PRINCIPLES OF MACROECONOMICS
Study Guide One: Chapter One
January 6, 2014
Definitions:
Be able to recognize the definition of terms that were identified in lecture.
Illustrations:
No Illustrations for Chapter One
Math:
No Math for Chapter One
Questions from the Book
For questions 1-15, match the following heterodox approach with the corresponding statement
a.
Radical
b.
Austrians
c.
Feminists
d.
Religious
e.
Institutionalists
f.
Post-Keynesians
1.
The approach that argued that human behavior is driven by cultural norms.
2.
The approach that seeks to integrate ethical and normative issues into economic analysis.
3.
The approach that argued social goals are best met by voluntary, mutually beneficial interactions.
4.
The approach that emphasizes Gross Domestic Product undervalues the contribution of homemakers.
5.
The approach that proposed the Federal Reserve System should be eliminated.
6.
The approach that focuses on the lack of equality in our current economic system.
7.
The approach that sees the fundamental instability and irrationality of the capitalist system is the root of a wide
array of social ills.
8.
The approach that claims the uncertainty of the market justifies government intervention in the economy.
9.
The approach that claims the uncertainty of the market suggests government should be as involved as little as possible in
the economy.
10.
The approach that examines the social arrangement surrounding provisioning.
11.
The approach that follows the ideas of Ludwig von Mises and Friedrich von Hayek.
12.
The approach that follows the work of Thorstein Veblen, John R. Commons, and Wesley Mitchell.
13.
The approach that follows the work of Karl Marx.
14.
The approach that favors worker cooperatives replacing corporations.
15.
What is a “heterodox economist”?
FROM CHAPTER ONE
17.
Summarize economics in one sentence.
18.
What is the “invisible hand theorem”?
Questions from Lecture
1.
According to John Maynard Keynes, why should a person study economics?
2.
What is “conventional wisdom”? According to John Kenneth Galbraith, how easily do people learn and
understand ideas that contradict their prior beliefs?
3.
According to lecture, what is the primary difference between the subjective (or ideological) approach to
understanding the world and the objective (or scientific) approach?
4.
What is deduction, induction, and abduction?
5.
Define “economics.”
6.
Explain the difference between micro and macroeconomics.
7.
List the four basic questions every society must answer.
8.
What is the fundamental economic problem?
9.
Explain the difference between marginal and sunk cost?
10.
Explain the “Economic Decision Rule.”
11.
Examine voting via the Economic Decision Rule. What does the study of voting illustrate?
12.
Utilizing cost-benefit analysis, examine your decision to attend SUU.
13.
Utilizing cost-benefit analysis, examine your decision to attend class each day.
14.
According to lecture, what is the size of the subsidy the government is providing you so that you
can receive a bachelor’s degree from Southern Utah University?
15.
According to lecture, what is the approximate difference in your lifetime earnings with a high school
degree relative to a bachelor’s degree?
16.
Define “opportunity cost.”
17.
“That Only Works in Theory.” Explain why such a statement would not apply to “good” theories.
Be sure to define the term “Economic Theory.”
18.
19.
20.
22.
22.
23.
24.
25.
26.
27.
Define the terms “Economic Models” and “Economic Principles.”
Explain the difference between positive and normative economics. Be sure to note the person credited with
making this distinction.
List the six steps one follows in constructing and testing a theory.
Briefly explain the role assumptions play in building a theory.
Define and briefly explain the significance of “ceteris paribus.”
Define the term econometrics.
According to Ray Fair, what factors primarily determine the voting for the U.S. President?
Fair estimated his model with data from the 20th century. How does his model perform when we consider
data from the 19th century? How was this performance explained in lecture?
According to Larry Bartels, what factors explain voting for the U.S. President?
According to lecture, what explains the role the economy plays in voting for the U.S. President?