ECON 1100 – Global Economics (Section 03) Exam #3 – Fall 2008 (Version D) – Answer Key Multiple Choice Questions (212 points each): 1. __________ refers to a situation where government revenues are greater than government spending. c. A surplus 2. The Federal Communications Commission was created in order to c. regulate non-governmental use of the radio spectrum. 3. Totalitarianism refers to d. a regime in which the state regulates nearly all aspects of both public and private behavior. 4. ______________ was elected Prime Minister of the United Kingdom in a landslide victory in 1945, right before the end of World War II. d. Clement Atlee 5. “Black Tuesday” refers to the b. U.S. stock market crash which occurred on Tuesday, 10/29/1929, at the start of what would become the Great Depression. 6. 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. c. increased; then decreased. 7. From 1983-2008, Inflation Rates in the United States a. have been relatively low, exceeding a value of 4.83% in only 1 of these 26 years. 8. Farmers in the United States chose to drown baby chickens d. in response to the wage and price controls implemented as part of Richard Nixon’s New Economic Policy (since at the controlled prices it was no longer worthwhile for them to raise the chickens for meat). 9. The “mixed economy consensus” that emerged in Europe following World War II resulted from: d. More than one of the above answers is correct. 10. From the mid 1950’s through the mid 1970’s, many countries throughout Europe (such as France and Germany) experienced b. relatively low levels of both inflation and unemployment.11. The Phillips Curve illustrates b. the tradeoff between unemployment and inflation that an economy faces. 12. Nationalization refers to b. the acquisition of ownership and control of a privately owned enterprise by the national government, either with or without compensation to the original owners. 13. The per capita GDP of Israel increased by roughly 5% in 2007. By the “Rule of 70” we can infer that if Israel were to experience this rate of growth for the next 20 years, then the value of per capita GDP in 2027 would be a. more than twice as large as per capita GDP in 2007. 14. Under a “Fixed Exchange Rate” system c. the value of a currency is set equal to the value of another single currency. 15. The financial crises which spread through Asia in 1997-1998 were referred to as c. Contagion. 16. Which of the following was one of the common techniques used for privatizing government owned enterprises when Margaret Thatcher was Prime Minister? b. Initial Public Offerings (IPOs) of stock to the general public. 17. One of the primary lessons of the “Asian Economic Miracle” is that a. the global economy is NOT rigged against new entrants (in that it is not impossible for currently poor countries to become wealthy and prosperous). 18. Between 10/9/07 and 10/24/08, the DJIA went down in value by 40.85%. In percentage terms, this “crash” c. is the largest decrease since the decline in the stock market between 1/11/1973 and 12/6/1974, during which the DJIA went down in value by 45.08%. 19. Milton Friedman c. was a strong advocate of free-market capitalism. 20. The “Treaty of Rome” a. established a “common market” in Europe in 1957, and would ultimately evolve into the creation of the European Union. 21. “The General Theory of Employment, Interest and Money” was written by a. John Maynard Keynes22. 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 c. individuals during a “bank run.” 23. The Unemployment Rate in the U.S. for 2008 (through September) has been 5.41%, which would d. not even be the highest rate in the last five years 24. According to the “Economic Calculation Problem,” c. without the information provided by market prices it is impossible to allocate resources in an effective manner. 25. One of the rationales for Privatization is that it would “create popular capitalism,” which means that d. a larger fraction of the general public would directly own stock in enterprises after Privatization. 26. A Keiretsu refers to b. a coalition or network of large enterprises with “interlocking business relationships and/or shareholdings.” 27. From the middle of 1921 to the middle of 1929, the U.S. economy experienced d. None of the above answers are correct. 28. Imposing a price floor of $7.50 in this market would c. create a Deadweight-Loss equal to “areas (d)+(e).” 29. Imposing a price ceiling of $3.00 in this market would b. result in sellers realizing a Producers’ Surplus of “area (c).” 30. If a price floor of $6.40 were imposed in this market, then __________ units would be traded. c. more than 2,600 but fewer than 4,870 31. The “Dow Jones Industrial Average” c. provides a “weighted average” of the stock prices of 30 large and widely held publicly traded companies in the U.S. (currently including companies such as 3M, Coca-Cola, General Motors, Home Depot, and Walmart). 32. The 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, is known as the c. Great Society33. The “Winter of Discontent” refers to a. the large scale labor strife which occurred throughout many sectors of the British economy in 1978-1979. 34. “GDP Per Capita (PPP)” in the U.S. is approximately $46,000. According to the discussion in lecture, this value is d. similar in value to the “GDP Per Capita (PPP)” levels in Singapore ($48,900) and Hong Kong ($42,000). 35. ________________ broadly refers to government policies which are intended to alter the behavior of businesses. c. Regulation of Business 36. Regarding the economic policies collectively known as the “New Deal” d. None of the above answers are correct. 37. Which of the following countries was NOT one of the “Asian Tigers” (the four Asian countries which experienced rapid economic growth starting in the 1960’s): b. China 38. Which of the following was NOT a
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