July 27, 2012
Final Exam 1. Use a chart to explain and demonstrate consumer surplus with demand curve for willingness to pay.
2. Identify items of household consumption expenditures, business expenditures, and government expenditures.
Items of household consumption expenditures include food & beverages, clothing & footwear, housing, household goods, transport, hotels, recreation, health, and other goods. Spending by the government sector including both the purchase of final goods and services, or gross domestic product, and transfer payments. Government expenditures are used by the government sector to undertake key functions, such as national defense and education. These expenditures are financed with a combination of taxes and borrowing Business expenditures include payroll, marketing, technology, overhead, book keeping, automobile, inventory, and office supplies.
3. Describe the organizational structure of the Federal Reserve System, list its responsibilities, and evaluate the role it plays in the economy. Support your evaluation with examples.
In the US the central bank is 12 institutions closely tied together and collectively called the Federal Reserve System. The 12 banks act in unison on major policy issues, with control of major policy decisions resting with the Board of Governors and the Federal open market committee. Many of the key policies decisions of the Federal Reserve are actually made by its Federal Open Market Committee (FOMC). The FOMC makes most of the key decisions influencing the direction and size of changes in the money supply: and their regular closed meetings are accordingly considered important by the business community, news media, and government.
4. How does economist define Welfare? How does it used by the government? Welfare is the provision of a minimal level of wellbeing and social support for all citizens. In most developed countries, welfare is largely provided by the government, in addition to charities , informal social groups, religious groups, and inter-governmental organizations. Welfare programs available in the United States include: Medicaid, Food Stamps, Supplemental Security Income (SSI), Housing and Urban Development (HUD) programs, Temporary Assistance for Needy Families (TANF), Head Start, Work Study, and Medicare. Social Security, often times called an entitlement program, is also considered one of the welfare programs in the U.S.. TANF is probably one of the most recognized of the welfare programs. Formerly known as Aid to Families with Dependent Children (AFDC), TANF was a reform measure for this program. No longer a lifelong program as AFDC was, TANF limits welfare benefits to a specified period of time. The states set these limitations, and most state’s plans terminate TANF benefits after five years. 5. What are the principal sources of government revenue and items of government expenditure? How does it relate to society?
Individual income taxes and payroll taxes accounted for 82 percent of all federal revenues in fiscal year 2010. Corporate income taxes…