ECON 1100 – Global Economics (Section 03) Exam #4 – Summer 2008 (Version A) Multiple Choice Questions (212 points each): 1. The “Cultural Revolution” refers to a. the social movement launched by Mao in the 1960’s to rid China of “liberal bourgeoisie elements” and continue “revolutionary class struggle.” b. the economic movement launched by Mao in the late 1950’s to “harness the ideological fervor of the Chinese population” to the task of raising economic output. c. the mass emigration from China which occurred from the nineteenth century through 1949. d. None of the above answers are correct. 2. From the middle of 1921 through the middle of 1929, the U.S. economy was characterized by a. multiple crashes of the New York Stock exchange, which left most people in the country bankrupt. b. relatively low rates of unemployment. c. historically high rates of inflation. d. More than one of the above answers is correct. 3. Under “command planning” in the Soviet Union a. the industrial sector was very efficient and could produce a greater amount of output with fewer inputs than could enterprises in similar sectors in other countries. b. a very large fraction of total resources were devoted to national defense. c. it was more expensive to fly from Vladivostok to Moscow than it was to take a cab from the airport in Moscow to Red Square. d. More than one of the above answers is correct. 4. The Asian countries which experienced tremendous growth during the second half of the twentieth century typically had ___________ during their period of growth. a. large government budget deficits b. relatively high rates of inflation c. relatively high individual savings rates d. More than one of the above answers is correct. 5. As part of his “New Economic Policy” Richard Nixon a. forced farmers to drown their chickens instead of sending them to market. b. abolished the price controls put in place by John F. Kennedy, “allowing markets to function again.” c. implemented price controls in an unsuccessful attempt to curb inflation. d. established a series of programs which were called the “New Deal.”6. A general criticism of “Special Economic Zones” is that a. they may not actually generate new economic activity, but rather might simply move existing economic activity from one area to another in an inefficient manner. b. if a region is dependent upon a declining industry, then new investment can be attracted by the incentives that result from SEZ status. c. the establishment of a SEZ will make it less likely that firms can realize “economies of agglomeration.” d. More than one of the above answers is correct. 7. Which of the following corporations is NOT a Chaebol? a. Samsung b. Hyundai c. Honda d. LG 8. The “National Recovery Administration” a. was an attempt at “Indicative Planning” in the U.S. b. was declared Constitutional by the Supreme Court in 1935. c. authorized the Federal Government in the United States to Nationalize the Commanding Heights of the economy, and thereby directly control a substantial amount of economic activity within the country. d. More than one of the above answers is correct. 9. _________________ was a term used to refer to the “restructuring” of the Soviet economy that was attempted under Mikhail Gorbachev. a. Perestroika b. Réaménager c. Glasnost d. Gostrud 10. Suppose that in 2008 the Per Capita GDP of “Country X” is $10,000. If the Per Capita GDP of this country grew at a constant rate of 8% per year, then in 2018 (that is, 10 years into the future) the Per Capita GDP in “Country X” would be a. exactly equal to $10,000 (that is, unchanged from it’s initial level). b. greater than $10,000 but less than $20,000 (that is, larger, but not twice as large). c. exactly equal to $20,000 (that is, exactly twice as large). d. greater than $20,000 (that is, more than twice as large). 11. _______________ became known as “Europe’s New Tiger,” because of its strong economic performance starting in the mid 1990’s. a. Germany b. France c. Poland d. Russia12. During the 1920’s many investors in the U.S. purchased stock “on margin.” This means that they a. used “insider information” in order to make purchases at prices well below the “true market value” of the stock. b. purchased stock in companies that were “marginal” in terms of their recent economic performance (i.e., companies which made minimal profits in recent years). c. borrowed money in order to purchase stock. d. irrationally purchased stock in companies that they knew would be likely to go bankrupt in the near future. 13. The “Catch-up effect” suggests that, all other factors fixed, a. the best way for a government to decide which enterprise in a particular industry to support in the future is to use “relative export performance” as a yardstick against which current performance can be measured. b. the global economy is “rigged against new entrants,” in that there is no way for poor countries to catch-up with rich countries. c. those economies with currently low levels of GDP will tend to experience higher GDP growth rates. d. whenever a countries experiences rapid growth in GDP, they must also experience an increase in income inequality. 14. __________________ was known as the “trust buster,” having launched anti-trust suits during his administration that led to the breakup of over 40 monopolies. a. John F. Kennedy b. John Maynard Keynes c. Franklin Roosevelt d. Theodore Roosevelt 15. 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.” b. leaders of a militant labor union during a strike. c. a profit maximizing monopolist. d. a government agency engaging in “rent seeking behavior.” 16. As a result of the economic reforms instituted in the 1990’s, the Czech Republic a. has become a highly planned economy in which the central government coordinates nearly all economic activity. b. has experienced a very high rate of unemployment (typically around 18%), a very high rate of inflation (typically around 12%), and negative rates of GDP growth, illustrating that they have had a tremendous amount of difficulty returning to a free market economy. c. has
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