Economics 010 Study Guide (Past Paper)

**Study Guide for Exam \# 3** *Economics 010* *[Chapter 17: Industrial Expansion and Concentration ]* 1\. The Sherman Act. What did it attempt to discourage? 2\. Vertical mergers according to Chandler and their benefits to a corporation. 3\. Horizontal mergers according to Chandler and their be...

**Study Guide for Exam \# 3** *Economics 010* *[Chapter 17: Industrial Expansion and Concentration ]* 1\. The Sherman Act. What did it attempt to discourage? 2\. Vertical mergers according to Chandler and their benefits to a corporation. 3\. Horizontal mergers according to Chandler and their benefits to a corporation with high infrastructure costs. 4\. Two reasons why corporations merged. 5\. Scientific Management by Taylor: How did it work and what were the benefits? Why was it criticized? Railroads. 6\. The use of a Trust to gain power 7\. The use of a Holding company to gain power 8\. What was Standard Oil accused of? 9\. What is predatory pricing? Be sure you understand what is meant by "Predatory." 10\. Industrial revolution and the trend towards oligopolies (big business). Economies of scale importance. How economies of scale are achieved. 11\. Evolution of energy usages during the last part of the 19th century until 1913. 12\. Worker production during the industrial revolution. 13\. Know what an investment bank is as compared to a commercial bank. Why were they formed? Why were investment banks needed during the industrial revolution? 14\. The Clayton Act: Its role in fighting big business. *[Chapter 19: Money, Prices, and Finance in the Postbellum Era]* 1\. Coinage Act of 1873 (Crime of 73) 2\. How did the government get prices to go down after the Civil War? 3\. Understand the supply-side economics of the Industrial Revolution. What happened to real wages? 4\. Gold standard (sound money) versus Free Silver movement 5\. Understand what "sound money" means and its advantages. 6\. Understand the "free silver" movement and its advantages. 7\. How was the fight between sound money and free silver eventually resolved? 8\. Know what bank runs are. 9\. Understand the plight of the farmers with their debt during this time. 10\. Deflation and who it helps and who it hurts. 11\. Inflation and who it helps and who it hurts. 12\. Dual Banking system: State and National banks. What was the difference? Why did the state banks choose to not become national banks? 13\. Understand what Greenbacks were during the Civil War and why they hurt the economy. 14\. National Banking Act of 1863 basic changes about Federal government financing. Going from Greenbacks to finance the government to borrowing to finance the government. 15\. Banking Panics: why they occurred. Why they led to the creation of the Federal Reserve. 16\. Supply side economics and the Quantity Theory of Money 17\. Applying the Quantity Theory of Money: 18\. The principles and advantages of having a gold standard. Think about the Quantity Theory of Money. 19\. Good deflation and bad deflation in the postbellum era. 20\. The Contraction Act and why it didn't work. Think about the Quantity Theory of Money and what happens when you contract the money supply. 21\. The Resumption Act of 1875. Think about the Quantity Theory of Money. Why did it work? 22\. Business cycles and how they can be avoided. Think about the Quantity Theory of Money. 23\. The gold rush of 1849. Its consequences. Gresham's Law. 24\. The Federal Reserve Act of 1913 and the reason the Fed was established. What problem did its advocates say it would solve and how? 25\. There is an important graph in the chapter on general prices. It shows the changes in general prices during the Postbellum era. Be familiar with it and what each part of the graph implies about the economy. Apply the quantity theory of money to it. 26\. There is an important graph in the chapter on the money supply during the postbellum era. It shows the changes in the money supply. Be familiar with the part after the Civil War and how it affected the economy. Apply the quantity theory of money to it. 27\. There were many recessions and depressions in the postbellum era. Why? What caused them. Think about the quantity theory of money. Think about credit provided by the fractional reserve banking system's effect on the economy. *[Comparing Industries: ]* 1\. Know how to interpret the ATC and the demand curve in a graph for a large corporation. Know about pricing power and elasticity for a large corporation. Know how to read the graph to determine prices and corresponding outputs. (This information is in the Comparing industries PowerPoint Presentation and lecture)