PRINCIPLES OF ECONOMICS JEFF HOLT S

Principles of Economics, 6th Editio

16. Study Guide for Chapter 7 17. C

11. Appendix: Book Review - “The

20. Appendix: The NCAA Cartel 21. S

Introduction: A Brief History of U.

In the twentieth century, per capit

Appendix: The 35 Largest National E

Multiple Choice: ___ 1. The Jamesto

2. Describe the economic cost of th

Chapter 1 Scarcity and Choices The

Example 5B: At the end of 1982, the

Example 11: When Cindy quits her jo

consequences may result in failure

An upward sloping curve (as in Exam

In making decisions, humans tend to

5. ______________________ _________

___ 13. If the value of one variabl

Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7

Chapter 2 Trade and Economic System

Example 4B: The following quantitie

1. An increase in the quantity of r

3. For whom to produce? This is det

The graph below illustrates the shi

The two primary economic systems ar

___ 12. The capitalist vision sees

___ 25. According to the book “Ca

Chapter 3 Demand, Supply, and Equil

. For inferior goods, income and de

The same information can be placed

Not only does a free market elimina

$7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3

Example 17: The graph below illustr

Questions for Chapter 3 Fill-in-the

___ 12. Assuming a market originall

$8 - 7 - 6 - 5 - Price 4 - 3 - 2 -

Chapter 4 Inflation and Unemploymen

Computing the Rate of Inflation The

Full Employment Though unemployment

3. Cyclical unemployment - due to d

During the Great Depression, the ec

Appendix: Think Like an Economist -

Answer questions 8. and 9. based on

___ 25. The extension of unemployme

Chapter 5 Measuring Total Output: G

5. Leisure. Leisure time is by defi

The U.S. is a high per capita GDP c

Example 17: In “An International

The simple circular flow diagram be

___ 3. Which of the following would

2. Explain what nonproduction trans

Chapter 6 The Aggregate Market The

Example 2C: Assume the same facts a

Example 5B: The price of crude oil

Price Level Real GDP SRAS AD 2 AD 1

Appendix: Why the Aggregate Demand

___ 3. DEF Company can invest in ne

2. List and explain the two factors

Chapter 7 Classical Economic Theory

Notice that the investment demand c

Long-Run Equilibrium If Real GDP is

Example 6B: When the economy is in

Laissez-faire If the economy is sel

___ 5. According to Say’s Law: a.

3. On the graph below, draw an aggr

Chapter 8 Keynesian Economic Theory

Example 2B: The graph below illustr

Example 5: Assume that the table be

Notice on the graph on the previous

According to Keynesian theory, a ch

“The General Theory” also inclu

___ 8. If the consumption function

3. If the MPC is .667, and investme

Chapter 9 Fiscal Policy The basic e

Keynesian Fiscal Policy Theory and

Example 5A: The federal government

The Laffer Curve What will happen t

Appendix: The Importance of Incenti

___ 4. A decrease in government exp

2. Explain what automatic stabilize

Chapter 10 Money, Money Creation, a

Example 4B: The castaways on Gillig

Looking at the balance sheet below,

Demand-side One-shot Inflation Exam

4. Inflation increases uncertainty

life; it came into existence not by

calculated by using the potential d

___ 12. If the required-reserve rat

4. Referring to the balance sheet f

Chapter 11 The Federal Reserve Syst

5. After Bank X sells the $300,000

Low Mortgage Interest Rates Mortgag

Relaxed Standards for Mortgage Loan

The Bursting of the Housing Bubble

On February 17, 2009, the federal g

Fed policies caused short-term inte

___ 10. The Fed’s most important

___ 25. In response to the recessio

Chapter 12 Monetary Policy The basi

2. A change in aggregate demand (AD

Monetarist Transmission Mechanism C

3. Borrowers do not have to seek ou

Appendix: Book Review - “The Age

Questions for Chapter 12 Fill-in-th

___ 16. The primary source of incom

7. According to Alan Greenspan, wha

than contributing to team productio

1. Difficulty in raising large amou

Corporations also use self-financin

