ECON 1100 – Global Economics (Section 03) Exam #4 – Summer 2008 (Version A) – Answer Key Multiple Choice Questions (212 points each): 1. The “Cultural Revolution” refers to a. the social movement launched by Mao in the 1960’s to rid China of “liberal bourgeoisie elements” and continue “revolutionary class struggle.” 2. From the middle of 1921 through the middle of 1929, the U.S. economy was characterized by b. relatively low rates of unemployment. 3. Under “command planning” in the Soviet Union b. a very large fraction of total resources were devoted to national defense. 4. The Asian countries which experienced tremendous growth during the second half of the twentieth century typically had ___________ during their period of growth. c. relatively high individual savings rates 5. As part of his “New Economic Policy” Richard Nixon c. implemented price controls in an unsuccessful attempt to curb inflation. 6. A general criticism of “Special Economic Zones” is that a. they may not actually generate new economic activity, but rather might simply move existing economic activity from one area to another in an inefficient manner. 7. Which of the following corporations is NOT a Chaebol? c. Honda 8. The “National Recovery Administration” a. was an attempt at “Indicative Planning” in the U.S. 9. _________________ was a term used to refer to the “restructuring” of the Soviet economy that was attempted under Mikhail Gorbachev. a. Perestroika 10. Suppose that in 2008 the Per Capita GDP of “Country X” is $10,000. If the Per Capita GDP of this country grew at a constant rate of 8% per year, then in 2018 (that is, 10 years into the future) the Per Capita GDP in “Country X” would be d. greater than $20,000 (that is, more than twice as large).11. _______________ became known as “Europe’s New Tiger,” because of its strong economic performance starting in the mid 1990’s. c. Poland 12. During the 1920’s many investors in the U.S. purchased stock “on margin.” This means that they c. borrowed money in order to purchase stock. 13. 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. 14. __________________ was known as the “trust buster,” having launched anti-trust suits during his administration that led to the breakup of over 40 monopolies. d. Theodore Roosevelt 15. 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 a. individuals during a “bank run.” 16. As a result of the economic reforms instituted in the 1990’s, the Czech Republic c. has become a fairly stable and prosperous market economy, but with a somewhat high unemployment rate (around 8.4% in 2007). 17. Lech Wałęsa d. More than one of the above answers is correct. 18. In comparison to the “free market outcome,” imposing a price ceiling of $3.00 would c. decrease Producers’ Surplus by “area (b) plus area (c).” 19. 5,300 units would be trade in this market d. More than one of the above answers is correct. 20. If the government imposed a price ceiling of $4.00 per unit, then there would be ____________________ in this market. c. a Deadweight-Loss smaller than “area (a) plus area (b)” 21. The “Securities and Exchange Commission” was created as part of the “New Deal,” with the primary task of b. regulating stock markets and restoring efficiency to financial markets.22. Many would argue that “philosophy took a back seat to politics” during Nixon’s first Presidential Administration since, contrary to previously expressed views, he b. increased the role of government in the economy by imposing price controls in an attempt to control inflation and by introducing a “Keynesian full employment budget” in an attempt to reduce unemployment. 23. In Russia between 1992 and 1996 b. large scale privatization took place, so that by 1996 over 80% of workers were employed in the private sector. 24. From 1965 through 1990 the “Asian Tigers” and “New Tigers” experienced b. tremendous growth in per capita GDP, along with decreases in income inequality. 25. Jeffrey Sachs d. None of the above answers are correct. 26. __________________ refers to “close relations between businesses, banks, and government agencies, leading to ‘favoritism,’ ‘sweetheart deals,’ corruption, and poor corporate governance.” a. Crony Capitalism 27. _______________ refers to policies aimed at replacing imports of finished products with domestic production of the same goods. b. Import Substitution. 28. Under a “Fixed Exchange Rate” system a. the value of a currency is set equal to the value of another single currency. 29. “Loans-for-Shares” refers to b. 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. 30. Which of the following caused an “Oil Crisis” in the U.S. in the 1970’s? a. The Oil Embargo imposed by Arab members of OPEC during the Yom Kippur War. 31. A Keiretsu refers to c. a coalition or network of large enterprises with “interlocking business relationships and/or shareholdings.” 32. ____________ was President of Russia when the Gaidar Reforms where instituted in 1992, moving the country to a market economy by way of “shock therapy.” c. Boris Yeltsin33. “Solidarity” c. was a Polish trade Union Federation founded in 1980 at the Lenin Shipyards. 34. “Iron Rice Bowl” refers to b. a job within a Chinese State Owned Enterprise. 35. Which of the following was NOT a characteristic of Chinese economic reform? b. “Nationalization.” 36. As a result of the experiences of 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. 37. The World Trade Organization b. is an organization designed to supervise international trade and to promote free trade among member countries. 38. The rapid economic development which is currently taking place in Dubai a. could be justified on the grounds of efficiency by arguing that it will allow for the realization of “economies
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