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KSU ECON 1100 - Exam 4 ECON 1100

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ECON 1100 – Global Economics (Section 06) Exam #4 – Fall 2010 (Version C) Multiple Choice Questions (212 points each): 1. From the mid 1950’s through the mid 1970’s, many countries throughout Europe (such as France and Germany) experienced relatively A. high levels of unemployment. B. high, sustained rates of economic growth. C. high rates of inflation. D. More than one of the above answers is correct. 2. The ___________________ refers to a series of domestic programs proposed by and initially enacted under the leadership of President Johnson in the 1960’s, with the two main goals of eliminating poverty and racial injustice. A. Great Society B. New Deal C. New Economic Policy D. Planification 3. Johannes Semler 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 A. ambrosia. B. chicken feed. C. dog food. D. wheat. 4. Friedrich von Hayek A. enacted policies as Prime Minister of Great Britain in the 1950’s which reversed many of the socialist policies that were enacted when Clement Atlee was Prime Minister. B. enacted policies as Prime Minister of Great Britain in the 1990’s which reversed many of the “free market reforms” which were put in place during Margaret Thatcher’s time in office. C. wrote the “Road to Serfdom,” in which he argued that Socialism would lead to Totalitarianism as central planning replaced individual decision making. D. More than one of the above answers is correct. 5. Imposing a “Price Ceiling” will A. lead to an increase in Total Social Surplus. B. always make all buyers in a market better off. C. always make all sellers in a market worse off. D. More than one of the above answers is correct.6. One of the arguments in favor of Privatization was that it would provide a “boost for productivity.” This argument A. focused on eliminating the difficulties with setting wages for employees within a government owned/operated enterprise. B. recognized that the sale of nationalized enterprises would boost government revenues, thereby allowing the government to reduce its budget deficits. C. claimed that private enterprises (run by profit maximizing managers) would be more productive than government enterprises (run by bureaucrats with primary motives other than profit). 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. 7. ______________ refers to a situation where government revenues are less than government spending. A. A Deadweight-Loss B. A budget deficit C. A budget surplus D. Government Failure 8. Between 10/9/07 and 3/9/09, the DJIA decreased in value by A. 24.18%, the largest percentage decrease in its value since the 38.22% decrease associated with the “Tech Bubble of 2001.” B. 42.19%, the largest percentage decrease in its value since the 45.08% decrease around the time of the Watergate scandal in the early 1970’s. C. 53.78%, the largest percentage decrease in its value since the 85.98% decrease between 1930 and 1932 (during the early years of the Great Depression). D. 94.17%, the largest percentage decrease in the value of the DJIA ever. 9. The “Regulation of Business” by the Federal Government in the United States began with the A. creation of the “National Labor Relations Board” in 1935. B. creation of the “Federal Trade Commission” in 1914. C. creation of the “Interstate Commerce Commission” in 1887. D. passage of the “Treaty of Guadalupe Hidalgo” in March 1848. 10. The Beveridge Report A. 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. B. clearly argued why systems of “Command and Control Planning” will always outperform free market systems. C. gave the French government ownership and control of the banking, electricity, gas, and coal industries in the country in the mid-1940’s. D. None of the above answers are correct.11. __________________ was known as the “trust buster,” having launched anti-trust suits during his administration that led to the breakup of over 40 monopolies. A. Theodore Roosevelt B. Franklin Roosevelt C. Lyndon Johnson D. Richard Nixon Answer Questions (12) through (14) based upon the information conveyed in the graph below. This graph illustrates Demand and Supply for gas in December 2010. The current (“free market”) price is $2.899, at which 4,300 units are traded. 12. Suppose the government is concerned that gas station owners cannot make a sufficient profit when the price of gas is only $2.899 per gallon, so they impose a price floor of $3.649 in this market. With this price floor in place, A. Total Consumers’ Surplus will be equal to “areas (a)+(b)+(d).” B. Total Producers’ Surplus will be equal to “areas (b)+(d)+(f).” C. there will be a Deadweight-Loss equal to “area (g).” D. None of the above answers are correct. 13. If a price ceiling of $1.999 were imposed in this market, then _________ units would be traded. A. fewer than 2,500 B. exactly 2,500 C. more than 2,500 but fewer than 4,300 D. more than 4,300 14. A Deadweight-Loss exactly equal to “area (c)+(e)” would result from imposing which of the following price controls? A. a price ceiling of $2.219. B. a price floor of $3.199. C. a price floor of $2.219. D. More than one of the above answers is correct. price 00quantity Demand 3.649 2.899 2.219 2,500 4,300 6,000 c b d e Supply f a g15. From 1988-2008, Unemployment Rates in the U.S. (reported on an annual basis) A. fluctuated tremendously, evidenced by the observation that the rate was below 3% in 8 of these 21 years but over 8% in 13 of these 21 years. B. were relatively high, exceeding a value of 10% in each of these 21 years. C. were relatively low, exceeding a value of 6% in only 4 of these 21 years. D. None of the above answers are correct. 16. The arguments made by John Maynard Keynes suggest that during an economic downturn, the government should A. run a budgetary deficit, in order to stimulate the economy by replacing missing private spending with government spending. B. have the government seize ownership of and directly control


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KSU ECON 1100 - Exam 4 ECON 1100

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