez-faire economics and identify the basic philosophy in Adam Smith’s writings
about the role of government in the marketplace
 Does competition force businesses to keep prices low or high?
 Identify the four types of market structures and fill out the corresponding information on them:
# of firms, influence over price, product differentiation, advertising, entry into market, examples)
1. 2.
# of firms: # of firms:
Influence over price: Influence over price:
Product differentiation: Product differentiation:
Advertising Advertising:
Entry into market: Entry into market:
Two examples: Two examples:
3. 4.
# of firms: # of firms:
Influence over price: Influence over price:
Product differentiation: Product differentiation:
Advertising Advertising:
Entry into market: Entry into market:
Two examples: Two examples:

5. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
Unit 3 (Chapters 8-12)
 Where do most of the government revenues come from?
 What are the two leading sources of revenue for the federal government?
1.
2.
 What are the two major categories included in the FICA tax?
 Briefly define these other minor forms of tax and provide an example of each:
1. Excise tax
2. Estate tax
3. Gift tax
4. Customs duty
 Go to the paycheck withholding statement figure 9.9 on page 241:
1. How much was deducted for Social Security and Medicare?
2. How much was deducted from the paycheck in total?
 List the four largest (by %) expenditure categories for each of the following:
1. Federal
2. State
3. Local

6. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
 Define the role of the FDIC in banking and how much do they insure up to
 Identify and explain the four basic considerations to make before investing:
1.
2.
3.
4.
 What are the three major components of bonds?
 Identify your options to save for your retirement:
 Investing your savings in different kinds of accounts is a good idea and called
 Go to the NYSE stock figure on page 330:
1. Which stock had the highest price in the given 52 week period?
2. Which stock increased the most in the 52 weeks? (% change)
 Explain the key difference between bull and bear markets (stock market)

7. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
Unit 4 (Chapters 13-15)
 Identify the four categories for goods and transactions that are excluded from the GDP
1.
2.
3.
4.
 Sketch business cycle, labeling the following: expansion, recession, trend line, trough and peak
 An example of a severe recession is a _____________________, and the primary example we
use in the United States was
 What was the primary cause of the Great Depression? (Black Tuesday)
 As a result of inflation, the value of the dollar and our purchasing power as consumers goes
 Do low interest rates encourage more or less borrowing from the private sector?

8. Name: ____________________________ Class: _________________ Date: ____________
Economics Economics Final Exam Study Guide LTHS Mr. Cress
 Identify briefly explain the five different forms of unemployment:
1.
2.
3.
4.
5.
 Outline the basic structure (membership of) the Fed
 Distinguish the difference between easy money policy and tight money policy. What does each
lead to?
 What happens when the Fed lowers the reserve requirement? And when it raises it?