ECON 200 EXAM REVIEW QUESTIONS
WITH ACCURATE SOLUTIONS 2026
▶ MV=PQ meaning. Answer: M- supply of money in the economy
V- velocity of money. Number of times a year that the average dollar is
spent on final goods and service
P- the overall price level in the economy, reflecting the average price at
which all output is sold
Q- the quantity of all goods and services produces; also known as real
output
▶ What if There is Too Little Money in the Economy?. Answer: If there is
too little money in the economy relative to the supply of goods and services
this can lead to deflation/falling prices, declining GDP, and unemployment.
▶ Deflation. Answer: -A decrease in the general level of prices; a period in
which the purchasing power of the dollar rises.
The Great Depression
▶ Socioeconomic Goals (5). Answer: 1) Environmental Protection
Preserving resources and the environment.
2) Financial Security
Examples are welfare, subsidies, tax breaks, low interest loans.
3) Economic Equity
People are given fair chances in the market.
4) Economic Justice
People have laws that protect them in the market.
5) Economic Freedom
People are allowed to have choices and preferences in the market.
▶ Other unemployment facts. Answer: Discouraged workers: Leave labor
force because they do not feel confident in the job market for suitable jobs.
Underemployment: Being employed but in a job below your human
capital/skill level.
,Part -time employment is considered employed.
▶ Traditional Economies or Economies in Transition. Answer: Things are
done because it's the way it has always been done.
Economics based on cultural, social, or religious norms or Economic
systems on the verge of change.
Economic thinking that transitions between various philosophies.
▶ creative destruction. Answer: out with the old and in with the new
▶ How are the economic questions answered in traditional economies?.
Answer: The way its always been done
The same things are being produced the same way for the same people.
▶ Supply/Demand. Answer: Supply- What is available.
Demand- What people want.
▶ What drives the economy?. Answer: Individuals, competition, and self
interest
▶ Voluntary exchange. Answer: No control. People should have a choice
in which they determine.
▶ Choice. Answer: A good thing to have. Why? Increased utility.
▶ Free trade. Answer: Open to buy and sell. Trade=Wealth.
▶ Risk and entrepreneurship. Answer: There is risk. It is good because of
innovation but bad because of high stakes.
▶ Capitalism. Answer: An economic system in which the means of
production and distribution are privately or corporately owned and
development is proportionate to the accumulation and reinvestment of
profits gained in a free market.
▶ Free market. Answer: People are free and have economic freedom.
They can buy, sell, and trade openly with minimal governmental restriction.
, ▶ Who is Adam Smith?. Answer: market economy
Main prophet of Laissez-Faire Economics.
Free Market would help everyone.
Self interest would serve society.
Supported by the rise of the industrial age.
The "Invisible Hand" will guide the economy.
-Socialist
▶ Market economies. Answer: Individuals and companies have private
property rights.
Individuals and companies have the right to freely trade or sell property to
others.
The Lorax- the oncler
▶ What goals are achieved with command or centrally directed
economies?. Answer: Full Employment, Price Stability, Financial Security,
Economic Equity
▶ Who is Karl Marx?. Answer: command economy
Father of Communism
Wrote Communist Manifesto
Believed history was about class struggle between the haves (bourgeois)
and have-nots (proletariat).
Urged workers of the world to unite to overthrow oppression by the
bourgeois and then set up a classless society.
Basis for various revolutions (Russia, Asia, Africa, and Latin America).
-Socialist
▶ Who is Robert Owen?. Answer: command
Utopian, from Thomas More's ideal society, Owen set up a model
community to put his theory into place.
Limited child labor and promoted worker's unions.
Believed that employers could set up decent living and working conditions
and still be profitable.
-Socialist
▶ Centrally Directed or Command Economies. Answer: -Utopian socialist
emerged and wanted communities where work and resources as well as
profits were shared within and evenly distributed amongst the
WITH ACCURATE SOLUTIONS 2026
▶ MV=PQ meaning. Answer: M- supply of money in the economy
V- velocity of money. Number of times a year that the average dollar is
spent on final goods and service
P- the overall price level in the economy, reflecting the average price at
which all output is sold
Q- the quantity of all goods and services produces; also known as real
output
▶ What if There is Too Little Money in the Economy?. Answer: If there is
too little money in the economy relative to the supply of goods and services
this can lead to deflation/falling prices, declining GDP, and unemployment.
▶ Deflation. Answer: -A decrease in the general level of prices; a period in
which the purchasing power of the dollar rises.
The Great Depression
▶ Socioeconomic Goals (5). Answer: 1) Environmental Protection
Preserving resources and the environment.
2) Financial Security
Examples are welfare, subsidies, tax breaks, low interest loans.
3) Economic Equity
People are given fair chances in the market.
4) Economic Justice
People have laws that protect them in the market.
5) Economic Freedom
People are allowed to have choices and preferences in the market.
▶ Other unemployment facts. Answer: Discouraged workers: Leave labor
force because they do not feel confident in the job market for suitable jobs.
Underemployment: Being employed but in a job below your human
capital/skill level.
,Part -time employment is considered employed.
▶ Traditional Economies or Economies in Transition. Answer: Things are
done because it's the way it has always been done.
Economics based on cultural, social, or religious norms or Economic
systems on the verge of change.
Economic thinking that transitions between various philosophies.
▶ creative destruction. Answer: out with the old and in with the new
▶ How are the economic questions answered in traditional economies?.
Answer: The way its always been done
The same things are being produced the same way for the same people.
▶ Supply/Demand. Answer: Supply- What is available.
Demand- What people want.
▶ What drives the economy?. Answer: Individuals, competition, and self
interest
▶ Voluntary exchange. Answer: No control. People should have a choice
in which they determine.
▶ Choice. Answer: A good thing to have. Why? Increased utility.
▶ Free trade. Answer: Open to buy and sell. Trade=Wealth.
▶ Risk and entrepreneurship. Answer: There is risk. It is good because of
innovation but bad because of high stakes.
▶ Capitalism. Answer: An economic system in which the means of
production and distribution are privately or corporately owned and
development is proportionate to the accumulation and reinvestment of
profits gained in a free market.
▶ Free market. Answer: People are free and have economic freedom.
They can buy, sell, and trade openly with minimal governmental restriction.
, ▶ Who is Adam Smith?. Answer: market economy
Main prophet of Laissez-Faire Economics.
Free Market would help everyone.
Self interest would serve society.
Supported by the rise of the industrial age.
The "Invisible Hand" will guide the economy.
-Socialist
▶ Market economies. Answer: Individuals and companies have private
property rights.
Individuals and companies have the right to freely trade or sell property to
others.
The Lorax- the oncler
▶ What goals are achieved with command or centrally directed
economies?. Answer: Full Employment, Price Stability, Financial Security,
Economic Equity
▶ Who is Karl Marx?. Answer: command economy
Father of Communism
Wrote Communist Manifesto
Believed history was about class struggle between the haves (bourgeois)
and have-nots (proletariat).
Urged workers of the world to unite to overthrow oppression by the
bourgeois and then set up a classless society.
Basis for various revolutions (Russia, Asia, Africa, and Latin America).
-Socialist
▶ Who is Robert Owen?. Answer: command
Utopian, from Thomas More's ideal society, Owen set up a model
community to put his theory into place.
Limited child labor and promoted worker's unions.
Believed that employers could set up decent living and working conditions
and still be profitable.
-Socialist
▶ Centrally Directed or Command Economies. Answer: -Utopian socialist
emerged and wanted communities where work and resources as well as
profits were shared within and evenly distributed amongst the
