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.

Chapter 5

  After reading Chapters 5, you should be able to:
  1. Discuss the concept of market failure.
  2. Explain the concept of external benefits and negative externalities.
  3. Describe the economic functions of government.
  4. Distinguish the difference between public goods and private goods.
  5. Describe the free rider problem.
  6. Describe the political functions of government and how they affect the economy.
  7. Discuss the economics of Medicare.
  8. Discuss the economic issues involved in public education.
  9. Explain the similarities between markets and collective decision making
  10. Explain the difference between markets and collective decision making.

Chapter 6

  After reading Chapter 6, you should be able to:
  1. Explain what the government budget constraint is and identify the government’s tax base.
  2. Discuss the differences between progressive, proportional, and regressive tax systems and how marginal and average tax rates are related under each of these regimes.
  3. List the sources of the U.S. federal government’s revenue.
  4. Explain how tax brackets work in the U.S. progressive income tax system.
  5. Calculate the capital gains tax from selling an asset and differentiate a nominal gain from a real gain.
  6. Explain how the corporate profits tax works, why corporate taxes are said to be double taxed, and who pays the social security tax in the U.S..
  7. List the sources of state and local tax revenue and describe what an ad valorem tax is.
  8. Explain what is meant be static tax analysis.
  9. Explain what is meant by dynamic tax analysis.
  10. Describe with the use of graphs the incidence of sales and excise taxes.

Chapter 7

  After reading Chapter 7, you should be able to:
  1. Name the government bureau responsible for unemployment data and the employment categories its uses in doing so.
  2. Describe the history of the unemployment rate in the US, define what is meant by a discouraged worker, and explain why knowing the average duration and costs of unemployment is important.
  3. Calculate the unemployment rate, the labor force participation rate, and the employment-population ratio from given data.
  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.
  6. Differentiate inflation from deflation and explain how each affects the purchasing power of money, and list and describe the various price indices published by the U.S. government.
  7. Measure inflation with a price index, with a good understanding of how the different price indices work.
  8. Explain the difference between anticipated and unanticipated inflation, and describe 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.
  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

 

    After reading Chapter 8, you should be able to:

  1. 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. 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.
  3. 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.
  5. Explain some of the limitations of GDP and why GDP is often not an accurate measure of national well-being.
  6. 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.
  8. 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.
  9. a) Distinguish between nominal GDP and real GDP,
    b) explain why the distinction matters, and
    c) calculate Real GDP from Nominal GDP given data about the GDP Deflator.
  10. 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) describe the per capita GDP of the U.S. as it compares to other countries using both approaches.