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ECON 2301
May 2010
Marilyn Spencer, Ph.D.
Professor of Economics
Chapters 6, 7, 8 & 14 Review
Exam 2, May 25
 Chapters 6, 7, 8 &14
Study PPT slides
Study assigned end-of-chapter questions
Study with a friend
 Test format:
25 multiple choice questions (+ 3 extra credit)
Questions include definitions, theory & applications
Expect graphs and numbers.
1 hour
Scantron 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: ___________________________
 Know about the revenue sources of our federal
 Know average tax rates v. marginal tax rates.
 Know the differences among proportional taxes,
progressive taxes & regressive taxes.
 Be able to explain our federal personal income tax
system, in terms of the 3 taxes above.
 Know the major issues of our social security tax
 Know how the taxes governments levy on purchases of
goods and services affect market prices and equilibrium
 Know how the unemployment rate is calculated.
Know who’s in the labor force and who isn’t.
Know what “discouraged worker” means.
 Know the 4 types of unemployment.
 Know the major price indexes & how price they’re
 Be able to use information from a price index.
 Understand who loses and who gains from inflation.
 Understand key parts of a business cycle.
 Know how to calculate the real interest rate.
 Understand the circular flow model:
Know what is purchased in factor markets v. product markets by whom and from whom.
Know that income flows one way and resources/goods the other.
 Be able to define gross domestic product (GDP).
Know the formula for the expenditure approach to GDP.
Know why intermediate goods aren’t included.
Know why not all production gets counted.
 Understand the limitations of using GDP as a measure
of national welfare.
 Understand the difference between real & nominal GDP.
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
class May 26:
Pre-read Chapter 16 & these end-of-chapter
14th ed: 16-1, 16-2, 16-4, 16-7, 16-9, 16-12 & 16-15,
on pp. 420-421;
15th ed: 16-1, 16-2, 16-4, 16-7, 16-9, 16-10 & 16-13,
on pp. 420-421.