ECON 1100 – Global Economics (Section 01) Exam #3 – Spring 2009 (Version A) – Answer Key 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 c. relatively sustained, brisk rates of economic growth. 2. The _______________ gave the French government control of the banking, electricity, gas, and coal industries within France. a. Nationalization Acts of 1945 and 1946 3. The “Economic Calculation Problem” argued that b. without the information provided by market prices it is impossible to allocate resources in an effective manner. 4. The U.S. Federal Income Tax d. is a Progressive 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 d. consumption and savings decisions which people made in previous periods. 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. redistribution in-kind. 7. The “replacement fertility rate” c. is the birth rate which would lead to a “constant population” over time. 8. _____________ refers to unselfish concern for the welfare of others. b. 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 b. justification for government regulation of products. 10. Most modern industrialized countries c. have rates of Unionization between 33% and 50%.11. ______________ broadly refers to government policies designed to reshape the wealth, income, and consumption across individuals in society. a. Redistribution 12. The “Golden Share” a. is a mechanism which allowed the government to prevent control of a privatized enterprise from falling into “unsuitable hands” (i.e., “foreign ownership”). 13. The “Fabian Society” in the U.K. a. greatly influenced the political philosophy and platforms of the British Labor Party during the 20th Century. 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. c. Joseph Schumpeter 15. ________________ refers to a situation where government revenues are greater than government spending. c. A budget surplus 16. The arguments made by John Maynard Keynes suggest that during an economic downturn, the government should c. run a budgetary deficit, in order to stimulate the economy by replacing missing private spending with government spending. 17. A _______________ is a good that is non-rival in consumption but excludable. c. Collective Good 18. One of the byproducts of a system of “stock ownership” is that it creates a “Market for Corporate Control,” which means that d. the stock price of a mismanaged firm will become artificially low, making the firm particularly vulnerable to an outside takeover bid, after which the new owners could increase the value of the firm by putting in place new managers. 19. The “German Social Market Economy” c. relied primarily upon free market institutions, but with a significant “social safety net.” 20. Which of the following industries would NOT be considered part of the “Commanding Heights” of an economy? b. The entertainment industry.21. Comparing Average Tax Rates in the United States resulting from the Federal Income tax in 2005 to those in 2000 c. the Average Tax Rate decreased across all income levels between 2000 and 2005. 22. If the United States were to enact trade policies with an objective of “Assisting Exports,” such policies would c. make it easier for U.S. firms to sell goods abroad. 23. A “Corporation” is b. a legal entity that can, through the sale of stock, raise capital from a large number of investors, each of whom shares in the profits of the firm. 24. The “mixed economy consensus” that emerged in Europe after World War II resulted from: d. More than one of the above answers is correct. 25. Suppose that under the income tax structure currently in place in “Country X”: Jim earns $45,000, of which he pays $4,500 in income taxes; Samantha earns $60,000, of which she pays $5,750 in income taxes; and Elliot earns $60,000 (the same as Samantha), of which he pays $3,000. Suppose that “income” provides a measure of “economic capacity,” and suppose that “dollars paid in taxes” provides a measure of “tax burden.” Based upon these observations, this tax structure would appear to b. violate the notions of both vertical and horizontal equity. 26. ______________ was elected Prime Minister of the United Kingdom in a landslide victory in 1945, right before the end of World War II. b. Clement Atlee 27. In most industrialized countries, the role of government in the economy __________ during the first part of the 20th century and ___________ during the last part of the 20th century. c. increased; then decreased. 28. “Lockheed Georgia Employees Federal Credit Union” is an example of c. a Depository Institution. 29. Which of the following is NOT one of the primary functions of a Central Bank? d. None of the above answers are correct (since all are functions of any Central Bank). 30. In 2008, the “worldwide birthrate” was approximately, a. 2.58, slightly above the “worldwide replacement fertility rate” of 2.33.31. Alice earns $200,000 per year. As a result, his “Average Tax Rate” is _____ , while he faces a “Marginal Tax Rate” of _____ . b. 2%; 1%. 32. Under this tax structure: Billy earns $30,000 and pays $900 in taxes; Cindy earns $120,000 and pay $3,200 in taxes; Daniel earns $450,000 and pays $6,500 in taxes. Based upon these observations, it would appear as if this tax: d. is a Regressive Tax. 33. The automotive company “British Rover” was privatized through a “negotiated sale.” This technique of privatization is one in which a. the entire
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