ECON 1100 – Global Economics (Section 03) Exam #4 – Fall 2008 (Version C) Multiple Choice Questions (212 points each): 1. _______________ was the leader of China during the time when the country implemented a system of “Soviet style Command Planning.” a. Mao Zedong b. Deng Xiaoping c. P.V. Narasimha Rao d. None of the above answers are correct. 2. The “British East India Company” a. implemented economic policies in India which lead to the creation of the Permit Raj during the second half of the 20th century. b. was an English corporation founded in 1600, which would establish trade routes between Great Britain, India, and China. c. directly ruled India from 1858 up until 1991. d. More than one of the above answers is correct. 3. Currently China a. has a population of over 1.3 billion people (roughly 20% of the global population), making it one of the largest consumer markets in the world. b. is an entirely “free market economy,” with no role for government in the economy whatsoever. c. exports a great deal of output to the rest of the world, but imports virtually no goods from the rest of the world. d. None of the above answers are correct. 4. Under “command planning” in the Soviet Union a. a great deal of resources were devoted to national defense (specifically, more than 30% of GDP by the end of the Cold War). b. it was more expensive to take a cab from the airport in Moscow to Red Square than it was to fly from Vladivostok to Moscow. c. the industrial sector was very efficient and could produce more output with fewer inputs than enterprises in similar sectors in other countries. d. More than one of the above answers is correct. 5. The Balcerowicz Group a. supported “gradual economic reform” and not “Shock Therapy.” b. was led by Leszek Balcerowicz, who served as Finance Minister and Deputy Prime Minister in the new Solidarity government in Poland. c. gained control of the Commanding Heights of the Russian Economy through “Voucher Privatization.” d. More than one of the above answers is correct.6. The current population of India is approximately a. 2,769,873,824, which is just over 40% of the world’s population. b. 1,147,995,898, which is roughly 17.2% of the world’s population. c. 617,455,329, which is roughly twice that of the United States. d. 304,823,774, which is roughly equal to that of the United States. 7. ___________________ became known as “Europe’s New Tiger,” because of its strong economic performance starting in the mid 1990’s. a. Great Britain b. Russia c. The Czech Republic d. Poland 8. The “Mahalanobis Equation” a. explained why the “Phillips Curve” (i.e., the “inverse relation between unemployment and inflation”) would not hold in India after independence. b. explained why standards of living in India would have to decline as a result of the election of P.V. Narasimha Rao as Prime Minister in 1991. c. expressed the entire Indian economy in a single mathematical equation. d. estimated the amount of revenue that the Russian government could expect to generate by selling a government owned enterprise by way of voucher auction. 9. In Las Vegas there are many fewer restrictions on individual behavior than in most other cities in the U.S. (e.g. – gambling is legal, consumption of alcohol in public is legal, etc.). A parallel could be drawn between “the ‘different rules’ that people face when in Las Vegas” and the a. the Contract Responsibility System, which was implemented in China during its time of economic reform. b. “Permit Raj” that emerged in India post WW-II. c. establishment of a “Special Economic Zone.” d. attempt at “Soviet style Command Planning” in China post WW-II. 10. The non-violent 1989 revolution in Czechoslovakia that led to the overthrow of the communist government was known as a. The Cultural Revolution. b. The Gaidar Reforms. c. The Velvet Revolution. d. Chinese Democracy. 11. _____________ was an economist who served as Finance Minister of India under Prime Minister Rao from 1991-1996, and is currently the Prime Minister of India. a. Rajiv Ghandi b. Palaniappan Chidambaram c. Manmohan Singh d. Atal Behari Varpayee12. Jeffrey Sachs a. 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. b. advised Poland to institute “Shock Therapy” in order to reform their economy. c. was the head of the “Planning Commission of India” from 1949 to 1964, a time during which the first of India’s “Five Year Plans” was implemented. d. None of the above answers are correct. 13. _______________ refers to the “complex system of licenses, controls, regulation, and red-tape that influenced economic decisions at all levels of production, investment, and foreign trade in India’s private sector from 1947 through 1990.” a. The Permit Raj b. The British Raj c. Swadeshi d. The “Indian Elephant.” 14. “Economies of Agglomeration” refer to a. the creation of a special geographic region in which the behavior of enterprises is constrained by fewer restrictions than in the rest of the country. b. benefits that governments realize from decreasing the amount of resources used for military purposes. c. benefits that firms obtain from locating near other firms. d. the sale of a government owned enterprise by way of auction. 15. Perestroika a. refers to the movement launched by Mao Zedong to rid China of “liberal bourgeoisie elements” and to continue “revolutionary class struggle.” b. means “restructuring,” referring to restructuring of the Soviet economy. c. means “openness,” referring to the shift toward openness and transparency in governmental decision making, along with freedom of access to information, in Soviet society. d. refers to the period of direct British rule of the Indian subcontinent from 1858 through 1947. 16. Which of the following policies was NOT supported by the Bharatiya Janata Party (BJP) when they came to power in March 1998? a. Reversing the market based economic reforms begun under Prime Minister Rao, and reinstituting the Permit Raj. b. Pursuing so called “Hindu Nationalism” (i.e., a revivalist emphasis on rolling back minority privileges in favor of India’s Hindu majority). c. Increased national defense spending by
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