Economics 110
Examination #2
Spring 1993
Part I: Compare the former Soviet Union and the United States on ONE of the following.
Consider both similarities and differences but focus on the former Soviet Union. You do
not need to do research on the corresponding aspect of the United States. Your general
knowledge is enough.
1. the management of enterprises
OR 2. the labor market (including companies' hiring decisions, workers' job decisions,
wages, unions, education, the role of women, etc.)
OR 3. agriculture ( 20 points)
Part II: Perhaps the main difference between the former Soviet economy and the
American economy was the use of central planning in the former Soviet Union. Describe
the main features of Soviet central planning. In your answer, (1) consider how the plan
was implemented and how it was enforced, including the role of Gosplan, the ministries,
the State Bank, and the enterprise directors. (2) Consider the role of prices in central
planning. (3) Explain what the "soft-budget constraint" was and why it existed? (4)
Explain why the system of central planning seemed to "succeed" well in the 1950s and
1960s (i.e., what were the strengths of this system?). Finally, (5) explain why the system
of central planning failed in the 1970s and 1980s (i.e., what were the problems with it?).
( 25 points)
Part III. You are employed by an American company that is considering trading with or
investing in the former Soviet Union. What were the most important features of Soviet
trade, financial, and investment policies that your company would have needed to know
prior to 1991? How these have changed since then? (i.e., what are the most important
features of the Russian trade and investment policies and of the Russian economic
situation that your company would need to know today?) ( 20 points)
Part IV. From 1985 to 1991, the former Soviet economy underwent a process of
significant reform, called perestroika. (1) Why was it believed to be necessary to
undertake these reforms? (2) Briefly describe the main reforms that were initiated. (3)
Why did perestroika fail to improve the economic performance of the former Soviet
Union? (4) Describe the further reforms that were proposed by Russia in 1992. Are
these likely to succeed any better than perestroika did? Why or why not? (5) Why has it
been so difficult to initiate reforms and make them work effectively? ( 25 points)
Part V. The former Soviet Union has been called a "Marxist" economy.
Explain why. (Review the section of the course on Marxism. Based on that material,
explain the ways by which the Stalinist model of economic development can be attributed
to the ideas of Marx.) ( 10 points)
Please type or write legibly. Try to limit your answer to each question to one to two
pages ---
250 to 500 words. In your answer, focus on the main points, not the small details.
Economics 110
Examination #3
Spring 1993
Part I: This section of the course has considered two developing countries: China and
Mexico. China began its period of economic development in the 1950s; Mexico began
in the 1930s.
A. Briefly compare the main features of the development strategy of each country
through the late 1970s. (That is, how did the government
of each country go about
achieving economic development?) In describing these development strategies, consider
agricultural policies, industrial policies, trade policies, planning, the role of markets, etc.
Write your essay so that you can compare these. (15 points)
B. Each country has experienced some successes and some failures in
its pursuit of modern economic development. For each country, what were the successes
and what were the failures? Consider the following: economic growth, productivity,
investment rates, unemployment, inflation, standards of living, education and health,
population growth, etc. Again, write your essay so that you can compare these. (15
points)
C. Each country has undertaken a major reform program. Compare the main features
of the reforms in the two countries. Consider reforms of agriculture, of industry, of the
role of government, of trade and foreign investment, etc. Why were these reforms
undertaken? Again write your essay so that you can compare these. (15 points)
D. "China and Mexico are in the process of becoming capitalist countries." Is this
statement true or false? WHY? (5 points)
Part II: Choose Two of the Following Questions ( 25 points each) :
1. While China modeled its economy on the Soviet Union, it was indeed different in
many respects.
A. In what ways was the Chinese economy prior to reform different from the
traditional Stalinist model of the Soviet Union? (10 points)
B. In what ways has the reform process in China since 1978 been different from the
reforms instituted in the U.S.S.R. under Gorbachev and in Russia under Yeltsin? (15
points)
2. For the past decade, China and Mexico have both experienced a significant increase in
international debt. For Mexico, this has even been called a "crisis"!
A. In the case of each country, why did this rise in international debt occur?
B. In each case, what policies have been undertaken to reduce the amount of
international debt?
C. In each case, what effect did the rise in international debt and the policies
undertaken to reduce the international debt have on the domestic economy?
3. Describe the international economic relations between the United States and China.
Consider the following:
A. The extent and composition of trade between the countries and the
trend of these over time
B. The trade balance between the countries and its trend over time
C. The policies of China regarding trade and foreign investment
prior to reform
D. The trade disputes that have existed with the United States
E. The reforms undertaken regarding both trade and foreign investment
F. Recent changes in trade relations
4. Describe the international economic relations between the United States and Mexico.
Consider the same points as in question 4. (Point F relates to the NAFTA.)
5. Review the section of the course on Marxian economics. Show how Marxian ideas
influenced economic policies of Mexico until the election of 1982 (discussed in question
A of Part I). Then, review the section of the course on the philosophy of the market
economy (Adam Smith). How have these ideas influenced the reforms in Mexico since
then (discussed in question C of Part I).
