Open Book Midterm Exam ( Weight 110 Points ) Name

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EC301 Open-Book Midterm Exam (Weight 110 points) NAME: Washington, Ron Submit your answers in the Dropbox or fax them. You may discuss concepts in the Q&A thread and where to find answers but do not give specific answers to specific questions. 1. (7 points) How are presidential election outcomes related to the performance of the economy? Usually when the economy is doing well the incumbent party will win the election, due to low unemployment and higher wage increases. The electorate cares about not spending tax dollars on frivolous projects that don’t enhance human lives or the environment in which they live in. An exception would be the 2001 election when the economy was doing well with the current party, but decided to elect the opposing party candidate. 2. (7 points) Discuss the difference between Microeconomics and Macroeconomics. Macroeconomics is the field of economics that studies the behavior of the economy as a whole not certain parts. Gross National Product (GDP) the economy’s total output; how it is affected by changes in unemployment, national income, rate of growth, and price levels. Macroeconomics encompasses an increase or a decrease in net exports would affect a nation 's capital account. Government’s role in macroeconomics is to keep the economy in equilibrium; taxes and government spending augment the balance to achieve equilibrium in the economy Microeconomics focuses on individuals and business decisions with limited resources and limited

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