Question/Problem 1

Why are we called a “mixed economy” and what is the
“invisible hand” that directs our output mix?

Question/Problem 2

Look at the data in Table A.1 (the chapter 1 appendix);
assume this data is reliable. Now look at the graph in figure A.1. Does this
graph prove that additional study will produce higher grades? Explain your
answer.

Question/Problem 3

Read the Policy Perspective at the end of Chapter 1. Explain
how this article illustrates the economic principle: “There is no free lunch”.

Question/Problem 4

Why might it be necessary to reduce consumer spending in
order to sustain economic growth?

Question/Problem 5

If taxes on the rich were raised to provide more
entitlements for the poor, how would the willingness to work likely be affected
for the rich and for the poor? What would likely happen to total macroeconomic
output?

Question/Problem 6

Explain how a “market failure” can produce a macroeconomic
“non-optimal output mix”. Use examples and illustrate your answer with a graph
that displays a production possibilities curve. (Develop your own graph/curve;
do not copy/paste from another source.)

Question/Problem 7

Explain why income taxes are considered “progressive” and
sales taxes are considered “regressive”.

Question/Problem 8

When comparing the USA and China: China has (1) as many
natural resources as the USA and also has (2) far more labor resources than the
USA. So why is output/GDP so much higher in the USA than in China?

Question/Problem 9

Explain why the legal system represents a critical
“economic” role for the government.

ScholarMatic: Explanation & Answer

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