Eco335
Dr. Robert Jantzen
Exam #2 Review Questions
1.
A. According to Conservatives, why is direct government regulation of businesses bad for
consumers and businesses? Illustrate with examples. Are there cases where direct regulation is
beneficial? Why so? What are the benefits to society of deregulation? Illustrate with examples.
B. According to Liberals, why is direct government regulation of business beneficial to
consumers and companies? Illustrate with examples. Why is deregulation unlikely to benefit
consumers and businesses? Illustrate with examples.
C. According to Radicals, why did America first have a wave of regulation which was then
followed by a wave of deregulation? Who has benefited first from direct government
regulation and then deregulation? Illustrate with examples.
2.
A. Income inequality has been increasing in America. Is this a good or a bad development?
Why so? Discuss in terms of the Conservative and Liberal perspectives, along with the evidence.
B. According to Conservatives, income redistribution programs like welfare harm both poor
recipients and middle and upper class taxpayers. How so? What kinds of policies should the
federal government adopt to aid the poor?
C. According to Liberals, income redistribution programs like welfare have been failures. Why
so? Why do Liberals feel that it’s the proper role of the federal government to reduce income
inequality? What kinds of reform do Liberals favor for improving the lot of the poor?
3.
A. What has been happening over time to the overall federal tax burden, and the burdens
borne by the poor, middle class and the rich? Discuss in terms of income and payroll tax
collections and the history of tax changes.
B. What is a progressive income tax structure? Illustrate. Why do Conservatives believe that a
progressive tax structure is unfair and hinders economic growth? What kind of tax reform are
Conservatives in favor of and how would it improve fairness and growth?
C. Why do Liberals view the progressive income tax structure as the one best to ensure fairness
and growth? Why are they critical of the reforms suggested by Conservatives?
4.
A. Currently the National Debt is nearly $15 Trillion, when it once stood at less than $1 Trillion
in 1980. Why has the Debt increased so much? Are we in danger of needing a financial bailout,
like Greece, Ireland and (newly announced this week) Portugal? Do we need to decrease the
Federal Budget Deficit, and if so how, what has to be changed?
B. Why are Conservatives against running Budget Deficits (i.e., $ Taxes are < $ Government
Spending)? Explain. Have Conservative government actions been consistent with their
pronounced views about deficits?
C. Why are Liberals less concerned about Budget Deficits? Are some deficits OK while others
are not? Why do Liberals think Conservatives emphasize reducing Budget Deficits?
5.
A. Why are the programs funded by the payroll tax, namely Social Security and Medicare, now
in financial trouble?
B. Why do Conservatives believe that the present Social Security system is unfair, fiscally
unsound and reduces production in the economy? What is their proposal for reforming Social
Security and how would that increase fairness, soundness and production?
C. Why do Liberals believe that the present Social Security system is the fairest, most fiscally
sound and least economically damaging program for supporting retirees? What are their
proposals for reforming Social Security? What are their objections to the reforms proposed by
Conservatives?
D. According to Radicals, the Social Security crisis is just a part of the general fiscal crisis of
capitalist governments. Explain in terms of accumulation and legitimation policies. Why do they
believe Conservatives want to end the current Social Security program? Why are they against
the proposed reforms of the Liberals? What is their program for supporting retirees?
6.
A. According to economic efficiency, what kinds of risks should insurance policies cover? Why
so? Why does the US private health insurance market fail to operate efficiently? Discuss in
terms of supply side and demand side failures.
B. Discuss the Obama Health Care plan. What are its key features?
C. Liberals generally support the Obama reforms. Why so? What are their criticisms of the
Obama reforms?
D. What is the Conservative perspective on the Obama reforms? What is their prescription for
fixing the US health insurance system?