EconUSA Telecourse

Study Guide for FINAL EXAM

Section I - New Material

CHAPTER 7

• For multiple choice questions, know the following definitions & the concepts :
• The definition, nature and effects of inflation
• Different types of inflation: creeping versus runaway inflation
• How inflation is measured
• The Consumer Price Index (CPI)
• Real income versus nominal income
• The impact of inflation on lenders, savers, taxpayers, and output
• Demand-side and Supply-side inflation
• NAIRU

CHAPTER 21

• What are external diseconomies?
• How does the understanding of external diseconomies clarify the analysis of the economic cause and impact of pollution?
• What is the distinction between economic and social costs? Why is this distinction important?
• What are the goals of regulations or public policies toward pollution and environmental quality?
• What is the relation between economic growth and pollution?
• Review the article in the packet: "Addressing Environmental Externalities".

CHAPTER 25

• What is economic growth? How is it measured?
• Thomas Malthus' explanation of the economic growth?
• The effect of investment on growth.
• The role of human capital formation in economic growth.
• Public policy in promoting economic growth.

CHAPTER 26

• The definition and characteristics of public goods. (Don't confuse public goods with public services).
• The role of government in the economy.
• The purposes of the tax system.
• The principles of taxation.
• The differences of excise, income, property and sales taxes.
• What determines who pays a tax?
• Review the article, Tax Shift, in the packet.

CHAPTER 27

• Know the definition of comparative advantage and how it differs from absolute advantage. (Comparative advantage questions are about half of the questions from this chapter)
• Know what tariffs and quotas are.
• The arguments for and against tariffs and quotas.

Section 2 - Review Material

CHAPTER 2

• The basic tasks of the an economy.
• Supply and Demand (approximately 10 to 15 questions)
• Equilibrium
• How the market distributes resources.
• How the market determines what to produce.
• The limitations of the price system.

Section 3 - Short Answer Essay Questions

• Supply and demand, especially the basic definitions: Supply, quantity supplied, Demand, quantity demanded, equilibrium, Law of Demand, Law of Supply.
• Article on Environmental Externalities
• Articles on Inequality
• Articles on taxation
• The article, The Capitalist Threat", by George Soros