ECON 1100 – Global Economics (Section 06) Exam #2 – Summer 2011 (Version D) Multiple Choice Questions (212 points each): 1. The “Great Inflation” refers to the period of high inflation in the U.S. during the A. first two years of the Presidential Administration of Barack Obama (from February 2009 through March 2011). B. last year and a half of the Presidential Administration of George W. Bush (from August 2007 to January 2009). C. early 1970’s through the early 1980’s (from roughly June 1973 to July 1982). D. years right before the Great Depression (from 1924 through 1929). 2. In lecture we identified and discussed “five key factors for economic growth.” Within this discussion we noted that (all other factors fixed) a society could potentially achieve Economic Growth by A. making deliberate investments in education with the intention of increasing the overall skill level of their workforce. B. using all of their available natural resources to produce as many consumption goods as possible in the short term. C. building a strong military with the intention of conquering neighboring countries with relatively higher standards of living. D. More than one (perhaps all) of the above answers is correct. 3. Under a _________________, the government relies upon the voluntary response of the private sector to a set of guidelines jointly formulated by government, industry, and labor (a system in which planning is intended to complement, as opposed to replace, markets). A. system of Indicative Planning B. system of Command Planning C. system of Sovereign Planning D. comparative economic system 4. The “Catch-up Effect” refers to A. the tendency over time for “the rich to become richer” and “the poor to become poorer” (a trend that is particularly pronounced in all market based economies). B. the trap in which countries are often poor because they cannot afford to save and invest, but cannot easily save and invest because they are poor. C. the observation that (all other factors fixed) those economies with currently low levels of GDP Per Capita will typically experience higher GDP Growth Rates. D. the phenomenon that the substance initially expelled from a bottle of Heinz is often a gloppy, watery goo.5. The value of the Gini Coefficient for the United States ______________ between 1980 and 1989 and then ______________ by 2007. A. increased from (.403) to (.431); increased further to (.463). B. increased from (.776) to (.983); increased further to (1.214). C. increased from (.203) to (.294); decreased slightly to (.287). D. decreased from (.394) to (.365); decreased further to (.312). 6. ___________________ provides a measure of the total value of all final goods/services produced within an economy in a given period of time, with all goods/services valued according to “current period prices,” whereas ___________________ provides a measure of the total value of all final goods/services produced within an economy in a given period of time, with all goods/services valued according to a “single set of common, constant prices.” A. Real GDP; Nominal GDP. B. Frictional GDP; Fictional GDP C. Real GNP; Real GNR. D. Nominal GDP; Real GDP. 7. One of the three types of “Economic Incentives” is “Material Incentives,” which could be described as A. attempts to convince individuals to behave in a certain manner because it is “the right thing to do.” B. the use of “force” or “intimidation” to obtain compliance. C. the use of “monetary rewards” or “direct increases in consumption” which result from engaging in an activity. D. the use of torture or other “enhanced interrogation techniques” in order to elicit information from someone. For Question 8, consider the continuum between the economic systems of Pure Socialism and Pure Capitalism illustrated below. 8. Based upon the discussion in lecture, along the continuum illustrated above the economy of the United States currently would most accurately lie at __________. A. Point A B. Point B C. Point C D. Point D Pure Socialism Pure Capitalism Cuba North Korea Germany United Kingdom New Zealand IsraelPoint D Point CPoint BPoint A9. ______________ traces its philosophical roots to the work of 19th Century Philosopher Karl Marx. A. Consumer Sovereignty B. The Invisible Hand C. Capitalism D. Communism For questions 10 through 12, refer to the graph below. This graph illustrates the supply and demand for iced coffee in 2011. 10. If producers of iced coffee were able to sell 2,450 units for $4.15 each, then Total Producers’ Surplus would be equal to A. “area (g).” B. “areas (c)+(d)+(f).” C. “areas (b)+(c)+(d).” D. “areas (a)+(b)+(c)+(d)+(e)+(f).” 11. In this market there would be ____________ at a price of $3.75. A. excess demand B. excess supply C. both excess demand and excess supply. D. neither excess demand nor excess supply. 12. In equilibrium A. Deadweight-Loss would be negative. B. trade would take place at a price of $3.20. C. Total Producers’ Surplus would be positive, but Total Consumers’ Surplus would be zero. D. More than one (perhaps all) of the above answers is correct. price 00Demand 2011 quantity Supply 2011 4.15 3.20 1.95 2,450 6,380 (a) (b) (c) (d) (e) (f) (g)13. A recession is traditionally defined as a period of time during which A. an economy realizes a low value of the Misery Index. B. both the unemployment rate and inflation rate simultaneously increase. C. the GDP growth rate is decreasing. D. the GDP growth rate is negative for two or more consecutive quarters. 14. Which of the following would be an example of Foreign Private Investment? A. The U.S. State Department gives $500 million to Cambodia, to assist in relief efforts after an earthquake. B. The World Bank makes a long term $4.1 billion loan to Malaysia. C. Walmart builds a new distribution center in Mississippi. D. Apple builds a new manufacturing plant in China to produce iPads. 15. According to the classification in the textbook, which of the following is not a “Less Developed Country”? A. Chile B. New Zealand C. Panama D. Thailand 16. Per Capita GDP in Singapore is $48,900, while Per Capita GDP in Poland is only $16,200. These values directly imply that A. the market value of goods/services produced per person in Singapore is more than
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