ECON 1100 – Global Economics (Section 05) Exam #4 – Fall 2011 (Version A) Multiple Choice Questions (212 points each): 1. The “Great Society” refers to A. the economic policies implemented by President Nixon, in response to the stagnation and malaise that plagued the U.S. economy in the early 1970s. B. the reforms enacted by President Reagan in the early 1980s, in order to return the U.S. economy to a primarily market based system. C. the series of domestic programs proposed by and initially implemented under the Leadership of President Johnson, with the two main goals of eliminating poverty and racial injustice. D. the programs initiated between 1933 and 1938 under President Franklin Roosevelt with goal of providing relief, recovery, and reform during the Great Depression. 2. During the first decade of the 21st Century, unemployment rates in most Western European countries were _________ the unemployment rate in the United States. A. higher than B. lower than C. virtually equal to D. None of the above answers are correct (since there are no reliable measures of unemployment rates for any European countries). 3. The Beveridge Report A. clearly argued why free market systems will always outperform systems of “Command and Control Planning.” B. gave the German government ownership and control of the banking, electricity, gas, and coal industries in the country in the mid-1940’s. C. established the Red Army as the rulers of France in 1946. D. outlined a series of social programs to “slay the five giants” of want, disease, ignorance, squalor, and idleness, which were plaguing British society at the end of World War II. 4. The current value of Per Capita GDP (purchasing power parity) in Russia is approximately: A. $44,850, approximately equal to the current value in the United States (of $46,000). B. $33,170, approximately equal to the current value in the European Union (of $32,900). C. $14,600, approximately equal to the current value in Poland (of $16,200) but substantially less than the value in the European Union (of $32,900). D. $2,870, drastically less than the value at the time when the country’s system of Command and Control Planning ended.5. _________________ was Prime Minister of Great Britain when the country Nationalized the Commanding Heights of its economy after World War II. A. Margaret Thatcher B. Gordon Brown C. Clement Atlee D. Winston Churchill 6. _____________ was the first enterprise that was privatized in Russia by way of voucher auction. A. The Vladivostok Broadcasting Corporation B. The Red Army C. St. Petersburg Motors D. The Bolshevik Biscuit Factory 7. The Misery Index in the United States achieved its lowest value of the 20th century during the time when ____________________ was President. A. Richard Nixon B. Lyndon Johnson C. Franklin D. Roosevelt D. Calvin Coolidge 8. Jeffrey Sachs A. advised Germany to institute “Soviet Style Command Planning” in the early 1970’s, since the “German Social Market Economy” was clearly not working. B. acquired Norilsk Nickel (a Russian enterprise with annual revenues of $1.5 billion) for roughly $180 million as part of a “loans-for-shares” deal. C. was an advocate of economic reform by way of “Shock Therapy.” D. was the first freely elected President of Poland, although he won the Polish election of 1991 amidst allegations of “voter fraud.” 9. As a result of the Mellon-Coolidge-Harding tax cuts, the “Highest Marginal Tax Rate” under the U.S. Federal Income Tax was decreased from 73% in 1921 to 25% by 1929. Further, the total amount of revenue generated by the U.S. Federal Income Tax ______________________ between 1921 and 1929. A. remained relatively constant at roughly $250 million B. increased from $700 million to over $1 billion C. decreased slightly from $780 million to $750 million D. decreased dramatically from $6.8 billion to $2.3 billion 10. _______________ was the leader of the Soviet Union when the Solidarity Party gained political control of Poland during the semi-free elections of 1989. A. Yegor Gaidar B. Vitali Klitschko C. Mikhail Gorbachev D. Boris Yeltsin11. ________ means “restructuring,” referring to restructuring of the Soviet economy. A. Glasnost B. Perestroika C. Luftbaloons D. Gossnab Answer Questions 12 through 14 based upon the information conveyed in the graph below. This graph illustrates Demand and Supply for laundry detergent in November 2011. The current (“free market”) price is $5.15, at which 36,200 units are traded. 12. Suppose the government is concerned that a price of $5.15 makes laundry detergent too expensive for consumers, so they impose a price ceiling of $4.05 in this market. As a result of this policy, Total Consumers’ Surplus would A. decrease by “Areas (a)+(b).” B. increase by “Areas (c)+(d).” C. increase by “Area (e).” D. change by “Areas (c)–(b).” 13. If a price ceiling of $4.75 were imposed in this market, then ______ units would be traded. A. fewer than 18,700. B. exactly 18,700. C. more than 18,700 but fewer than 36,200. D. exactly 36,2000. 14. Consider the following two proposals: “Policy A” is a price floor of $6.25 and “Policy B” is a price ceiling of $4.05. We can infer that A. the magnitude of Deadweight-Loss would be exactly the same under either “Policy A” or “Policy B.” B. “Policy A” would create a larger Deadweight-Loss than would “Policy B.” C. “Policy B” would create a larger Deadweight-Loss than would “Policy A.” D. None of the above answers are correct, since the graph does not convey enough information to be able to compare the magnitude of Deadweight-Loss under these two alternative policies. price 00quantity Demand 6.25 5.15 4.05 18,700 36,200 48,000 76,350 (b) (a) (d) (e) Supply (c)15. During Margaret Thatcher’s time as Prime Minister, the highest marginal tax rate on earned income in Britain A. was increased from 10% to 50%. B. was decreased from 25% to 0% (as a result of all income taxes being eliminated for all workers in the country). C. was decreased from 83% to 40%. D. remained constant at the relatively low level of 5%. 16. The “Dow Jones Industrial Average” A. provides a direct measure of the rate at which one Euro can be traded for one U.S. Dollar. B. provides a “weighted average” of the stock
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