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KSU ECON 1100 - Exam 3 ECON 1100

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ECON 1100 – Global Economics (Section 01) Exam #3 – Spring 2009 (Version B) Multiple Choice Questions (212 points each): 1. From the mid 1950’s through the mid 1970’s, many countries throughout Europe (such as France and Germany) experienced a. multiple stock market crashes, along with overall “financial instability.” b. historically high rates of inflation. c. relatively sustained, brisk rates of economic growth. d. More than one of the above answers is correct. 2. The _______________ gave the French government control of the banking, electricity, gas, and coal industries within France. a. Nationalization Acts of 1945 and 1946 b. Vichy Regime c. Beveridge Report d. Treaty of Rome 3. The “Economic Calculation Problem” argued that a. labor unions would be able to negotiate less aggressively with privatized enterprises than they could with government enterprises. b. calculating the true economic value of a worker can only be done by the government. c. the best way to manipulate macroeconomic performance was through active fiscal policy. d. without the information provided by market prices it is impossible to allocate resources in an effective manner. 4. The U.S. Federal Income Tax a. was abolished by the “American Recovery and Reinvestment Act of 2009.” b. is a Proportional Tax. c. is a Progressive Tax. d. is a Regressive Tax. 5. One of the “6 Determinants of Productivity, Income, and Wealth” is “Accumulated Savings,” which refers to the recognition that differences in current wealth across individuals could result from differences in a. the natural talents that people are endowed with at birth. b. how hard individuals chooses to work. c. consumption and savings decisions which people made in previous periods. d. the amount of money that individuals receive as inheritances during their lifetime.6. Government provision of “free Pre-Kindergarten in the State of Georgia” (which is available for all four year old children at no cost) is an example of a. a direct transfer payment made to low income individuals. b. redistribution in-kind. c. government production of a good that would otherwise not be supplied at all by the free market. d. government intervention to correct an inefficiency resulting from a negative externality. 7. The “replacement fertility rate” a. refers to the amount of money which a firm must invest in new capital, so as to maintain a constant stock of physical capital over time. b. is the birth rate which would lead to a “constant population” over time. c. is exactly equal to 2, since every person born has exactly two biological parents. d. is exactly equal to 4, since every person born has exactly four biological grandparents. 8. _____________ refers to unselfish concern for the welfare of others. a. Socialism b. Keynesianism c. Utilitarianism d. Altruism 9. “In some instances it is difficult or very costly for consumers to gather accurate information on important characteristics of some goods. Therefore, having the government impose and enforce standards on safety, quality, and effectiveness of such goods may assist consumers in making good economic decisions in the marketplace.” This argument provides the a. justification for government regulation of products. b. justification for government regulation of industry. c. justification for government provision of information. d. justification for Nationalizing the “Commanding Heights” of an economy. 10. Most modern industrialized countries a. legally allow unions to exist, but still have rates of Unionization near 0%. b. have rates of Unionization between 33% and 50%. c. have rates of Unionization between 70% and 90%. d. have rates of Unionization near 100%. 11. ______________ broadly refers to government policies designed to reshape the wealth, income, and consumption across individuals in society. a. Anti-Trust Policy b. Bankruptcy Law c. Redistribution d. The Incidence of a Tax12. The “Golden Share” a. is an argument in favor of a “Welfare State,” based upon “treating others as you would like to be treated.” b. is a clause in a CEO’s contract specifying that she receives substantial compensation if her employment is terminated. c. is a mechanism which allowed the government to prevent control of a privatized enterprise from falling into “unsuitable hands” (i.e., “foreign ownership”). d. refers to the sale of a government enterprise to current employees at a price well below actual market value. 13. The “Fabian Society” in the U.K. a. wanted to implement socialism in Britain by way of revolution during World War I. b. was founded in 1952, in an attempt to stop the rapid expansion of government in the British economy by the leaders of the Labor Party. c. greatly influenced the political philosophy and platforms of the British Labor Party during the 20th Century. d. More than one of the above answers is correct. 14. _____________ described Capitalism as a “gale of creative destruction,” recognizing that the failure of enterprises from time to time must be viewed as a natural facet of the system. a. John Maynard Keynes b. Joseph Schumpeter c. Jeremy Bentham d. Clement Atlee 15. ________________ refers to a situation where government revenues are greater than government spending. a. A budget deficit b. A budget surplus c. A Deadweight-Loss d. Nationalization 16. The arguments made by John Maynard Keynes suggest that during an economic downturn, the government should a. deploy the military in order to conquer and colonize other countries with large amounts of natural resources (e.g., Middle Eastern countries with tremendous oil reserves). b. run a budgetary deficit, in order to stimulate the economy by replacing missing private spending with government spending. c. run a budgetary surplus, so that we do not accumulate a tremendous amount of debt that will ultimately burden our children and grandchildren. d. have the government seize ownership and direct control of the “Commanding Heights” of our economy.17. A _______________ is a good that is non-rival in consumption but excludable. a. Common Resource b. Collective Good c. Tariff d. None of the above answers are correct. 18. One of the byproducts of a system of “stock ownership” is that it creates a “Market for Corporate Control,” which


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KSU ECON 1100 - Exam 3 ECON 1100

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