Principles of Macroeconomics
 1.  Explain the determination of oil and natural gas prices on the commodity futures markets.  In what currency are these contracts traded in?  What can be done by the United States to significantly lower oil prices?  What economic factors are contributing to the record oil prices?

 2.  Clearly differentiate between Fiscal and Monetary policy.  Given the current state of the economy, which do you think is more effective?  Why?  Please be specific in your answer.

 3.  Clearly differentiate between a progressive, proportional, regressive and flat tax system.  In your opinion, which is the most equitable tax system and why?

 4.  What are the monetary economic goals of the United States?  Explain the Employment Act of 1946.  What are functions of the Council of Economic Advisers?  Who do they report to?  In your opinion, how effective have they been?

 5.  Explain the difference between a "expansionary fiscal policy" and a "contractionary fiscal policy"?  What do we have now?

 6.  Explain the primary functions of "money".  What is meant by M1, M2 and M3.  Describe how rapid inflation can undermine money's ability to perform each of the functions.  Is the U.S. economy in a deflationary or inflationary path?  Explain your answer.

 7.  Clearly differentiate between "transaction demand for money", "precautionary demand for money", and "speculative demand for money".  What are the primary functions of money?

 8.  In your own words explain the "powers of the Federal Reserve".  Which is the least effective, the most effective, and the most frequently used power?  What is the primary function of the FOMC (Federal Open Market Committee)?  When is their next meeting?

 9.  Explain the concept that the United States has a "dual banking system"?  What commodity (gold, silver, platinum,...) backs up the U. S. Dollar.  Explain the concept of "Legal Tender".

10.  What are the primary functions of the Federal Reserve?  Who is the chairman of the Federal Reserve (FED)?  When does his term end?  Can he be reappointed?  Who was the previous chairman of the FED.

11.  Explain how commercial banks create "money".  How does the money supply affect interest rates?  On the federal side who audits commercial banks? and why?

12.  Explain why there is a need for the Federal Reserve System to control the money supply?  What is meant by a "Bank run"?  Is it still a possibility today?  Explain your answer.

13.  Clearly differentiate between the "Discount Rate", "Federal Funds Rate" and "Prime Rate".  Whose responsibility is it to sat these (interest) rates?  What are the actual rates today?

14.  What are major advantages and disadvantages of monetary policy in adjusting the economy?

15.  What is meant by a "tight" and "easy" money policy.  How does it affect the GDP?  What do we have now?

16.  Clearly differentiate between the "Phillips Curve" and the "Laffer Curve".  Explain the concept of "Supply Side Economics".  What is meant by "Voodoo Economics"?

17.  In the 1970's and 1980's the Phillips Curve shifted - why?  Comment on "Hyperinflation" and "Stagflation".

18.  What are the four supply factors in economic growth?  Explain the concept of "economics of scale" and "increasing returns".

19.  In 1776, Adam Smith in his book the Wealth of nations" cited four essential requirements of an "ethical tax system" - what are they?  Does the U.S. Income Tax System meet all those requirements?  Defend your answer.

20.  Is a federal deficit necessary bad for the U.S. economy?  Under what circumstances would a deficit be welcome?  What is the current total accumulated federal deficit?  Did John Maynard Keynes in his book, The General Theory fo Employment, (1936) advocate deficit spending?  In the 1980's the federal deficit sharply increased - why?  What is the approximate value of the U.S. Federal Deficit?  Do you expect it to increase or decrease over the next three years?  Please be specific in your answer.