• Circular Flow Diagram
• GDP: what is it? What does it measure?
o What is the largest dollar amount?
o What is an intermediate good?
o What is a final good?
o What is nominal GDP?
o How do you go from nominal GDP to real GDP? (nominal GDP/price index) x 100 = real GDP **be able to do this!!
o Would certain things, like waste or pollution, decrease GDP?
o Be able to look at the GDP for one year and then a second year and see if there was an increase, decrease or if it stayed the same based on % change
o Who is considered unemployed?
o What is structural unemployment? Think of examples!
o What is frictional unemployment? Think of examples!
o What is the natural rate of unemployment? Is it always at the number set by our government?
• Price Index
o What is the GDP Deflator? How do you calculate it? It’s the same thing as consumer price index!
o The CPI tends to overstate true changes in the cost of living – why?
• Inflation: what is it?
o Anticipated inflation: what are the three economic costs involved? Who can be hurt by this?
Boot-leather costs: what the heck is that?
o Unanticipated inflation: what are the economic costs? Who can be hurt by this? Think about lenders and people who get loans.
• What is opportunity cost?
o What do we have to do to get more of one thing (like a high school)?
o Be able to calculate opportunity cost
o Absolute advantage vs. comparative advantage
• What are the two basic economic problems? Opportunity cost and production possibilities!
• What are the two problems that all economic systems face?
• Production Possibilities Frontier:
o What does a curve look like that is showing increasing opportunity cost?
o What would cause a curve to shift to the left?
o Be able to look at a curve and see how the country should move one way or another to produce more of one of the goods
o How can you reach a point that is not currently represented on the curve?
• Elasticity: what does it...