ECON 1100 – Global Economics (Section 09) Exam #3 – Spring 2010 (Version D) Multiple Choice Questions (212 points each): 1. “Assisting Exports” refers to a. trade policies which make it easier for firms within a country to sell their goods abroad. b. investments in education and healthcare which increase the overall amount of human capital within a society. c. trade policies which give domestic firms advantages at supplying a good within their own country. d. policies which make it more difficult for illegal aliens to enter a country. 2. As of 2008, the birthrate in the U.S. was approximately a. 3.30, well above the country’s “replacement fertility rate.” b. 2.10, roughly equal to the country’s “replacement fertility rate.” c. 1.53, well above the country’s “replacement fertility rate.” d. None of the above answers are correct, since no reliable measure of birth rate is currently available for the U.S. 3. The highest rates of Unionization in the world are found a. in Scandinavian countries. b. in the United States. c. in Japan. d. in Sub-Saharan Africa. 4. In 2007: George earned $923,807 of income, of which he paid 24.0% in U.S. Federal Income Taxes; John earned $386,527 of income, of which he paid 30.7% in U.S. Federal Income Taxes; and Joe earned $319,853, of which he paid 20.7% in U.S. Federal Income Taxes. If “income” provides a measure of “economic capacity” and “average tax rate” provides a measure of “tax burden,” then these figures would suggest that the U.S. Federal Income Tax a. results in “the poor” paying “too much” in taxes. b. results in “the rich” paying “too little” in taxes. c. satisfies the notion of horizontal equity. d. violates the notion of vertical equity. 5. A Corporation is a. a labor organization, consisting of workers who all work for the same enterprise. b. a legal entity that can, through the sale of stock, raise capital from a large number of individuals, each of whom shares in profits. c. the entity which determines fiscal policy for a country. d. None of the above answers is correct.6. ______________ refers to monetary payments made by the government to certain individuals, with the primary aim of directly altering levels of income in society. a. Redistribution In-Kind b. Demand Stabilization c. Income Taxation d. Income Support 7. Consider the following policies: “subsidy payments to specific firms,” “targeted funding of research and development,” “discriminatory tax relief,” and “the use of tariffs/quotas to protect domestic industries.” These policies are examples of a. the indirect provision of corporate governance by financial markets. b. monetary policy. c. “macro level” industrial policy. d. “micro level” industrial policy. 8. A “Collective Good” is one that is a. rival in consumption and excludable. b. rival in consumption and non-excludable. c. non-rival in consumption and non-excludable. d. non-rival in consumption and excludable. 9. Which of the following is one of the primary policy tools used by a central bank? a. Loaning money to low income home buyers at below market interest rates. b. Assisting households in acquiring access to healthcare. c. Regulating labor unions and overseeing labor markets, in order to ensure that both workers and firms realize a “fair share” of the overall market gains from trade. d. Setting the “discount rate” (i.e., the interest rate at which the central bank lends money to other banks). 10. _____________ described capitalism as a “gale of creative destruction,” correctly recognizing that the failure of some business from time to time must be viewed as a normal and unavoidable facet of the system. a. President Barack Obama b. Jeremy Bentham c. Ronald Coase d. Joseph Schumpeter 11. Altruism refers to a. unselfish concern for the welfare of others. b. the claim that in order for a tax to be “fair,” individuals with “greater economic capacity” should have a “greater tax burden.” c. the idea that society should strive to achieve the “greatest happiness for the greatest number of people.” d. the notion that a wealthy society has an obligation to guarantee everyone a “minimum standard of living.”12. _______________ are financial enterprises with the primary function of protecting individuals and firms from exposure to risk. a. Investment Banks b. Mutual Funds c. Non-Depository Institutions d. Insurance Companies 13. Since its inception in 1913, the U.S. Federal Income has always been a. a “Flat Tax.” b. a Progressive Tax. c. a Regressive Tax. d. a Proportional Tax. 14. The ____________ argument for income redistribution is based upon a claim that “a wealthy society has an obligation to guarantee everyone a minimum standard of living.” a. Demand Stabilization b. Social Contract c. Shared Control d. Shared Growth 15. Under the U.S. Federal Income Tax, the “Bottom 50% of wage earners” currently pay ____________ of all taxes collected ____________________. a. exactly 50%; an amount exactly equal to the portion of the total population which they represent. b. approximately 25.49%; an amount which is almost twice as large as their share of total adjusted gross income earned (of 12.83%). c. roughly 12.97%; an amount which is just above their share of total adjusted gross income earned (of 12.83%). d. about 3.07%; an amount which is significantly less than their share of total adjusted gross income earned (of 12.83%). 16. “Commercial Banks,” “Savings and Loans,” “Credit Unions,” and “Postal Savings Banks” are examples of a. Central Banks. b. Depository Institutions. c. Non-Depository Institutions. d. Investment Banks. 17. The _______________ says that in order for a tax to be “fair,” two individuals of “equal economic capacity” should have “equal tax burdens.” a. argument that income redistribution leads to an “Increase in Social Productivity” b. notion of horizontal equity c. notion of vertical equity d. Justification for Government Provision of Information18. “Structural Policy” can be described as government policy a. related to improving the structure of education and healthcare. b. which determines the “money supply” within an economy. c. aimed at changing the underlying institutions of a
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