Economics
What the test asks
Economics items cover scarcity and opportunity cost, supply and demand, market structures, the role of government, money and banking, and macroeconomic indicators (GDP, inflation, unemployment) plus fiscal and monetary policy.
Concepts to master
Understand that scarcity forces choices with opportunity costs. Be fluent with supply and demand: movements along a curve versus shifts, and how equilibrium price and quantity change. Know market structures (perfect competition, monopoly, oligopoly) and the rationale for government intervention (public goods, externalities, market power). For macro, know GDP as output, inflation as sustained price-level rise, the unemployment types (frictional, structural, cyclical), and how fiscal policy (government spending/taxes) and monetary policy (central bank interest rates) aim to stabilize the economy.
Traps
The biggest trap is confusing a shift of a curve with a movement along it-a price change moves along the curve; a non-price determinant (income, technology, input costs) shifts it. Another trap mixes fiscal (government) with monetary (central bank) policy, or treats inflation as always bad for everyone.
Rule of thumb
When a scenario changes, ask: does this change price or a non-price determinant? Price → movement; non-price → shift.
Worked example
"Consumer incomes rise and coffee is a normal good. What happens?" Demand shifts right, raising equilibrium price and quantity-this is a shift, not a movement along the demand curve.