Bonus Question ( 1 to 5 points)
Write a question that can be used on an examination on the economies of China and
Mexico. Your question must be completely different from any of the questions asked on
this examination.
Economics 110
Spring 1993
Examination #4 --- DUE MAY 24
Part I: Fourth Exam. (Choose two only of the following)
1. Many people believe that the Japanese economy has been performing better than the
American economy since 1960. Is this belief valid? In particular, name some of the
ways in which the Japanese economy has been performing better and some of the ways in
which it has not. (Refer to the list of goals presented at the beginning of the course.)
2. The Japanese have not accepted the American idea of laissez faire. Instead, the
Japanese government is very involved with the economy! In what ways is the Japanese
government involvement in the economy different from that in the United States?
(Consider both before and after 1970.) What are the arguments that the Japanese
government's involvement with its economy has contributed greatly to the success of
Japanese economic performance? What are the arguments that it has not done so?
3. Some people see the differences in Japanese business practices (the nature of the
corporation) as the key to the Japanese economic success. In what ways is the Japanese
corporation different from the American corporation? (You might consider here such
points as: ownership, control, relations with other businesses, competitive strategies, the
careers of managers, the role of small companies, etc.) How might these differences have
contributed to the competitive advantages of Japanese companies in
certain industries?
Conclude your essay by considering what American companies can learn from the
Japanese business practices.
4. Some people see the differences in industrial relations systems as the key to Japanese
economic success. In what ways are industrial relations in Japan different from those in
the United States? (You might consider such points as wage determination, training,
employment tenure, job organization, unions, flexibility, worker participation, income
distribution, maintenance of full-employment, etc.) How might these differences have
contributed to the competitive advantages of Japanese companies in certain industries?
Conclude your essay by considering what Americans can learn from the Japanese system
of industrial relations.
5. In recent years, economic relations between the United States and Japan have become
strained. Some Americans claim that Japan has been unfair, leading to American calls
for protection. One source of this conflict is the large American trade deficit with Japan.
(1) Why has this trade deficit occurred? (2) What are its effects on the American
economy?
(3) What are the arguments made by those who believe that Japan is NOT at fault? (4)
What are the arguments made by those who believe that Japan is indeed at fault? Another
source of this conflict has been direct foreign investment. Explain the nature of the
conflict. Then, answer questions (2), (3), and (4) for this conflict.
In the above questions that ask you to compare Japan and the United States, focus your
time on Japan only. Do not also explain the situation in the United States!
Economics 110
Spring 1993
Final Examination --- DUE MAY 24
Choose two only of the following:
1. Of the countries studied in the course, Russia, China, and Mexico are very poor
countries whose economies have not performed well in recent years. Choose one of these
countries. Write an essay on the following question: If the country wants its economy to
perform well in future years, what can it learn from the experience of Japan? Consider as
many aspects as you can. Be sure to show that you understand how the Japanese
experience can be applied to the particular situation of the country you have chosen.
2. The United States has economic relations with each of the countries studied in the
course: the former Soviet Union, China, Mexico, and Japan. Economic relations involve
trade policies and foreign investment policies. Write an essay on the recent economic
relations of the United States and each of these countries. Consider especially how the
economic relations have changed in recent years. Consider also the nature of any
conflicts of an economic nature between the United States and these countries. (in your
answer, consider Adam Smith's views on trade between nations and Karl Marx's views on
imperialism.)
3. In the philosophy of Adam Smith, the government in a capitalist country should have
a very limited role. In the philosophy of Karl Marx, the government of a capitalist
country was an instrument of the ruling classes. Neither considered the government of a
communist economy. Write an essay comparing the role of the government in the
economies of the former Soviet Union, China, Mexico, and Japan. Consider also how
this role has changed in recent years and whether government intervention in each of
these countries improved or hurt economic performance (provide some specific
examples).
4. In the discussion of each country studied in the course --- the former Soviet Union,
China, Mexico, and Japan --- , we have considered the system of labor relations. This
involves such factors as wage determination, training and education, employment tenure,
hiring decisions, job organization and flexibility of job assignment, unions, the role of
women, the distribution of income, maintenance of full-employment, etc. Write an essay
comparing the systems of labor relations of the four countries studied.
5. In the 1960s and 1970s, many people debated what was called the "convergence
theory". This theory argued that the communist and capitalist economic systems were
coming to resemble each other more and more. The communist economies would
undertake reforms that would make them resemble the capitalist economies and the
capitalist economies would undertake reforms that would make them more resemble the
communist economies. Eventually, the two would become indistinguishable and the
need for conflict between them would end.
Argue the convergence theory based on the countries studied in this course. Begin
your essay (but not your preparation) with your conclusion.
Then, support your conclusion with as much evidence as you can from ALL of the
countries studied. In particular, (1) what kinds of reforms are being made? (2) why are
they believed to be needed? (3) are the countries reforming in ways that make them more
or less similar? (4) what differences are likely to remain?