Example 24: A blacksmith who produc

For financing needs, proprietorship

___ 13. Corporations: a. are comple

5. List two things that the absence

Chapter 20 Production and Costs The

In Example 5B, Birdwell finds that

variable cost initially decreases,

Quantity TC MC AFC AVC ATC 0 240 X

If the scale of operation is increa

average total cost. Average fixed c

___ 11. Concerning the cost curves:

5. Complete the following cost tabl

Chapter 21 Perfect Competition The

Even though a perfect competitor ca

Example 6C: This example builds on

At what price will there be neither

Appendix: Perfect Competition in th

Multiple Choice: ___ 1. A perfect c

___ 17. Perfect competition: a. req

Answers for Chapter 21 Fill-in-the-

Chapter 22 Monopoly Of the four mar

3. Exclusive ownership of an essent

maximizing quantity (4 units) creat

$22 - 20 - 18 - 16 - 14 - Deadweigh

2. Negotiating, beginning at a high

Legal barriers are created by gover

___ 8. The slope of the demand curv

Price Quantity 3. List some of the

Chapter 23 Monopolistic Competition

For Percomp (the perfect competitor

Example 7A: The graph below represe

Example 9: The Organization of the

Example 12 illustrates the dilemma

its current price and quantity. The

___ 14. Game theory: a. is a method

Answers for Chapter 23 Fill-in-the-

Chapter 24 Factor Markets The basic

$ $240 - 200 - 160 - 120 - 80 - 40

Since producers will attempt to equ

2. Differences in nonmoney aspects

were his strikeouts, walks, and hom

___ 3. To maximize profits, a produ

___ 19. According to the book, “M

Multiple Choice: 1. a. 8. c. 15. d.

Chapter 25 Labor Unions The primary

The elasticity of demand for union

Example 4A: Assume that the graph b

Notice from the graph in Example 6

Wage Factory A Quantity of Labor S

As a cartel, a labor union faces a

___ 10. For a monopsony: a. there i

3. The graph below represents a lab

Chapter 26 Interest, Present Value,

An increase in expected rates of re

An asset is valuable because we exp

Example 13B: General Ordnance prove

Appendix: Present Value Table One f

___ 4. An increase in expected rate

Problems: 1. List and explain the t

Chapter 27 Market Failure The basic

External Benefit If a market genera

Example 2: To encourage the consump

$100 - 90 - 80 - MSC 70 - $ 60 - 50

A common good is nonexcludable. Non

Study Guide for Chapter 27 Chapter

___ 5. What government policy would

4. Based on the information on the

Chapter 28 Public Choice and Govern

Candidates and the Median Voter Mod

Example 8: According to State and F

Example 10: When Elvis Presley was

4. Pessimistic bias. This is the te

___ 5. An elected official will: a.

2. If a certain policy will yield s

Chapter 29 Government Regulation of

underproduction is the amount that

micromanagement results in business

market. They may agree with their c

Questions for Chapter 29 Fill-in-th

___ 10. The public interest theory

4. List the four types of costs imp

Chapter 30 Agriculture and Health C

weather may cause bumper crops. Bad

Security and Rural Investment Act o

Example 12: From 1960 to 2013, the

1. NHI would provide universal heal

d. Insurance providers are not allo

Study Guide for Chapter 30 Chapter

Answer questions 7. through 10. by

___ 21. If there were no individual

Chapter 31 Income Distribution and

Income is more equally distributed

over a typical career is the accumu

Ideal Income Redistribution The ide

Poverty - a family whose income fal

Appendix: Income Inequality around

How is this story an analogy for th

___ 2. In 2013, the Lowest Income 6

Problems: 1. Explain the two primar

Absolute advantage - when one natio

Fiat money - money by government de

Nonrivalrous good - a good for whic

Absolute advantage, 16-9 Absolute e

“Company town”, 25-6 Comparativ

Eli Lilly and Company, 22-1 Emergen

Houston, Texas, 15-10 Human capital

Market, 3-1, 3-8-9 Market basket, 4

Political bias, 9-4, 12-7 Political

Short run production, 20-2-3 Short-

Upturns, 9-4 USDA, 27-9, 30-1-2, 30