ECON 1100 – Global Economics (Section 05)
Exam #4 – Fall 2012 (Version A)
Multiple Choice Questions ( 2 12 points each):
1.
In most industrialized countries, the role of government in the economy
____________ during the first part of the twentieth century and ______________
during the last part of the twentieth century.
A.
decreased; then increased.
B.
decreased; then decreased further.
C.
increased; then decreased.
D.
increased; then increased further.
2.
Between 2000 and 2010, Per Capita GDP in the Russian Federation
A.
increased by 5.13%
B.
increased by 64.68%
C.
decreased by 27.40%
D.
None of the above answers are correct (since no reliable measure of Per
Capita GDP has been computed for the Russian Federation during this
time).
3.
During Margaret Thatcher’s time as Prime Minister, the highest marginal tax rate
on earned income in Britain
A.
remained constant at 25%.
B.
was decreased from 83% to 40%.
C.
was decreased from 75% to 0% (as a result of all income taxes being
eliminated for all workers in the country).
D.
was increased from 10% to 90%.
4.
In August 1936, 45% of respondents said “yes” to a Gallup poll question that
asked:
A.
“Do you believe the U.S. will defeat Nazi Germany in World War II?”
B.
“Do you believe the Mellon-Coolidge-Harding Tax Cuts caused the Great
Depression?”
C.
“Do you think that John Maynard Keynes should run for President?”
D.
“Do you believe the acts and policies of the Roosevelt Administration may
lead to a Dictatorship?”
5.
As part of his “New Economic Policy” Richard Nixon
A.
legally required farmers to drown their chickens instead of sending them
to market.
B.
completely eliminated the U.S. Federal Income Tax (a change which was
undone with the reestablishment of the tax by President Reagan in 1981).
C.
implemented price controls in an unsuccessful attempt to curb inflation.
D.
More than one (perhaps all) of the above answers is correct.
6.
In April, 1942, President Franklin Roosevelt signed an Executive Order (later
rescinded by Congress) which would have
A.
sentenced Friedrich von Hayek to death.
B.
taxed all income over $25,000 at a Marginal Tax Rate of 100%.
C.
completely abolished the U.S. Federal Income Tax.
D.
implemented economic reform by way of “Shock Therapy” in the U.S.
7.
When making general observations on the level of barriers to trade around the
world, it was noted that before World War I there were ____________ trade
barriers whereas by the end of the 1930s there were ____________ trade barriers.
A.
relatively high; even higher.
B.
relatively high; relatively low.
C.
relatively low; relatively high.
D.
relatively low; even lower.
8.
After Privatization in Great Britain, annual “working days lost to strikes for every
1,000 employees”
A.
decreased from 1,247 in 1979 down to 108 in 1990.
B.
decreased from 867 in 1979 down to 0 in 1990 (since labor strikes were
made illegal in the country starting in 1988).
C.
increased from 17 in 1979 up to 34 in 1990.
D.
increased from 1,363 in 1979 up to 2,981 in 1990.
9.
_________________ was Prime Minister of Great Britain when the country
Nationalized the Commanding Heights of its economy after World War II.
A.
Margaret Thatcher
B.
John Major
C.
Clement Atlee
D.
Winston Churchill
10.
According to a 1992 survey of economists, _______ agreed with the statement:
“In the movement from a non-market to a market economy it is important that the
ownership of productive resources be privatized at the onset.”
A.
99.7%
B.
73.5%
C.
45.2%
D.
12.8%
11.
Which of the following was NOT one of the four primary causes of Britain’s poor
economic performance during the 1970’s?
A.
Poor labor relations, which led to numerous strikes.
B.
The tremendous amount of resources devoted to inefficient and
economically declining nationalized industries.
C.
The burdensome and highly progressive tax structure.
D.
None of the above answers are correct (since each choice was one of the
primary causes of Britain’s poor economic performance in the 1970’s).
12.
The National Recovery Administration
A.
allowed industries to create “codes of fair competition,” intended to
reduce destructive competition between firms, establish minimum wages
for workers, and maximum weekly hours for workers
B.
was an attempt at “Command Planning” in the U.S.
C.
was declared Constitutional by the Supreme Court in a controversial 6 to 5
decision in 1936.
D.
More than one (perhaps all) of the above answers is correct.
13.
After Jeffrey Sachs agreed to formulate a plan for economic reform in Poland,
Polish leaders told him that
A.
they needed the plan immediately, which forced him to write up his plan
that night and deliver it to members of Parliament the following morning.
B.
he could take over a month to write the plan, since Parliament would be on
recess during the entire time between Thanksgiving and the New Year.
C.
it did not really matter how long it took him to write up his plan, since
asking him to do so was only symbolic and there was no chance that his
plan would ever actually be implemented.
