PCM

 ECON 2301 MACROECONOMICS   

Below you will find the learning objective, concept, idea, term, or theory that each question on the exam will cover. Each number in the following list refers to the question number on Exam 2 that will test your knowledge of that specific learning objective. Each of these topics/learning objectives is discussed in the textbook in the order that they are listed below.  A much better understanding can often be attained by working through MyEconLab assignments connected to any of these objectives.

Chapters 5 & 6

  After reading Chapters 5 & 6, you should be able to:
    CHAPTER 5
  1. Explain how market failures such as externalities might justify the economic functions of government.
  2. Distinguish between private goods and public goods and explain the nature of the free-rider problem.
  3. Describe political functions of government that entail its involvement in the economy.
  4. Analyze how Medicare affects the incentives to consume medical serives.
  5. Explain why increases in government spending on public education have not been associated with improvements in measures of student performance.
  6. Discuss the elements of the theory of public choice.

    CHAPTER 6
  7. Distinguish beteen average tax rates and marginal tax rates.
  8. Explain the stucture of the U.S. income tax system.
  9. Understand the key factors influencing the relationship between tax rates and the tax revenues governments collect.
  10. Explain how the taxes governments levy on purchses of goods and services affect market prices and equilibrium quantities.

Chapter 7

 
    After reading Chapter 7, you should be able to:

    The Macroeconomy: Unemployment, Inflation & Deflation, and the Business Cycle Unemployment:

  1. Answer the following:
    a) name the government bureau responsible for unemployment data and the employment categories its uses in doing so, and
    b) describe the history of the unemployment rate since 1890.
  2. Answer the following:
    a) list the four categories an unemployed individual might fall into according to the Bureau of Labor Statistics,
    b) define what is meant by a discouraged worker, and
    c) explain why knowing the average duration and costs of unemployment is important.
  3. Be able to calculate the unemployment rate or the labor force participation rate from given data.

    The Major Types of Unemployment and the Concept of Full Employment (also know as the Natural Rate of Unemployment):

  4. List and describe the three major types of unemployment according to economists.
  5. Define what is meant by full employment and by the natural rate of unemployment and how they relate to the four types of unemployment is learning objective 4.

    Price stability and price indices:

  6. To do the following:
    a) differentiate inflation from deflation and explain how each affects the purchasing power of money, and
    b) list and describe the various price indices published by the U.S. government.
  7. To be able to measure inflation with a price index, with a good understanding of how the different price indices work.

    Inflation's impact on the economy:

  8. To do the following:
    a) explain the difference between anticipated and unanticipated inflation,
    b) explain the relation between the nominal interest rate and the real interest rate.
  9. Explain how inflation affects people and what economists think is the main cost of inflation.

    Business Fluctuations:

  10. Explain what is meant by business fluctuations, list the phases of the business cycle, and give an overview of the history of business fluctuations in the United States since 1880.

Chapter 8

 

    Measuring the Economy's Performance: GDP

    After reading Chapter 8, you should be able to:

    The Circular Flow of Income and Output:

  1. To do the following:
    a) define what is meant by National Income Accounting,
    b) reproduce the circular flow of income and output correctly labeling all actors, markets, and flows, and
    c) explain why profits are a cost of production.
  2. To do the following:
    a) discuss what is exchanged in the product markets and in the factor markets, and
    b) explain why dollar value of all output must equal total income.

    GDP defined:

  3. To do the following:
    a) give the definition of GDP,
    b) explain why it is a flow concept and not a stock concept,
    c) identify two main methods of measuring it, and
    d) explain why intermediate goods are not included in the definition using the idea of value added.
  4. List all other transactions that are not included in GDP and explain why they are not included.

    Limitations of GDP:

  5. Explain some of the limitations of GDP and why GDP is often not an accurate measure of national well-being.

    Calculating GDP by the expenditure approach:

  6. To do the following:
    a) list the components that comprise the expenditure approach to measuring GDP, and
    b) explain what is contained in each component.
  7. Explain how depreciation (capital consumption allowance) connects GDP to NDP and gross private domestic investment to net investment.

    Calculating GDP by the income approach:

  8. To do the following:
    a) list the components that comprise the income approach to measuring GDP,
    b) explain what is contained in each component,
    c) be able to list the other three measures of national income besides GDP and NDP, and
    d) show how all five are related to one another.

    Nominal GDP vs. Real GDP:

  9. To do the following:
    a) distinguish between nominal GDP and real GDP,
    b) explain why the distinction matters, and
    c) be able to correct nominal GDP for changes in the price index (the GDP deflator).

    Comparing GDP per capita of different countries:

  10. To do the following:
    a) discuss why using purchasing power parity when converting one country’s GDP into the currency value of another county is preferred to using the current exchange rate, and
    b) be able to describe the per capita GDP of the U.S. as it compares to other countries using both approaches.

Chapter 9

 
    After reading Chapter 9, you should be able to:

    Economic Growth:

  1. Explain what is meant by economic growth.
  2. To do the following:
    a) discuss historical record of economic growth in the U.S.,
    b) describe the ranking of the twelve countries growth rates listed in Table 9-1 from 1970 to 2011, and c) discuss criticisms of economic growth

    Small differences in growth rates add up over time:

  3. Explain why small differences in growth rates between countries can add up to big differences over the long term and be able to use Table 9-3.

    Traditional sources of economic growth:

  4. Explain how increased productivity contributes unambiguously to greater annual increases in a nation's per capita GDP.
  5. Explain why saving is such an important determinant of economic growth. (Figure 9-3)
  6. Describe the importance of more labor, increased capital, and improved human capital.

    New Growth Theory:

  7. Explain how new growth theory differs from traditional growth theory.
  8. Explain the connection of innovation, patents, knowledge, new ideas, improved human capital, an open economy, and R&D to advancements in technology.

    Population and economic development:

  9. To do the following:
    a) discuss the relationship between immigration and economic growth,
    b) explain Thomas Malthus' theory of the relationship between population growth and standards of living, and
    c) explain what the world has discovered about the relationship between economic growth and population growth.
  10. List and explain the four factors that seem to be highly correlated to the pace of economic development.