~$~

~ Midterm Exam Review Questions ~
~ Draft Version ~



1)  Recall our class discussion of "Models" in general and the "Stock Market Model" in particular.   Applying the model, illustrate and explain how changes in important 'variables' can influence the Stock Market.
Consider the following "financial developments":
[a] "Bernanke Signals Another rate Cut";
[b] "Markets React to Oil Price Rise"
[c] "Concerns About Corporations's Financial Accounting Rack Market"



2) In  "What's wrong with the GDP?",   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'.   A review of recent trends can be found in the  "Income Inequality",  "The BBs of Wealth" ,  & "CEO Pay Charts" . Optional:  You may find the 'special report' "Wealth & Democracy" instructive .  Additional data can be accessed at the "Briefing Room I" and at the "Briefing Room II".  Must Read- 'Important Updates': "Our Three-Decade Recession" and "Prison Nation" .



3) 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.   Optional: You may find the article "Manifesto Destiny: The Enduring Sexiness of Karl Marx" interesting.



4) What is the current Unemployment Rate? How many millions of 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 (give examples).  Also, comment on the effects of unemployment on individuals, families, communities, and the nation.  You may find a review of the following instructive:   "Low Wage Jobs Damage Us All" .   Also, the video "Job Threat" ,  "Layoffs Cause Self-Esteem Problems, Author Finds" and the cartoon "Powder Keg" are very informative.  Relevant charts can be accessed at the "Briefing Room" , "Martin Capital" and "Economagic".



5) What are the "Two Faces of Inflation"? What is the current Inflation Rate?  Illustrate both faces with the "Supply & Demand Model" .  Note and briefly explain the effects of inflation on the econoimic decisions of Households, Firms, Government and International Sectors.   Explain.  Relevant charts can be accessed at the "Briefing Room" , "Martin Capital"   and "Economagic".



6) 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 "Leakage & Injection Model" . For a 'deficit update', read "U.S. Trade Deficit Hits New Record of $68.9 Billion" .   Relevant charts can be accessed at the "Briefing Room" , "Martin Capital" and "Economagic" .



7) Recall Adam Smith's emphasis on "Capital Accumulation" in explaining the Growth of Capitalism ("Three Economists"), our class discussion and explain and illustrate how an improvement in the division of labor ( for example, Smith's "Pin Factory" ) could contribute to the process of economic growth.



8) 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? Explain and illustrate with the "Keynesian 'AE & AO' Model". You may find a review of the following instructive: "The Keynesian Revolution" . Relevant charts of a can be accessed at the: "Briefing Room" , and "Economagic" .




~$~