ECON 1100 – Global Economics (Section 02) Exam #4 – Spring 2009 (Version D) – Answer Key Multiple Choice Questions (212 points each): 1. Under “command planning” in the Soviet Union d. More than one of the above answers is correct. 2. There was an “Oil Crises” in the U.S. in the 1970’s as a result of a. the disruption of worldwide supply during the Iranian Revolution and the subsequent Iran/Iraq War. 3. Glasnost b. means “openness,” referring to the shift toward openness and transparency in governmental decision making, along with freedom of access to information, in Soviet society. 4. ________________ was the leader of the Soviet Union when the Solidarity Party gained political control of Poland during the semi-free elections of 1989. c. Mikhail Gorbachev 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 a. individuals during a “bank run.” 6. The “Dow Jones Industrial Average” c. provides a “weighted average” of the stock prices of 30 large and widely held publicly traded U.S. companies (currently including AT&T, ExxonMobil, Home Depot, McDonald’s, and Walmart). 7. “Economies of Agglomeration” refer to b. benefits that firms obtain from locating near other firms. 8. The Balcerowicz Group a. was led by Leszek Balcerowicz, who served as Finance Minister and Deputy Prime Minister in the new Solidarity government in Poland. 9. In Russia, the ownership of many small shops was transferred to current managers, agricultural land was “decollectivized,” and apartments were sold to current occupants as a part of b. “Small Scale Privatization.”10. The Unemployment Rate in the U.S. reached 8.10% in February 2009. This rate c. is not even the highest rate in the last 30 years, since the unemployment rate was 8.30% or higher for 26 straight months from 1981 through December 1983. 11. One of the distinguishing characteristics of economic reform in China was that the leaders in China often implemented “partial reform,” which refers to d. the willingness to create situations in which market reform is “incomplete,” thereby introducing incentives without completely altering the environment in which individuals must make decisions. 12. The “Misery Index” b. is computed by taking the sum of (i.e., adding together the values of) the current unemployment rate to the current annual inflation rate. 13. __________________ was known as the “trust buster,” having launched anti-trust suits during his administration that led to the breakup of over 40 monopolies. c. Theodore Roosevelt 14. ________________________ refers to a series of domestic programs proposed by and initially enacted under the leadership of President Johnson in the 1960’s, with the two main goals of eliminating poverty and racial injustice. c. The Great Society 15. The “World Trade Organization” a. welcomed China as an official member in late 2001. 16. “Import Substitution” refers to c. policies aimed at replacing imports of finished products with domestic production of the same goods. 17. 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. 18. _________ was the leader of China during the time when the country implemented a system of “Soviet style Command Planning.” b. Mao Zedong 19. After Jeffrey Sachs agreed to formulate a plan for economic reform in Poland, Polish leaders told him that a. they needed the plan immediately, which forced him to write up his plan that night and deliver it to members of Parliament the following morning.20. Which of the following countries was one of the “New Tigers” (the Asian countries which experienced rapid growth starting in the late 1970’s/early 1980’s) a. Malaysia 21. Per Capita GDP in Norway is approximately $55,600. This figure: c. is greater than the Per Capita GDP of the United States as a whole (which is approximately $46,000), but is less than the Per Capita GDP of the state of Alaska (which is approximately $57,520). 22. According to the “Rule of 70,” d. if a variable grows at a constant rate of “X% per period,” then the value of the variable will double in approximately “(70/X) periods.” 23. A general criticism of “Special Economic Zones” is that b. an SEZ might not actually generate any new economic activity, but rather might simply move existing economic activity from one area to another in a potentially inefficient manner. 24. ___________ refers to the industrial structure common in South Korea, consisting of large business conglomerates, typically owned by a single family and operated with authoritarian management along with substantial government assistance. c. Chaebol 25. The current population of China is approximately c. 1,330,044,605, which is approximately 20% of the world’s population. 26. Between 1978 and 1996, the Chinese economy experienced c. a doubling of per capita income between 1978 and 1987, followed by another doubling of per capita income between 1987 and 1996. 27. Many would argue that “philosophy took a back seat to politics” during Nixon’s first Presidential Administration since, contrary to previously expressed views, he a. 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. 28. Between 10/9/07 and 3/9/09, the Dow Jones Industrial Average decreased by b. 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). 29. The Asian countries which experienced tremendous growth during the second half of the twentieth century typically _____________ during their periods of growth. a. had low inflation rates and small government budget deficits30. The non-violent 1989 revolution in Czechoslovakia that led to the overthrow of the communist government was known as c. the Velvet Revolution. 31. During the mid and late 1970’s the U.S. economy c. was characterized by both high unemployment and high inflation. 32. Suppose the government is concerned that gas station owners cannot make a
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