### Economics Reviewer

#### Introduction to Economics

Economics is the study of how individuals, businesses, and governments make choices on allocating
resources to satisfy their needs and wants. It involves analyzing the production, distribution, and
consumption of goods and services.

#### Key Concepts

1. **Scarcity and Choice**: Resources are limited, so choices must be made about how they are used.

2. **Opportunity Cost**: The cost of forgoing the next best alternative when making a decision.

3. **Supply and Demand**: The relationship between the availability of a product (supply) and the
desire for that product (demand), which determines its price.

4. **Market Equilibrium**: The point where supply equals demand for a product.

#### Microeconomics

- **Consumer Behavior**: Understanding how individuals make choices based on their preferences and
budget constraints.

- **Utility**: A measure of satisfaction or pleasure derived from consuming goods and services.

- **Production and Costs**: Examines how goods and services are produced and the costs involved.

- **Market Structures**:

- **Perfect Competition**: Many firms, identical products, easy market entry.

- **Monopoly**: One firm controls the market, unique product, high barriers to entry.

- **Oligopoly**: Few firms dominate the market, products may be similar or different.

- **Monopolistic Competition**: Many firms, differentiated products, some barriers to entry.

#### Macroeconomics
- **National Income Accounting**: Measurement of a country’s economic performance, including GDP,
GNP, and NNP.

- **Economic Growth**: Increase in the output of goods and services in an economy over time.

- **Unemployment**: The state of being jobless and actively seeking work.

- **Inflation**: The rate at which the general level of prices for goods and services rises.

- **Fiscal Policy**: Government spending and tax policies to influence economic conditions.

- **Monetary Policy**: Central bank actions, such as controlling interest rates and money supply, to
influence the economy.

#### International Economics

- **Trade Theories**: Explaining why countries trade, including absolute and comparative advantage.

- **Exchange Rates**: The value of one currency for the purpose of conversion to another.

- **Balance of Payments**: The record of all economic transactions between the residents of a country
and the rest of the world.

#### Economic Indicators

- **Gross Domestic Product (GDP)**: Total value of all goods and services produced in a country.

- **Consumer Price Index (CPI)**: Measures changes in the price level of a market basket of consumer
goods and services.

- **Unemployment Rate**: Percentage of the labor force that is unemployed and actively seeking
employment.

#### Economic Policies

1. **Fiscal Policy**: Use of government spending and taxation to influence the economy.

2. **Monetary Policy**: Central bank actions to regulate the money supply and interest rates.

3. **Trade Policy**: Regulations and agreements that govern international trade.

#### Major Economic Theories

1. **Classical Economics**: Focus on free markets and the belief that economies are self-regulating.

2. **Keynesian Economics**: Emphasizes total spending in the economy and its effects on output and
inflation.

3. **Monetarism**: Focus on the role of government in controlling the amount of money in circulation.

4. **Supply-Side Economics**: Advocates reducing taxes and decreasing regulation to stimulate

economic growth.

#### Review Tips

1. **Understand Key Terms**: Familiarize yourself with basic economic vocabulary.

2. **Practice Graphs and Models**: Be able to draw and interpret supply and demand curves,
production possibilities frontiers, and other models.

3. **Apply Concepts to Real-World Scenarios**: Consider how theoretical concepts apply to current
economic events.

4. **Keep Up with Current Events**: Understanding current economic trends can provide practical
insights into theoretical knowledge.

By mastering these fundamental concepts, you'll have a strong foundation in economics that will help
you analyze various economic issues and policies effectively.