EXAM QUESTIONS I and II
EXAM 1
1)Discuss the relationship between economics and evolutionary psychology.
2)Use the concept of complex adaptive systems to explain how ground traffic is organized.
3)Present an example of absolute and comparative advantage. Show how the terms of trade are determined.
4)Use a production possibilities curve to demonstrate the difference between unemployment, full employment, and economic growth. What is opportunity cost? Give an example using the PPC.
5)What is money? What does money have to do with specialization and trade? Distinquish between a gold standard and a fiat money standard. What is the primary argument in favor of the former?
6)Contrast the major "schools" of economic thought. Define paradigm shift, cognitive dissonance, and confirmation bias.
7)Use supply and demand curves to demonstrate the concepts of equilibrium price, shortage, and surplus.
8)Use supply and demand curves to contrast the "rationing effect" and the "signaling effect".
9)Use a graph to contrast changes in "quantity demanded and supplied" vs changes in "demand and supply".
10)Use a three market model to show how information is transmitted throughout the price system.
11)Name four ways to "own" property. What is the relationship between secure property rights and prosperity?
12)Discuss four ways to present models and the "Rodney Dangerfield" problem.
13)How do prices coordinate economic activity? Discuss the problem of price controls in terms of the complexity model.
14)Discuss the four components of GDP. What is the difference between current dollar and constant dollar GDP?
15)Discuss how the unemployment rate and the consumer price index are calculated. Contrast unemployment and inflation as macroeconomic problems.
16)Use a diagram to discuss the business cycle. Include information about the most recent peaks and troughs.
17)Define the marginal propensities to consume and save. How are they related? Give an example of the "multipler effect".
18)What is a "deflationary gap". Use a diagram to show an example.
19)What is "fiscal policy"? Discuss how fiscal policy can be used to stabilize the economy (according to the Keynesian theory).
EXAM II
20)Contrast the Keynesian and Classical Theories in relation to the Great Depression. Which theory was proven correct by the facts?
21)Compare and contrast discretionary fiscal policy and the automatic stabilizers. Explain how they work in relation to the present economic situation.
22)Use the Goldsmith Principle to explain how banks create money.
23)Discuss the concept of double-entry bookkeeping. Use a T-account to demonstrate how it works.
24)Discuss the structure of the US banking system showing the relationship between the various parts.
25)Explain the three formulas that determine how much lending banks can do.
26)Why can a single bank lend out only as much as its excess reserves but a banking system can lend a multiple of its excess reserves.
27)What is monetary policy? Discuss the three ways that the Fed can change the lending capacity of the banking system.
28)What is a bond? Discuss the relationship between interest rates and bond prices.
29)What is "malinvestment". Discuss the main aspects of Austrian Busines Cycle Theory (ABCT).
30)Discuss the concepts of time preference and the structure of production. What is the take away idea from the bus driving across the desert analogy?
31)What is the international balance of payments? Contrast the current account and the capital account.
32)What is an exchange rate. Use supply/demand analysis to show (a) currency appreciation and (b) currency depreciation.
33)Why is it so difficult, some would say impossible, to manage an economy? What are your recommendations for improving the performance of our economic system?
34)Do you think it is important for people to have a basic understanding of economics? Why or why not?
1)Discuss the relationship between economics and evolutionary psychology.
2)Use the concept of complex adaptive systems to explain how ground traffic is organized.
3)Present an example of absolute and comparative advantage. Show how the terms of trade are determined.
4)Use a production possibilities curve to demonstrate the difference between unemployment, full employment, and economic growth. What is opportunity cost? Give an example using the PPC.
5)What is money? What does money have to do with specialization and trade? Distinquish between a gold standard and a fiat money standard. What is the primary argument in favor of the former?
6)Contrast the major "schools" of economic thought. Define paradigm shift, cognitive dissonance, and confirmation bias.
7)Use supply and demand curves to demonstrate the concepts of equilibrium price, shortage, and surplus.
8)Use supply and demand curves to contrast the "rationing effect" and the "signaling effect".
9)Use a graph to contrast changes in "quantity demanded and supplied" vs changes in "demand and supply".
10)Use a three market model to show how information is transmitted throughout the price system.
11)Name four ways to "own" property. What is the relationship between secure property rights and prosperity?
12)Discuss four ways to present models and the "Rodney Dangerfield" problem.
13)How do prices coordinate economic activity? Discuss the problem of price controls in terms of the complexity model.
14)Discuss the four components of GDP. What is the difference between current dollar and constant dollar GDP?
15)Discuss how the unemployment rate and the consumer price index are calculated. Contrast unemployment and inflation as macroeconomic problems.
16)Use a diagram to discuss the business cycle. Include information about the most recent peaks and troughs.
17)Define the marginal propensities to consume and save. How are they related? Give an example of the "multipler effect".
18)What is a "deflationary gap". Use a diagram to show an example.
19)What is "fiscal policy"? Discuss how fiscal policy can be used to stabilize the economy (according to the Keynesian theory).
EXAM II
20)Contrast the Keynesian and Classical Theories in relation to the Great Depression. Which theory was proven correct by the facts?
21)Compare and contrast discretionary fiscal policy and the automatic stabilizers. Explain how they work in relation to the present economic situation.
22)Use the Goldsmith Principle to explain how banks create money.
23)Discuss the concept of double-entry bookkeeping. Use a T-account to demonstrate how it works.
24)Discuss the structure of the US banking system showing the relationship between the various parts.
25)Explain the three formulas that determine how much lending banks can do.
26)Why can a single bank lend out only as much as its excess reserves but a banking system can lend a multiple of its excess reserves.
27)What is monetary policy? Discuss the three ways that the Fed can change the lending capacity of the banking system.
28)What is a bond? Discuss the relationship between interest rates and bond prices.
29)What is "malinvestment". Discuss the main aspects of Austrian Busines Cycle Theory (ABCT).
30)Discuss the concepts of time preference and the structure of production. What is the take away idea from the bus driving across the desert analogy?
31)What is the international balance of payments? Contrast the current account and the capital account.
32)What is an exchange rate. Use supply/demand analysis to show (a) currency appreciation and (b) currency depreciation.
33)Why is it so difficult, some would say impossible, to manage an economy? What are your recommendations for improving the performance of our economic system?
34)Do you think it is important for people to have a basic understanding of economics? Why or why not?
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