Macroeconomics – 2. The Aggregate Supply-Aggregate Demand Model and the Classical-Keynesian Debate

  1. The Classical versus Keynesian controversy is primarily a dispute over what?
  2. State Say’s Law.
  3. What was Thomas Malthus’ critique of Say’s Law?
  4. Use the circular flow diagram to illustrate Say’s Law.
  5. Describe the quantity theory of money.
  6. Explain the two major assumptions of the quantity theory of money.
  7. Describe the Keynesian income adjustment mechanism.
  8. Illustrate equilibrium in the aggregate supply-aggregate demand model.
  9. Explain the three reasons why the .aggregate demand curve slopes downward.
  10. List at least five major reasons why the aggregate demand curve shifts.
  11. Why does the aggregate supply curve slope upward?
  12. List at least five reasons why the aggregate supply curve shifts.
  13. Draw and explain the three ranges of the economy.
  14. Draw and describe the Classical price adjustment mechanism.

Microeconomics – Lecture 4. Supply and Production Theory

  1. Illustrate the production function algebraically and explain its components.
  2. What does the production function specify?
  3. Define the short run. Define the long run.
  4. What is the difference between fixed versus variable costs? Provide several examples of each.
  5. Explain the difference between the short and long run.
  6. Define marginal cost.
  7. Explain the law of diminishing returns.
  8. Define marginal product.
  9. Define and illustrate average fixed cost, variable cost and total cost.
  10. The long run average cost curve is the envelope of what? Illustrate this.
  11. Explain the difference between economies of scale, diseconomies of scale and constant returns to scale. Illustrate each with the appropriate cost curve.
  12. Economies of scale may be traced to what factors?
  13. An industry characterized by increasing returns to scale is called what?
  14. Define minimum efficient scale.
  15. Define both the law of supply and the price elasticity of supply.
  16. What is the difference between economic versus accounting profits? Explain why this difference is important.

Microeconomics – 2. Supply, Demand and Equilibrium

  1. Why does quantity demanded tend to fall as price rises?
  2. Suppose the average income of consumers rises. What happens to the demand curve?
  3. Suppose you are analyzing the market for beef and the price of chicken rises. What do you think will happen to the beef demand curve?
  4. Explain the difference between a change in demand versus a change in the quantity demanded.
  5. The market demand curve is the horizontal sum of what?
  6. Explain the Law of Supply.
  7. Name three shift factors influencing the supply curve.
  8. Suppose your company comes up with a new cost-saving, computerized process for making corn flakes. What do you think will happen to the supply curve?
  9. Suppose the price of labor or raw materials increases for corn flakes manufacturers. What happens to the supply curve?
  10. Illustrate a shortage, a surplus, and equilibrium using supply and demand curves.
  11. Illustrate a price floor for milk.
  12. Illustrate a price ceiling for wheat.
  13. Explain how the market mechanism answers these three questions: What goods are produced? For whom are goods produced? How are goods produced?
  14. Provide several examples of how the supply and demand framework can help you save or make money in your professional or personal life.