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KSU ECON 1100 - Exam 1 ECON 1100

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ECON 1100 – Global Economics (Section 05) Exam #1 – Fall 2010 (Version A) – Answer Key 1. A “Self-Interested” person C. cares about their own well-being more than the well-being of others. 2. Under “Command Planning” B. the government directly controls nearly all economic activity, and almost all production takes place in government owned enterprises. 3. ________________ refer to the “informal guidelines which dictate how much of the day-to-day behavior of an institution is conducted.” B. Procedures 4. Consider the following two statements. Statement 1: “Fiscal Policy has a significant stimulative impact on a less than fully employed economy.” Statement 2: “The Federal budget should be balanced in every single year.” Most economists would D. agree with Statement 1, but disagree with Statement 2. 5. Which of the following statements is true? D. More than one of the above answers are correct. 6. On September 4, 2009, Gov. Arnold Schwarzenegger offered a $100,000 reward for anyone who could provide information leading to the arrest and conviction of the arsonists who set a wildfire which was then burning in southern California (a fire which claimed the lives of two firefighters). In this situation, Gov. Schwarzenegger was attempting to obtain the desired information by C. offering a material incentive. 7. Which of the following output combinations is “not feasible” or “unattainable”? C. “C” (600 Tanks and 1,000 bushels of Corn). 8. If this society wanted to produce 475 bushels of Corn, then their maximum output of Tanks would be D. more than 600 Tanks. 9. Supposing that this society is producing efficiently, it follows that the Opportunity Cost of producing the 420th Tank is C. greater than the Opportunity Cost of producing the 200th Tank. 10. The Principle of Comparative Advantage states that B. a society can produce a greater amount of total output when individuals focus their production on those activities for which they have a comparative advantage.11. Based upon this graph, we can tell that C. income in Brazil was distributed more equally in 2010 than in 2005. 12. Based upon the Lorenz Curves illustrated above, we can infer that for Brazil the value of the Gini-Coefficient C. decreased between 1998 and 2005, and then decreased further between 2005 and 2010. 13. Economics is B. the social science that studies decision making in the face of scarcity, and the implications of such decisions on individuals and societies. 14. LeBron James chose to skip college and enter the NBA draft in 2003 straight out of high school. The fact that he made this choice suggests that D. he properly understood that his opportunity cost of attending college was very high. 15. Armen Alchain and Gordon Tullock D. argued that automobile accident rates could be decreased by installing a sharp, irremovable, foot long, iron spike to the steering wheel of every car. 16. Which of the following provides an example of government establishing a law which is relevant for the functioning of a modern economy? D. All of the above answers are correct. 17. _____________ is/are “the currently available stock of machines, factories, and inventories of finished goods available as industrial capital, as well as social capital such as transportation infrastructure, communications infrastructure, and educational institutions.” C. Produced Assets 18. Evan and Xavier spend each workday assembling bicycles and fixing computers. Evan can assemble 20 bicycles in a single day, while Xavier can assemble 15 bicycles in a single day. Based upon this information alone, we know that A. Evan possesses an Absolute Advantage in assembling bicycles. 19. The economy of the former Soviet Union D. More than one of the above answers is correct. 20. Positive Statements B. are “fact based statements” which provide “predictions about outcomes” without any judging of their desirability. 21. The “United Way” is which of the following type of “economic institution”? A. A Non-Governmental Organization.22. The current economic system of France is best described as A. a Mixed Economy. 23. ____________________ was a 19th century German philosopher, economist, and revolutionary, who wrote “Das Kapital” and in considered by many to be the most influential economist in the history of Socialism. C. Karl Marx 24. ____________ is the branch of economics which studies how individual decision-makers behave and interact with each other (often with a focus on how individual households and/or firms behave and interact with each other in markets). C. Microeconomics 25. Kenny has $75 to spend and wants to purchase either a new amplifier for his guitar or a new MP3 player. Each good costs exactly $75, so he can only purchase one of the two items. This scenario illustrates the basic concept that C. people face tradeoffs. 26. Consider a society consisting of only three people: Amy, Bill, and Chuck. Amy and Bill spend all day producing clothing and food. At the end of each day they bring their output to Chuck, who then divides it between the three individuals. The “basic economic question” that Chuck is answering for this society is the D. Distributional Decision. 27. For two individuals who engage in the same two productive activities, it is generally impossible for one of the two individuals to A. have a Comparative Advantage in both activities. 28. In which of the following countries do individuals enjoy the least amount of Economic Freedom? B. Russia. 29. Privately owned enterprises in a free market economy have a primary goal of A. earning as large of a profit as possible. 30. Paula enjoys going to the movies. In August she saw 8 movies in the theatre. Her Marginal Benefit of the 8th movie was $14.75, while her Marginal Cost of the 8th movie was $9.50. Based upon only this information, her Economic Surplus A. would have been smaller if she had instead gone to the movies 7 times. 31. ________________ refers to the freedom of an individual to buy or not buy a good/service at a price determined in an unfettered market. A. Consumer Sovereignty32. From the discussion of “Structure Based Classifications” in lecture and the text C. the U.S. has a greater “capacity to achieve growth over the medium term, controlling for the current level of development” than any other


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KSU ECON 1100 - Exam 1 ECON 1100

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