Macroeconomics ECON 2301 Spring 2011 Marilyn Spencer, Ph.D. Professor of Economics Chapters 6, 7, 8 & 14 Review

Exam 2 4 Chapters 6, 7, 8 &14 ÜStudy PPT slides ÜStudy assigned end-of-chapter questions ÜStudy with a friend 4 Test format: ÜSection 003 (10 a.m.) 25 multiple choice questions (+ 3 extra credit) ÜSection 004 (5:30 p.m.) 25 multiple choice questions (+ 3 extra credit) for 60 minutes ÜQuestions include definitions, theory & applications ÜExpect graphs and numbers. ÜScantron answer sheet provided

Test Resources Used Please check any applicable box concerning "fees" for test resources you plan to use DURING the exam:  3x5 card with notes, 5 test points  textbook and notebook, 15 test points  information from others, 100 test points  Will NOT use additional resources* * Two (2) points will be added to your score if you choose to NOT use any of these test resources. Name (please print):____________________ ID #:______________________ (some portion of ID#) Signature: ___________________________

Chapter 6 EXAM QUESTION TOPICS  Revenue sources of our federal government  Average tax rates v. marginal tax rates  Differences among proportional taxes, progressive taxes & regressive taxes  Our federal personal income tax system, in terms of the 3 taxes above  Major issues of our social security tax system  How the taxes governments levy on purchases of goods and services affect market prices and equilibrium quantities

Chapter 7 EXAM QUESTION TOPICS  How the unemployment rate is calculated  Who’s in the labor force and who isn’t  Discouraged workers  The 4 types of unemployment.  Major price indexes & how they’re calculated  Be able to interpret & use information from a price index.  Who loses and who gains from unanticipated inflation  Key parts of a business cycle  Know how to calculate the real interest rate.

Chapter 8 EXAM QUESTION TOPICS  Circular flow model:  What is purchased in factor markets & product markets - by whom and from whom.  Income flows one way and resources/goods the other.  GDP  Formula for the expenditure approach to GDP  Why intermediate goods & used goods aren’t included  Why not all production gets counted  Limitations of GDP as a measure of national welfare.  Difference between real & nominal GDP  Per capita GDP for measuring standard of living  Foreign exchange rates

Chapter 14 Exam Question Topics:  Federal budget deficit, surplus or balanced budget  Largest spending categories of the federal budget  How the federal government finances a budget deficit  How a budget deficit can crowd out private spending  Public debt:  gross v. net  burden to future generations: paying for it  How to reduce the deficit

Assignment to be completed before our next regular class: Pre-read Chapter 15 & these end-of-chapter Problems: 14 th ed: 15-2, 15-4, 15-6, 15-8, 15-13, & 15-15, on pp ; 15 th ed: 15-2, 15-4, 15-6, 15-8, 15-13, & 15-15, pp