D.
None of the above answers are correct (this is a “trick question,” since
Jeffrey Sachs was never asked to draft a plan to reform the Polish
economy).
14.
Which of the following countries operated under a system of “Command and
Control Planning” before World War II?
A.
Germany.
B.
France.
C.
The Soviet Union.
D.
More than one (perhaps all) of the above answers is correct.
15.
Which of the following contributed to the U.S. entering the Great Depression?
A.
The poor performance of the U.S. stock market throughout the 1920s
(starting with the stock market crash of 1921, when the DJIA decreased in
value by 42.3% during the first week of June 1921).
B.
The contractionary monetary policy enacted by the Federal Reserve
between August 1929 and March 1933, during which time the money
supply in the United States was decreased by one-third.
C.
The assassination of President Hoover on 1/2/1932.
D.
None of the above answers are correct (since to this day nobody has any
reasonable explanation for why the Great Depression occurred).
16.
Between 1980 and 1991, the United Kingdom experienced ______________ in
the value of GDP and ______________ in the value of the Gini-Coefficient.
A.
an increase; an increase.
B.
an increase; a decrease.
C.
a decrease; a decrease.
D.
a decrease; an increase.
17.
___________________ broadly refers to government policies intended to directly
alter market outcomes, often with the intention of influencing things such as the
number and size of firms in an industry, wages paid to workers, working
conditions, and types of products produced.
A.
Command Planning
B.
Nationalization
C.
Regulation of Markets
D.
Regressive Taxation
Answer Questions 18 through 20 based upon the information conveyed in the graph
below. This graph illustrates Demand and Supply for “Good X” in November 2012.
The current (free market) price is $8.40, at which 36,000 units are traded.
Supply
price
9.60
a
b
f
8.40
c
7.25
d
Demand
e
0
quantity
0
18,100
36,000
48,950
76,725
18.
If a price ceiling of $8.00 were imposed in this market, then _____________ units
would be traded.
A.
more than 36,000 but fewer than 76,725.
B.
exactly 36,000.
C.
more than 18,100 but fewer than 36,000.
D.
exactly 18,100.
19.
Suppose the government imposes a price floor of $9.60 in this market. As a result
of this policy, Total Consumers’ Surplus would
A.
decrease by “Areas (a)+(b).”
B.
decrease by “Areas (b)+(d).”
C.
change by “Areas (a)–(d)” (which appears to be an increase).
D.
not change at all.
20.
Imposing a price ceiling of $6.95 would create a Deadweight-Loss
A.
exactly equal to “Areas (b)+(d).”
B.
greater than “Areas (b)+(d).”
C.
exactly equal to “Areas (c)+(d)+(e).”
D.
exactly equal to “Area (f).”
21.
_____________ was the first enterprise that was privatized in Russia by way of
voucher auction.
A.
North Sea Oil and Gas
B.
The Bolshevik Biscuit Factory
C.
Norilsk Nikel
D.
St. Petersburg Motors
22.
Since the end of World War II, the unemployment rate in the United States
(reported on an annual basis) has never been higher than 9.71%. In contrast,
during the Great Depression this figure
A.
peaked at a value of 8.53% in 1932.
B.
was between 9% and 10% in the three consecutive years between 1931
and 1933 (but below 9% in every other year during the downturn).
C.
was above 10% for ten consecutive years (from 1931 through 1940).
D.
was above 25% for twelve consecutive years (from 1927 through 1938).
23.
One of the arguments in favor of Privatization was that it would “create popular
capitalism.” This argument
A.
maintained that privatization would make entrepreneurs and business
leaders better respected by the general public (ultimately attracting more
highly qualified people to the profession).
B.
recognized that the sale of nationalized enterprises would boost
government revenues, thereby allowing the government to reduce its
budget deficits.
C.
focused on eliminating the difficulties with setting wages for employees
within a government owned/operated enterprise.
D.
noted that as a result of privatization, there would be a boost in the number
of people who directly had an ownership stake in business enterprises.
24.
________________ was replaced by Ludwig Erhard as the German Director of
Economic Administration in the American/British Occupation Zone after
referring to U.S. food aid to Germany as “chicken feed.”
A.
Lucius Clay
B.
Johannes Semler
C.
Jean Monnet
D.
Keith Joseph
25.
Which of the following was a part of the “Gaidar Reforms”?
A.
An increase in defense spending, in order to solidify Russia’s military
advantage over nearby countries in Western Europe.
B.
The creation of programs to provide a “Social Safety Net,” including
unemployment compensation.
C.
Neither (A) nor (B) are correct.
D.
Both (A) and (B) are correct.
26.
_____________ refers to a regime in which the state regulates nearly all aspects
of public and private behavior.
