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KSU ECON 1100 - Exam 4 ECON 1100

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ECON 1100 – Global Economics (Section 05) Exam #4 – Fall 2010 (Version A) – Answer Key 1. Which of the following industries would NOT be considered part of the “Commanding Heights” of an economy? B. Music and Entertainment. 2. The “Golden Share” refers to C. a mechanism which allowed the government to prevent the ownership of an enterprise privatized by “initial public offering” from falling into “unsuitable hands” (i.e., “foreign ownership”). 3. The “Dow Jones Industrial Average” is C. a stock market index, the value of which is the weighted average of the stock prices of 30 large and widely held U.S. companies (such as 3m, Coca-Cola, Microsoft, and Walmart). 4. The British enterprise “National Freight Corporation” was privatized by “employee or management buyout.” This technique of privatization is one in which A. the enterprise is sold to current managers and employees, typically at a price well below “fair market value.” 5. During Margaret Thatcher’s time as Prime Minister, the highest marginal tax rate on earned income in Britain B. was decreased from 83% to 40%. 6. Suppose the government is concerned that a price of $2.649 per gallon makes gas too expensive for consumers, so they impose a price ceiling of $1.999 in this market. As a result of this policy, D. None of the above answers are correct. 7. Imposing a price floor of $3.399 in this market would D. More than one of the above answers is correct. 8. Which of the following policies would create a Deadweight-Loss in this market that is positive but less than “Areas (c)+(d)”? B. Imposing a Price Ceiling of $2.249. 9. Medicaid C. is a U.S. federal government program which provides funding for medical and healthcare services for low income individuals. 10. In which of the following countries were the “Commanding Heights” of the economy Nationalized shortly after the end of World War II? D. More than one of the above answers is correct.11. The Unemployment Rate in the U.S. (reported on a monthly basis) C. was above 10% for 3 months in 2009, which was the first time that the rate had gone above 10% since the early 1980’s. 12. “The General Theory of Employment, Interest and Money” was written by C. John Maynard Keynes 13. The Phillips Curve directly illustrates C. the tradeoff between unemployment and inflation that an economy faces. 14. ________________ created a plan that “shook the French economy out its stalemate and propelled it into the modern age” by way of setting “targets and priorities for investment, with a particular focus on reconstruction of essential industries” in the decades following the end of WW–II. C. Jean Monnet 15. Which of the following was NOT one of the primary policy elements which became known as “Thatcherism”? D. A comprehensive program of “Nationalization.” 16. Between 10/9/07 and 3/9/09, the DJIA C. decreased in value by 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). 17. Fabians were A. British socialists who sought to replace the “scramble for private gain” with “collective welfare.” 18. The arguments made by John Maynard Keynes suggest that during an economic downturn, the government should B. run a budgetary deficit, in order to stimulate the economy by replacing missing private spending with government spending. 19. _______________________ relied primarily upon free market institutions, but with a significant “social safety net.” A. The German Social Market Economy 20. Milton Friedman C. was an influential figure in the formulation of the ideas of Monetarism as an alternative to Keynesianism. 21. The “National Recovery Administration” D. More than one of the above answers is correct.22. Which of the following events bolstered patriotism within Great Britain and increased Margaret Thatcher’s popularity, allowing her to remain in office as Prime Minister following the June 1983 general election in the U.K.? C. The military success of Britain over Argentina in the Falklands War from April 1982 to June 1982. 23. ____________________ refers to a system in which the government assumes the responsibility of improving the well-being of its citizens, particularly with respect to healthcare, education, employment, and social security. C. The Welfare State 24. For the 2009 Fiscal Year, the federal government in the U.S. will spend approximately $3.72 trillion dollars, while bringing in revenue of only $2.17 trillion. These figures imply that for the year the government is C. running a budget deficit of approximately $1.55 trillion. 25. In the “Road to Serfdom” Friedrich von Hayek argued that ________________ as central planning replaced individual decision making. B. Socialism would often lead to Totalitarianism 26. From 1949-1967, Inflation Rates in the United States (reported on a yearly basis) D. were relatively low, exceeding a value of 3.34% in only 1 of these 19 years. 27. ________________ was elected Prime Minister of the United Kingdom in a landslide victory in 1945, right before the end of World War II. C. Clement Atlee of the Labor Party 28. The central argument of “monetarism” is that D. the most effective way to promote stable economic growth is for the Central Bank to manipulate the money supply, in an attempt to ensure an “equilibrium outcome” (with neither “excess demand” nor “excess supply”) in the market for money. 29. As part of his economic policy, President Richard Nixon C. implemented price controls in an unsuccessful attempt to curb inflation. 30. Which of the following countries operated under a system of “Command and Control Planning” before World War II? B. The Soviet Union. 31. Which of the following was NOT one of the four primary causes of Britain’s poor economic performance during the 1970’s? B. The complete absence of a “Social Safety Net.”32. 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. B. increased; then decreased. 33. The “Great Inflation” refers to the period of high inflation in the U.S. C. during the early 1970’s through the early 1980’s (from roughly June 1973 to


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KSU ECON 1100 - Exam 4 ECON 1100

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