ECON 1100 – Global Economics (Section 06) Exam #4 – Fall 2010 (Version D) – Answer Key 1. From the mid 1950’s through the mid 1970’s, many countries throughout Europe (such as France and Germany) experienced relatively B. high, sustained rates of economic growth. 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. D. Great Society 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 B. chicken feed. 4. Friedrich von Hayek C. wrote the “Road to Serfdom,” in which he argued that Socialism would lead to Totalitarianism as central planning replaced individual decision making. 5. Imposing a “Price Ceiling” will B. always make all sellers in a market worse off. 6. One of the arguments in favor of Privatization was that it would provide a “boost for productivity.” This argument A. 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). 7. ______________ refers to a situation where government revenues are less than government spending. C. A budget deficit 8. 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. 9. The “Regulation of Business” by the Federal Government in the United States began with the B. creation of the “Interstate Commerce Commission” in 1887.10. Between 10/9/07 and 3/9/09, the DJIA decreased in value by 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). 11. __________________ was known as the “trust buster,” having launched anti-trust suits during his administration that led to the breakup of over 40 monopolies. B. Theodore Roosevelt 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 Producers’ Surplus will be equal to “areas (b)+(d)+(f).” 13. If a price ceiling of $1.999 were imposed in this market, then _________ units would be traded. D. fewer than 2,500 14. A Deadweight-Loss exactly equal to “area (c)+(e)” would result from imposing which of the following price controls? C. a price ceiling of $2.219. 15. From 1988-2008, Unemployment Rates in the U.S. (reported on an annual basis) B. were relatively low, exceeding a value of 6% in only 4 of these 21 years. 16. The arguments made by John Maynard Keynes suggest that during an economic downturn, the government should C. run a budgetary deficit, in order to stimulate the economy by replacing missing private spending with government spending. 17. During the time when Margaret Thatcher was in office, Britain experienced B. positive economic growth, along with an increase in income inequality. 18. The Phillips Curve D. illustrates the short term tradeoff between unemployment and inflation that an economy faces. 19. Ludwig Erhard (who became the German Director of Economic Administration in the American/British Occupation Zones in 1948) belonged to a group of economists called the “Ordoliberals,” who wanted to B. establish an economic system which relied primarily upon free markets, but with a significant “social safety net.” 20. ______________ became known as the “Mad Monk” because of the impassioned political speeches which he gave throughout Britain in the mid 1970’s extolling the virtues of free enterprise and market based economic systems. B. Keith Joseph21. Farmers in the United States drowned baby chickens D. in response to the wage and price controls implemented as part of Richard Nixon’s New Economic Policy (since at the controlled prices it was no longer profitable for them to raise the chickens for meat). 22. The “Economic Calculation Problem” argues that D. without the information provided by market prices it is nearly impossible to efficiently allocate resources. 23. The “mixed economy consensus” that emerged in Europe following World War II resulted from: D. More than one of the above answers is correct. 24. The U.S. government created the Securities and Exchange Commission to B. regulate financial markets. 25. Following the Great Depression, the U.S. C. embraced regulation and government intervention in the economy, but did not become a “planned economy” like many countries in Europe. 26. In most industrialized countries, the role of government in the economy __________ during the first part of the twentieth century and ___________ during the last part of the twentieth century. A. increased; then decreased. 27. The automotive company “British Rover” was privatized through a “negotiated sale.” This technique of privatization is one in which D. the entire enterprise is sold to a single buyer, at terms agreed upon by the buyer and the government. 28. __________________ was an economist of the “Chicago School of economic thought” who was influential in the formation of Monetarism as an alternative to Keynesianism. C. Milton Friedman 29. The “Fabian Society” in the U.K. D. greatly influenced the political philosophy and platforms of the British Labor Party during the 20th Century. 30. Economists all agree that D. None of the above answers are correct. 31. Which of the following was a proper task of government in the opinion of Margaret Thatcher? B. Providing national defense.32. “Black Thursday” refers to the A. U.S. stock market crash which occurred on Thursday, 10/24/1929, at the start of what would become the Great Depression. 33. The French notion of “Planification” was intended as C. a “middle ground” between free markets and socialism. 34. The value of the “Misery Index” in the U.S. in September 2010 was C. 10.74, a value which is above both the post WW-II median value of 8.54 and post WW-II mean value of 9.44. 35. As a
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