1. If government increases the excise tax on tires and the tax is added to the price, describe in detail how we can determine the incidence of the tax between the consumer and the seller.
2. What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.
3. What are externalities? Describe how government corrects for positive and negative externalities.
4. Define the business cycle. Explain what is happening to spending, output and income, employment and prices in each phase.
5. Define Capitalism and identify and explain the characteristics of a capitalist system.
6. What is meant by full employment? Discuss the four types of unemployment?
7. Explain how agricultural price supports work and what the effects of the supports are.