~$~

~ Midterm Exam Review Questions ~



1) In  "Genuine Progress Indicator",   the advocates of the Genuine Progress Indicator (GPI) state that instead of separating "costs and benefits", and "productive" activities from "destructive" ones, the Gross Domestic Product (GDP) assumes that every monetary transaction adds to "well being". What evidence do the advocates offer in support of their view?  Explain  (give ‘three' specific examples).  I suggest that you give special consideration to the issue of 'Income & Wealth Distribution'. You may find the transcript of the 'audio clip' "Wealth & Democracy" instructive .


2) The authors of the "Three Economists" tell us that Marx's Model of Capitalism  (M - C....P....C'- M')   can be used as a guide to understanding the "origins of crisis" and the "nature of the business cycle".  Do you agree or disagree?   Explain and illustrate with Marx's schema.


3) What is the current "Unemployment Rate"?  "April Employment Update" . How many people are out of work? According to many economists, people may experience unemployment a 'number of times' and for a 'variety of reasons'. Do you agree or disagree? Explain. For examples, see the following readings-  "Millions of Unemployed Face Years Without Jobs" , "Even in a Recovery, Some Jobs Won't Return " and " Dr. Econ Talks Unemployment" .  Also, comment on the effects of unemployment on individuals, families, communities, and our nation.  You may find a review of "Low Wage Jobs Damage Us All" instructive.   Also, the following videos are very informative: "Unemployment Rate Holds Steady, but Minorities Still Worse Off" and "Unemployment Hits 26-Year High Despite Economic Growth".   Relevant data and charts can be accessed at "FRED" , "Labor Market Indicators" and , "Martin Capital" .


4) What are the "Two Faces of Inflation / Deflation"? What is the current "Inflation Rate"?  What are the 'three indicies' commonly used to measure the price level? Illustrate both faces with the "Supply & Demand Model" .  Note and briefly explain the effects of inflation on the econoimic decisions of Households, Firms, the Government and the International Sector.  Relevant data and charts can be accessed at "FRED"  and  "Martin Capital" .


5) A "Jr. Economist" would predict that the recently reported 'increase' in the U. S. Trade Deficit will be a‘drag' on our economy. T/F,  Explain.  Also, illustrate with the 'graphical presentation' of the "Leakage & Injection Model" .   Relevant data and charts can be accessed at  "Martin Capital" .


6) Recall Adam Smith's emphasis on "Capital Accumulation" in explaining the growth of Capitalism ("Three Economists"). Explain and illustrate using your ('supply and demand', 'production possibilites' and 'production function' models) how an improvement in the technology and the division of labor ( for example, Smith's "Pin Factory" ) can contribute to the process of economic growth.


7) Suppose the Wall Street Journal reported that Investment Expenditures are expected to rise in the coming year. Would it be correct to conclude, using the Keynesian Model, that the GDP will increase by the same amount as the expected rise in Investment Expenditures? Also, note the various 'determinants' of this type of expenditure. Explain and illustrate with the "Keynesian 'AE & AO' Model". Relevant data and charts can be accessed at: " U.S. Economic Accounts".
Finally and very important, read the following: "Keynes for Today".



~$~