A.
Totalitarianism
B.
Communism
C.
Monetarism
D.
Socialism
27.
In 1936 Per Capita GDP in the region which would become East Germany was
slightly higher than the corresponding figure in the region which would become
West Germany. At the time of German reunification in 1991, (i.e., after East
Germany had operated under Command Planning for over four decades) Per
Capita GDP in East Germany was approximately _________ of Per Capita GDP
in West Germany.
A.
212.46%
B.
102.77%
C.
82.31%
D.
31.34%
28.
______________ became known as the “Mad Monk” because of the impassioned
political speeches which he gave throughout Britain in the mid 1970’s extolling
the virtues of free enterprise and market based economic systems.
A.
Keith Joseph
B.
Friedrich von Hayek
C.
Winston Churchill
D.
Clement Atlee
29.
The circulation and official use of the Euro as currency began in _____.
A.
1946
B.
1957
C.
2002
D.
2011
30.
The regulation of business by the Federal Government in the United States began
with the creation of the
A.
Securities and Exchange Commission in 1934.
B.
Department of Commerce in 1903.
C.
Interstate Commerce Commission in 1887.
D.
Department of Business in 1817.
31.
The __________ was a collection of Polish economists concerned with analyzing
the problems of Socialism and questions of how to reform the Polish economy,
who ultimately advocated a transition to a market economy via “Shock Therapy.”
A.
Pietlukiewicz Pack
B.
Beveridge Assembly
C.
Balcerowicz Group
D.
Gaidar Gaggle
32.
During the 1970’s and into the early 1980’s, the U.S. economy experienced
A.
a negative GDP growth rate in 4 of the 9 years between 1974 and 1982.
B.
an unemployment rate below 4% in all 12 years between 1972 and 1983.
C.
relatively high inflation, peaking at an annual rate of 14.76% in March
1980.
D.
More than one (perhaps all) of the above answers is correct.
33.
Lech Wałęsa
A.
was the first freely elected President of Poland.
B.
strongly opposed the implementation of shock therapy in Poland.
C.
moderated negotiations between the U.S., U.K., and Canada, which led to
the signing of AFTA (the “Atlantic Free Trade Agreement”) in 1984.
D.
More than one (perhaps all) of the above answers is correct.
34.
The __________________ gave the French government control of the banking,
electricity, gas, and coal industries within France.
A.
Nationalization Acts of 1945 and 1947
B.
Walsh-Healey Act of 1936
C.
Beveridge Report
D.
Treaty of Rome
35.
Which of the following was a key part of the policies which FDR put in place to
deal with the Great Depression?
A.
An attempted stimulus of the economy via Keynesian Fiscal Policy (i.e.,
“make-work” programs administered by the Civil Works Administration
and the Works Progress Administration).
B.
The temporary elimination of the U.S. Federal Income Tax, which would
increase the disposable income of households (giving people more money
to spend in the short term).
C.
Imposing wage and price controls, in order to keep inflation low.
D.
More than one (perhaps all) of the above answers is correct.
36.
______________ (a member of FDR’s “Brain Trust”) stated, “We didn’t admit it
at the time, but practically the whole New Deal was extrapolated from programs
that Hoover started.”
A.
Milton Friedman
B.
Angus Young
C.
Andrew Mellon
D.
Rex Tugwell
37.
Which professional sports team was named after the symbol of the National
Recovery Administration?
A.
The New England Patriots.
B.
The Philadelphia Eagles.
C.
The Washington Capitals.
D.
The New York Yankees.
38.
The “General Agreement on Tariffs and Trade” (GATT)
A.
was an agreement initially signed in 1947 by 23 countries (geographically
from all reaches of the globe), which helped create a global economy in
which economic activity transcends national borders.
B.
nationalized the Commanding Heights of the Soviet economy in 1917.
C.
was the primary cause of the Vietnam War.
D.
More than one (perhaps all) of the above answers is correct.
39.
Poland became known as
A.
“Europe’s Minotaur,” because of its robust, resilient, unimaginable
economic growth during the late 1970s and early 1980s.
B.
“Europe’s New Tiger,” because of its strong economic performance
starting in the mid-1990’s.
C.
“Europe’s Turtle,” because of its slow (but steady) economic growth
throughout the 1950s, 1960s, and 1970s.
D.
“Europe’s Sloth,” because of its severe economic decline between 1999
and 2007.
40.
________________________ broadly refers to the series of domestic programs
proposed by and initially enacted under the leadership of President Lyndon
Johnson in the 1960’s, which included the creation of Medicare and Medicaid.
A.
The Great Society
B.
The New Economic Policy
C.
Johnsonomics
D.
The Thousand Points of Light
(Blank Page)