Final Study Guide Part I: Chapters 14-16 You may use this study guide for your test on Wednesday, May 30th. This will need to be turned in with your final. 1. What is contractionary fiscal policy? Expansionary fiscal policy? 2. What is FICA? What is included in FICA? 3. What does it mean “lender of last resort”? 4. Create a flow map of the federal budget process. 5. How did the Great Depression relate to the school of classical economics? 6. What is a possible short-term effect of an easy money policy? 7. What are the tools of monetary policy? 8. What is the difference between an operating budget and capital budget? 9. Where does the main funding for school come from? 10. What is an example of an automatic stabilizer? 11. What date does the federal government’s fiscal year start for Fiscal Year 2007? 12. What are the fundamentals of Keynesian economics? 13. How many Federal Reserve Districts are there? 14. What is the role of the Federal Open Market Committee? 15. Why would the Fed want to introduce a tight money supply? 16. Why does a bank sometimes holds excess reserves? 17. Why does the Federal Reserve alter monetary policy? 18. What are the constitutional limits on the power to tax? 19. What are the characteristics of classical economics? 20. What is the cost of money? 21. What do the supporters of supply-side economics believe? 22. How can the Federal Reserve encourage banks to lend out money? 23. How well did the Federal Reserve Banks perform during the Great Depression? 24. What type of policy does the Fed use to counteract a contraction? 25. What are examples of state spending? 26. Why did the US government start the Federal Reserve System? 27. What does the Laffer curve predict? 28. What effect would an increase in the discount rate have on the money supply? 29. What will lead directly to a government shutdown? 30. What is a balanced budget? 31. What type of policy doe the Federal Reserve use to counteract an expansion that is causing high rates of interest? 32. What tools does the Federal Reserve use to change the money supply? Which one is the most used? 33. How does the Federal Reserve Bank serve the government? 34. Define the following: corporate tax, estate tax, regressive tax, proportional tax, individual income tax, gift tax, incidence of a tax, deductions, real property, Medicaid, withholding, Social Security 35. Explain what type of problems Keynesian economics addressed that were not addressed by classical economics. 36. Why does the Federal Reserve use open market operations much more freely than changing the discount rate or the reserve requirement? 2012 Economics Final Study Parts 2: Chapter 1-13 You may use this study guide for your test on Thursday, May 31st. This will need to be turned in with your final. Define the following terms: gross domestic product, free rider, public interest, private sector, in-kind benefits, macroeconomics, poverty threshold, market failure, welfare, public disclosure laws, supply shock, shortage, excess supply, spillover costs, search costs, disequilibrium, minimum wage, price floor, price ceiling, rent control 1. 2. 3. 4. 5. 6. What are examples of public goods? Identify and define the characteristics of money. What is collective bargaining? What is a production possibilities curve? What determines how a change in prices will affect total revenue for a company? What is it called when the government uses some tool other than money to allocate goods? 7. A shift in the demand curve means what? 8. What is the important advantage of a free market system? 9. What term describes demand with an elasticity of less than 1? 10. In your community there are enough lawncare workers to fill all the lawncare available. There are also no unemployed lawncare workers. What can you assume about their wages 11. What is the largest source on income for banks? 12. What is an example of positive external shock to aggregate supply? 13. What is a traditional economy? 14. What is a market demand schedule? 15. Why is investing in a money market mutual fund is a higher risk than investing in a certificate of deposit? 16. What is an example of capital deepening? 17. What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future? 18. What is the product market? 19. What is a mixed economy? Which countries are mixed with a free market dominance? 20. What is a negative externality? 21. What is efficiency? 22. Why did Communist governments use a command economic system for many years? 23. What is fractional reserve banking? 24. How do you calculate GNP? 25. What is the purpose of the FDIC? 26. Who was the leader that introduced communism to the Soviet Union? 27. Why would a company hire lobbyist to persuade lawmakers? 28. What are the four phases of the business cycle? 29. What are the disadvantages of centrally planned economy? 30. Why are bonds considered a safe investment? 31. What variables affect the business cycle? 32. What is opportunity costs? 33. Which economic system would be advantageous to an entrepreneur? 34. How are wages determined for a particular job? 35. What is a subsidy? 36. What is the glass ceiling? 37. What is the purpose of a debit card? 38. What is a liquid asset? 39. You are a financial advisor whose client is concerned about losing his investment of a company goes out of business. What type of stock would advise him to buy? 40. What year did labor unions gains some legal rights? 41. What are economics of scale?