Study for Quiz 2

Key Questions:

  1. What is scarcity? Why does it exist? How is it relevant to economics?
  2. In economic terms, what are resources? Why are they important? What are the 3-4 broad categories of resources?
  3. What are the fundamental questions that an economic system must answer?
  4. How does real GDP differ from nominal GDP (conceptually)?
  5. How are the following different (in theory): capitalism, socialism, communism, Keynesianism?
  6. How does a free-market system differ from a centrally-planned system?
  7. What types of countries were originally classified into the categories of First-world, second-world, and third world? Why?
  8. How has the first-world, second-world, third-world classification system changed? What term & type of country has replaced the “second-world” classification? What does “third-world” now mean?
  9. How has the growth of incomes/wealth in Western Europe compared to growth in China throughout history?
  10. What characterized the period of 1950-1973 (rates of growth, location of fast-growing countries, types of economic policies pursued in first world in that era)?
  11. What characterized the period of late 1970’s to present (which parts of the world grew fast? which didn’t? types of economic policies pursued in the first world)?
  12. What views, theories, or policies were proposed and promoted by the following economists:
  • Adam Smith
  • John Maynard Keynes
  • Karl Marx
  • Nicolai Lenin
  • Friedrich Hayek
  • Milton Friedman

Important terms:

  • resources
  • public goods
  • scarcity
  • GDP
  • real vs. nominal
  • capital vs. consumer goods
  • GDP per capita
  • socialism
  • capitalism
  • communism
  • Keynesianism
  • feudalism and traditional economies
  • mercantilism
  • economic “golden age” in world growth
  • institutions
  • stagflation

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