Naked Economics

Please read Naked Economics by Charles Wheelan (Norton, 2002) and answer the following questions. Your answers should be typed or neatly handwritten. This book is available in the Altoona and Hollidaysburg Public library, as well as Barnes and Noble, Amazon.com and many other online sellers. Purchase of the book is not required, but recommended.

–The Book is $10.85 on Amazon.com.
–Half.com from $5.00 used.
–$15.95 at Barnes and Noble

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1) Answer the following questions fully. You will turn these in on the first day of class. You will earn 5 points for each question, for a total of 150 points.

3) There will be a test on this book when we return from summer break, on the 2nd day of school.

Naked Economics Study Questions

1. What fundamental economic precept is indicated in the example of Coke and East Germany?

2. What is the economic concept of utility?

3. What does the economic concept of cost mean?

4. According to what economic principle do firms operate?

5. Why are gas stations in South Africa cleaner?

6. What is the free rider problem?

7. What is the principal-agent problem?

8. What is creative destruction?

9. Explain what role the government can play in a market economy when dealing with externalities.

10. Why is it important for the government to establish property rights and effective institutions?

11. Explain briefly why human capital and productivity are so important to economic well-being.

12. How do financial markets differ from Las Vegas?

13. What does economics explain about the politics of special interest groups?

14. What is GDP? What is the difference between nominal GDP and real GDP?

15. What are some of the causes of recessions?

16. What is fiscal policy?

17. What is Okun’s Law?

18. What is the current account surplus and current account deficit?

19. Explain why the Federal Reserve is such a powerful institution.

20. Explain what are the functions of money.

21. What gives the dollar its value?

22. What are some of the harmful effects of inflation?

23. What is deflation? Why is it not a positive phenomenon?

24. Why do we trade with others?

25. How can we offset some of the negative results of globalization?

26. Explain how globalization positively impacts poor developing nations.

27. What is the primary economic reason why sweatshops pay low wages?

28. Explain what are some of the factors that contribute to the wealth and poverty of different nations.

29. Explain why property rights are an important factor in economic development.

30. What is brain drain?

31. Explain why sound and effective government policies are often associated with successful foreign aid.

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