econ exam 3

Question 1

explain regression methods of detecting racial discrimination

Answer 1

using statistics to see if the discrimination could have been random

Question 2

what does “rational/statistical” mean in discrimination

Answer 2

discrimination proven with sound statistical evidence

Question 3

explain adverse impact discrimination

Answer 3

acts that are not inherently discriminatory but cause inequality for some groups

Question 4

explain disparate treatment discrimination

Answer 4

treating two otherwise equal people differently on the basis of race

Question 5

summarize gradations of affirmative action

Answer 5

everyone deserves an equal opportunity to apply, and race can be a deciding factor, however, it cannot be a deciding factor to meet quotas or who you advertise to. and institutions can chose those who are qualified by a standard and fill in different races of people

Question 6

briefly discuss the “auditor” methods of detecting racial discrimination

Answer 6

techniques that use paid actors to see if people are treated differently based on race

Question 7

list the methods of detecting racial discrimination

Answer 7

regression techniques
auditing techniques

Question 8

describe elements in the U.S. society that would constitute systemic discrimination using examples from race and sex discrimination

Answer 8

racism- public funding, property taxes, legacy admissions, police brutality
Sexism- women should hold traditional roles, men protect women from some jobs

Question 9

plot the path of mandatory spending as a percentage of the total federal budget

Answer 9

mandatory spending has gone up from less than 30% to 70%

Question 10

plot the path of discretionary spending as a percentage of the total federal budget

Answer 10

has gone down from around 70% to around 30%

Question 11

list the four largest components of the federal budget

Answer 11

social security
Medicare
interest
national defense

Question 12

difference between mandatory and discretionary spending

Answer 12

mandatory spending occurs because law says money has to be spent
discretionary spending occurs to spend money

Question 13

describe defense spending in terms of the percentage of total federal budget

Answer 13

half or more of the budget used to go straight to national defense now it is about 12 %

Question 14

describe defense spending in terms of the percentage of the U.S. economy

Answer 14

3.7% of GDP, gross domestic pay

Question 15

Has the defense budget risen or fallen since 1960

Answer 15

fallen

Question 16

difference between baseline and current services budgeting

Answer 16

baseline uses last years figures
current-services estimate next years to equate to last years

Question 17

why are baseline and current-services budgeting important in framing the debate over federal spending

Answer 17

they use past spending to create future spending

Question 18

describe the size of the U.S. budget (terms of absolute and relative size to the US economy and size relative to other countries) describe 4 major component pieces of budget

Answer 18

13 million, small compared to the industrialized world most of budget goes to
Medicaid, social security, interest, and national defense

Question 19

list the methods of limiting trade

Answer 19

tariffs
quotas
non-tariff barriers

Question 20

explain how tariffs limit trade

Answer 20

they tax imports making it more expensive to import

Question 21

explain how quotas limit trade

Answer 21

put limits on what can come into the country

Question 22

explain how non-tariff barriers limit trade

Answer 22

result in regulatory actions

Question 23

define “terms of trade”

Answer 23

the amount of a good one country must give up in order to obtain another good from the other country, expressed as ratio

Question 24

list the reasons for limiting trade

Answer 24

national security
national identity
environmental concerns
child-labor concerns

Question 24

explain national security in terms of reasons to limit trade

Answer 24

won’t trade with nations that could sell information to other nations

Question 25

explain national identity in terms of reasons to limit trade

Answer 25

it the country is known for something they will not import because they want to support their people

Question 26

explain environmental concerns in terms of limiting trade

Answer 26

not trading with nations that destroy for gain
destroy forests for wood even though the trees are thin instead of planting and cutting

Question 27

explain child-labor concerns in terms of reasons of limiting trade

Answer 27

nations that produce products by employing children are not worth spending money on

Question 28

using the concept of dead-weight loss to discuss the wisdom of erecting trade barriers to stem the loss of jobs due to international trade

Answer 28

by creating trade barriers it gives an opportunity for new jobs to be created in the home country which will help increase production by creating opportunities

Question 29

explain the idea of comparative and absolute advantage in the context of a good typing brain surgeon and a poor typing secretary

Answer 29

Although the brain surgeon would be better at typing (absolute) it would be more of a loss of money for the surgeon to transcribe and type than to employ a secretary

Question 30

show that there are benefits for trade when one party has an absolute advantage in the production of other goods

Answer 30

it creates an equal trade system where each country can have more of the product available for their people- put up a grid

Question 31

supply and demand diagram to illustrate the impact of a tariff

Question 32

explain “work effect” argument that minimum wage increase will not lead to a reduction in GDP

Answer 32

This happens if the increase in pay results in workers becoming harder workers and not slacking off, which will increase productivity that will benefit the employer

Question 33

explain the earned income tax credit (EITC)

Answer 33

tax credit for working families with low incomes - child tax credits- helps lift families out of poverty

Question 34

why is EITC more targeted to the working poor than the minimum wage

Answer 34

because research has shown that 70% of benefits go to households not experiencing poverty

Question 35

explain why a minimum wage must be above equilibrium in order for it to be considered relevant

Answer 35

b/c if it is below no workers will willingly get those jobs, but if it is above workers will be more likely to engage in the labor

Question 36

explain why economists always focus on the real minimum wage for historical comparison

Answer 36

This is because it stands for how much the wage actually pays for a items when taking consideration of inflation

Question 37

show the effect of minimum wage and minimum benefit provisions on a supply and demand diagram for labor

Question 38

using traditional economic analysis explain who is hurt by an increase in the minimum wage

Answer 38

When there is an increase in minimum wage this hurts workers that lose their jobs and firms who have to pay higher prices

Question 39

using nontraditional economic analysis, list the reasons why some economists believe that traditional analysis is wrong

Answer 39

macroeconomic argument
work argument
elasticity argument

Question 40

draw a supply and demand diagram for labor and indicate on it the impact of a relevant minimum wage

Question 41

discuss the importance of the elasticity of demand for labor on relevant minimum wage

Answer 41

this will cause firms to look for cheaper alternatives which will most likely result in replacing human jobs with electronics (like a kiosk or self-service)

Question 42

using nontraditional economic analysis, explain why some economists believe that traditional analysis is wrong, in terms of macroeconomics

Answer 42

it will increase GDP because the money will likely be spent instead of saved

Question 43

using nontraditional economic analysis, explain why some economists believe that traditional analysis is wrong, in terms of the work effect argument

Answer 43

employers will get their money back because of the productivity levels of their employees who work harder due to more pay

Question 44

using nontraditional economic analysis, explain why some economists believe that traditional analysis is wrong, in terms of the elasticity argument

Answer 44

demand is inelastic equals less employment and less deadweight loss - it results in a tiny change