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ECON 104 Study Guide - Final Guide: Nancy Folbre

Course Code
ECON 104
Krishna Pendakur
Study Guide

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ECON 104: Study Questions for the Final Exam 2009
1.All study questions from the First-Day Handout, except #18
2. All study questions from the Midterm Study Questions
3. Why do people sometimes sayinflation hurts savers and helps borrowers?
4. We are currently heading into a deep recession. The province of BC has committed to balance its budget this year
and all years. Is this a good idea?
5. The federal government has made the same commitment, while at the same time reducing consumption tax rates (ie,
the GST was reduced from 7% to 5%). Is this a good idea?
6. Assume that both levels of government keep their promises. What is the effect of this on public debt levels in the
future? Is this redistributive? If so, in what way? Is it good?
7. Identify as many information problems in health care as you can. For each problem you identify, think about: (1) a
public production or financing solution; (2) a private production and/or financing solution; (3) whether there is any
solution at all.
8. Child poverty is higher in BC than in any other province. What can and/or should we do about it? Is child poverty
different from adult poverty? What does the poverty rate reported in the newspaper actually measure?
9. Why is there so much homelessness in Vancouver compared to 30 years ago? Is homelessness different from
10. What can be done to reduce homelessness?
11. What externalities are associated with good health and bad health? Are these big enough to warrant public
intervention? What costs are associated with public intervention in health care? Is public health care redistributive?
Is it very effective at redistribution?
12. David Friedman and Nancy Folbre have very different views of whether or not the freedom to choose ones
elementary or high school woud be a good thing.
a.Summarize how they might argue with each other on this issue.
b. BC recently required all school districts to allow students to apply to schools outside their catchments. Do
you think this was a good thing? Why or why not?
13. Some argue that education of individuals causes externalities onto the well-being of other individuals.
a.Identify as many such externalities as you can, noting whether or not they are positive or negative effects
on the other individuals, and noting the limits of these externalities (that is, are they universally valid, and
if not, where and why).
b. Summarize Friedman’s argument for purely private funding and choice for education.
c.Friedman is a smart fellow. Why does he think that the externalities outlined in (a) are not sufficient to
justify public funding or production of education?
14. Some argue that education is permeated with information problems.
a.What information problems might arise in K-12 education?
b. Which types of information problems might government be able to help solve?
c.Why is Friedman pessimistic about governments ability to help solve these problems?
15. Governments should provide education for all for the sake of equality.” Support and/or attack this statement.
16. Governments should eliminate poverty.” Support and/or attack this statement.
17. What is an investment? What characterises a good investment? What investments should not be undertaken?
18. Sometimes people argue that we should invest in social programs like income assistance (giving money to people
who don’t have much money). Is this an investment? Or is it really simply redistribution?
19. Sometimes people argue that we should invest in ‘social infrastructure, such as public transit, public housing,
public parks. Are all of these things investments? Are some of them really simply redistribution?
20. Why do we redistribute? Why should we redistribute?
21. Does democracy allow the majority to exploit the minority? Can you give an example?
22. What is social insurance? Bicycle helmets are mandatory in BC. Is this social insurance? There is only one kind of
tap water to buy in Vancouver. Is this social insurance? Why do we say that public pensions are social insurance?
23. What is "hidden knowledge" and why does it matter? What is "hidden action" and why does it matter?
24. What information problems are there in credit markets?
25. What private solutions might there be for these problems?
26. Are there incentive problems in credit markets? Whose incentives?
27. What does the economics of information tell us about the ongoing financial crisis? What does it tell us about how
we might or might not solve the ongoing financial crisis?
28. How does the complexity of what we trade matter to the traders? Are there information problems associated with
complexity? How might complexity matter to financial markets?
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