ECON 1100 – Global Economics (Section 06) Exam #2 – Summer 2011 (Version D) – Answer Key 1. The “Great Inflation” refers to the period of high inflation in the U.S. during the C. early 1970’s through the early 1980’s (from roughly June 1973 to July 1982). 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. 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 4. The “Catch-up Effect” refers to 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. 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). 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.” D. Nominal GDP; Real GDP. 7. One of the three types of “Economic Incentives” is “Material Incentives,” which could be described as C. the use of “monetary rewards” or “direct increases in consumption” which result from engaging in an activity. 8. Based upon the discussion in lecture, along the continuum illustrated above the economy of the United States currently would most accurately lie at __________. B. Point B9. ______________ traces its philosophical roots to the work of 19th Century Philosopher Karl Marx. D. Communism 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 C. “areas (b)+(c)+(d).” 11. In this market there would be ____________ at a price of $3.75. B. excess supply 12. In equilibrium B. trade would take place at a price of $3.20. 13. A recession is traditionally defined as a period of time during which 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? 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”? B. New Zealand 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 three times greater than in Poland. 17. The value of the Misery Index in the United States C. was above 10 for 155 consecutive months from April 1973 through February 1986. 18. The “Index of Economic Competitiveness” attempts to measure D. the capacity of the national economy to achieve growth over the medium term, controlling for the current level of development. 19. ___________________ refers to the freedom of an individual to buy or not buy a good/service at a price determined in an unfettered market. C. Consumer Sovereignty 20. Transactions involving goods produced in the past (such as the sale of an eight year old automobile by a used car dealer) are C. not included in current GDP, because GDP only measures the value of goods and services produced in the current year.21. Consider a market in which the efficient level of trade is 9,850 units. There would be a positive Deadweight-Loss if _________ units were traded. D. More than one (perhaps all) of the above answers is correct. 22. ____________________ is an economic system in which the means of production are privately owned and operated for a profit. C. Capitalism 23. Suppose that “County A” were to realize a constant Real GDP Growth Rate of 10% per year. It follows that Real GDP would double in B. roughly 7 years. 24. Suppose that the Unemployment Rate in Greece is 12.8% while the Unemployment Rate in India is 6.2%. These figures would directly imply that D. None of the above answers are correct. 25. Per Capita GDP in the United States as a whole is approximately C. $46,000, a value which is greater than the Per Capita GDP (PPP) of the European Union as a whole (of approximately $32,900). 26. Based upon the discussion in lecture and the textbook, which of the following economies has the lowest level of corruption (i.e., is the “least corrupt”)? C. Finland. 27. ___________________ refers to a general decrease in the level of overall prices. A. Deflation 28. The “Law of Supply” states that C. all other factors fixed, a greater quantity of a good will be supplied at higher prices. 29. Based upon the current values of “life expectancy at birth” for different countries around the world which were discussed in lecture, C. of all countries in the World, life expectancy in the United States (78.11 years) is neither the longest nor shortest life expectancy. 30. ___________________ is defined as “improvements (over time) in a society’s quality of life and standard of living,” which includes, but is not limited to, increased production/consumption of material goods and services. C. Economic Development 31. In 2008, the annual inflation rate in Zimbabwe was approximately _______. A. 12,563% 32. Which of the following statements regarding “GDP in the U.S.” is accurate? A. “Real GDP per capita was roughly 7.9 times larger in 2007 than in 1908.”33. Deadweight-Loss generally refers to C. the difference between “maximum possible Total Social Surplus” and “realized Total Social Surplus.” 34. Michael owns a guitar autographed by Pete Doherty of the band “Babyshambles.” His reservation price as a seller of this
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