ECON 1100 – Global Economics (Section 05) Exam #1 – Fall 2011 (Version B) Multiple Choice Questions (212 points each): 1. Adam Smith was A. a 16th century French monarch. B. a 17th century English mercantilist. C. an 18th century Scottish economist. D. a 19th century German philosopher, economist, and revolutionary. 2. Which of the following is not one of the “Three Basic Economic Questions” that every society must address? A. “What mix of goods and services should we produce?” B. “How can we guarantee that all individuals in society have access to healthcare?” C. “Which productive resources should be used for the production of which goods?” D. None of the above answers is correct (since each choice is one of the “Three Basic Economic Questions” that every society must address). 3. Positive Statements A. are “fact based statements” which provide “predictions about outcomes” without any judging of their desirability. B. are never made by any good, respectable economist. C. attempt to describe “how the world should be” or “how the world could be improved upon.” D. More than one (perhaps all) of the above answers is correct. 4. ________________ 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 Sovereignty B. Command Planning C. The Principal/Agent Problem D. The Invisible Hand 5. Abigail divides her labor time between two activities, painting pictures and growing pumpkins. In one single workday she could either complete 3 paintings or grow 15 pumpkins. It follows that her “opportunity cost of growing a pumpkin” is A. 151th (i.e., “one-fifteenth”) of a workday. B. 51th (i.e., “one-fifth”) of a painting. C. 5 paintings. D. 45 pumpkins.6. With regards to “Union Membership in the United States,” currently A. no workers belong to a union (since union membership was made illegal by an executive order signed by President George W. Bush on January 20, 2009, his last day in office). B. about 19% of the workforce is unionized (a rate which is lower than the rate in most other industrialized countries). C. about 75% of the workforce is unionized (a rate which has increased steadily over the past 40 years). D. all workers are required to belong to a union (due to the passage of the “Labor Freedom Act” signed into law by President Obama in May 2009). 7. In 2008 High School graduates earned $11,180 per year more than non-High School graduates. If this difference had instead been $15,850 per year, then we would expect A. that nobody would change their behavior. B. more people to drop out of school before graduating High School. C. fewer people to drop out of school before graduating High School. D. more parents to encourage their children to participate in high school athletics. 8. The “Index of Economic Competitiveness” attempts to measure A. the impact of a society’s economic activity on the environment. B. the degree to which decision makers in an economy experience a “real system” that differs from the “nominally defined system.” C. the capacity of the national economy to achieve growth over the medium term, controlling for the current level of development. D. None of the above answers are correct. For Question 9, consider the continuum between the economic systems of Pure Socialism and Pure Capitalism illustrated below. 9. Based upon the discussion in lecture, along the continuum illustrated above the economy of the United States currently would most accurately lie at __________. A. Point A B. Point B C. Point C D. Point D Pure Socialism Pure Capitalism Cuba North Korea Germany United Kingdom New Zealand IsraelPoint A Point BPoint CPoint D10. Which of the following is an example of a “Produced Asset”? A. The 1.7 trillion tons of coal reserves in the United States. B. The Kia Motors plant which recently opened in West Point, GA. C. The “college education” which has been acquired by approximately 27% of the U.S. population. D. None of the above answers are correct. 11. Armen Alchain and Gordon Tullock A. argued that automobile accident rates could be decreased by installing a sharp, irremovable, foot long, iron spike to the steering wheel of every car. B. wrote a letter to FDR in 1939, advising him to have the U.S. government assist physicists in the U.S. working on research related to the creation of a uranium bomb. C. argued that automobile accident rates could be decreased by installing “five point harness” seat belts and improved airbags in every car. D. were the two county commissioners in Nye County, Nevada that enacted a law legalizing prostitution in November 2005. 12. ______________ traces its philosophical roots to the work of 19th Century Philosopher Karl Marx. A. The Mixed Economy B. Capitalism C. Communism D. The Invisible Hand 13. Which of the following is an example of a “Non-Governmental Organization”? A. The Sierra Club. B. Sam’s Club. C. The United Autoworkers. D. The U.S. Department of Homeland Security. 14. Perry enjoys going to the movies. In August he saw 5 movies in the theatre. His Marginal Benefit of the 5th movie was $18, while his Marginal Cost of the 5th movie was $10. Based upon this information alone, his Economic Surplus A. would have been smaller if he had instead gone to only 4 movies. B. was clearly maximized by going to exactly 5 movies. C. would have been smaller if he had instead gone to 6 movies. D. More than one (perhaps all) of the above answers is correct. 15. Socialism refers to an economic system in which A. all the gains from economic activity are distributed equally among all members of society. B. the means of production are owned and operated by the government. C. everyone in society is guaranteed and is able to realize an acceptable and sufficient standard of living. D. More than one (perhaps all) of the above answers is correct.16. Which of the following statements is a “Normative Statement”? A. The Green Bay Packers won Super Bowl XLV in February 2011. B. In July 2011, the unemployment rate in the United States was 9.1%. C. Zaxby’s would be the best fast food restaurant in the world, if only they had better French fries. D. The city of Mexicali is the capital of the Mexican state of Baja California. 17. Amy has $75 to spend and
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