Question 1: Please write a short but complete answer to the given questions:
A) How is economics like a science?
B) Why is economics a ‘social’ science?
C) Why do economists sometimes offer contradictory advice to the policymakers?
D) Should an economic model explain reality exactly?
Question 2: Describe each of the given statements from the viewpoints of equity and efficiency.
A) Everyone in society must be guaranteed the best health care possible
B) When workers are laid off, they must be able to collect unemployment benefits until they find out a new job.
Question 3: Categorize each of the given statements as positive or normative. Describe.
A) Society faces a short-run trade off between inflation and unemployment.
B) In a market, when quantity supplied surpasses quantity demanded, price tends to drop.
C) When finding out tax rates, the government must take into account the income needs of individuals.
D) The Federal Reserve must decrease the rate of growth of money.
E) Lower tax rates encourage more work and more saving.
Question 4: Categorize the given topics as relating to the microeconomics or macroeconomics.
A) A family’s decision regarding how much income to spend on food.
B) The effect of government regulations on auto emissions.
C) The impact of higher public saving on the economic growth.
D) A monopolist’s decision regarding how many units to sell.
E) The relationship between the inflation rate and the unemployment rate.
Question 5: STATA exercise: After reading the paper by Gwartney and Haworth, “Employer Costs and Discrimination: The Case of Baseball” use the file Dataset1.dta, to do the following.
A) Making summary statistics for the three variables Balack47, Black52 and Won.
B) Make a graph with Won on the vertical axis and Black47 on the horizontal axis.
C) Run a simple regression with Won as the dependent variable and Black47 as the independent variable.
- What percent of the total variation in the variable Won is described by Black47?
- What is the impact of an additional black player year on the percentage of games won? What would be the impact of a one-standard deviation change in additional black player years on the percentage of games won? What would be the expected percentage of games won for a team which remained all white?
- Test the null hypothesis that Black47 has a zero consequence on the percentage of games won using a 5% level of significance.
D) Add up the predicted regression line to the graph you drew earlier.