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KSU ECON 1100 - Exam 4 ECON 1100

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ECON 1100 – Global Economics (Section 01) Exam #4 Answer Key – Fall 2007 (Version A) 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 2. An “Iron Rice Bowl” refers to a. a job within a Chinese State Owned Enterprise. 3. From 1965 through 1990 the “Asian Tigers” and “New Tigers” experienced a. tremendous growth in per capita GDP, along with increases in income equality. 4. A Keiretsu refers to c. a coalition or network of large enterprises with “interlocking business relationships and/or shareholdings.” 5. One explanation for the spread of the currency crises from Thailand to other Asian economies was that investors engaged in behavior similar to that of c. individuals during a “bank run.” 6. The “semi-free elections of 1989” in Poland b. led to the collapse of Communism in Europe, as Mikhail Gorbachev told Communist leaders in Poland to accept the outcome of the elections. 7. Between 1978 and 1996, the Chinese economy experienced b. a rate of GDP growth greater than that of any other part of the world during the same time-period. 8. The economic system which has emerged in China could be described as “Socialism with Chinese Characteristics.” This system b. is one in which the assets of much of the industrial sector are owned by the state, but in which the primary functions of coordination are performed by the market. 9. The “Household Responsibility System” a. was the central component of reform within the agricultural sector in China. 10. Most of the countries affected by the East Asian Financial Crisis c. experienced a downturn that was “V-Shaped,” in that after a sharp contraction in 1998, positive growth returned in 1999 and 2000.11. Following economic reform in Russia b. income inequality increased. 12. “Import Substitution” refers to b. policies aimed at replacing imports of finished products with domestic production of the same goods. 13. 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 c. establishment of Special Economic Zones within China. 14. Which of the following countries was NOT one of the “Asian Tigers” (those countries which experienced tremendous growth starting in the 1960’s) a. Japan 15. ____________ became known as “Europe’s New Tiger,” because of its strong economic performance starting in the mid 1990’s. a. Poland 16. Jeffrey Sachs b. was a strong supporter of “Shock Therapy” as a method of economic reform in Eastern Europe. 17. “Loans-for-Shares” refers to c. a program under which the Russian government used shares in public enterprises as collateral for loans from the private sector, with no intention of ever repaying the loans. 18. Under “command planning” in the Soviet Union d. More than one of the above answers is correct. 19. As a result of Privatization in Russia, by 1996 b. over 80% of workers were employed in the private sector. 20. Under a “Fixed Exchange Rate” system b. the value of a currency is set equal to the value of another single currency. 21. Deng Xiaoping was c. the person responsible for implementing economic reform in China starting in 1978. 22. Lech Wałęsa b. was the first freely elected President of Poland.23. ________ means “restructuring,” referring to restructuring of the Soviet economy. c. Perestroika 24. The financial crises which spread through Asia in 1997-1998 were referred to as d. Contagion. 25. The economy of Taiwan a. consists of a large network of small, family-operated enterprises. 26. The “Catch-up effect” suggests that, all other factors fixed, c. those economies with currently low levels of GDP will tend to experience higher GDP growth rates. 27. The first enterprise to be privatized in Russia by way of “voucher auction” was c. the Bolshevik Biscuit Factory. 28. The _______________ is a group of eight Asian countries that experienced spectacular economic growth at different points in time during the second half of the twentieth century. b. High Performance Asian Economies 29. The Sachs/Balcerowicz Shock Therapy Plan a. consisted of the immediate lifting of price controls, reform of the tax structure, and currency reform in Poland on 1/1/1990. 30. 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. 31. ____________ refers to the government practice of temporarily supporting multiple enterprises within a particular industry, and using “relative export performance” to determine which enterprise would receive continued governmental support. c. Augmenting the Market through Competition 32. During the time of Economic Reform in Russia, large gains in output were expected from “converting the defense sector” because by then a. many of the most highly skilled and educated individuals in society were employed in the defense sector. 33. _________ was established on 1/1/1995 as a successor to GATT, in order to supervise international trade and to promote free trade among member countries. c. The World Trade Organization (WTO)34. During the “Great Leap Forward” in China a. “communes” were established throughout China as the new form of economic and political organization. 35. Which of the following is NOT a general argument in favor of establishing a “Special Economic Zone”? b. A SEZ may not generate “new economic activity,” but may rather simply move existing economic activity from one geographic location to another. 36. In which of the following countries was economic reform instituted by way of “Shock Therapy”? c. The Czech Republic. 37. “Special Economic Zones” in China c. have an “outward looking orientation,” serving as “export processing zones” and acting as “magnets” for attracting foreign investment. 38. A unique characteristic of economic reform in China is that a. economic freedom emerged before political freedom. 39. As part of “small-scale privatization”


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KSU ECON 1100 - Exam 4 ECON 1100

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