Download ECON 1100 – Global Economics (Section 07) Exam #2 – Spring

ECON 1100 – Global Economics (Section 07)
Exam #2 – Spring 2011 (Version C)
Multiple Choice Questions ( 2 12 points each):
1.
_________________ refers to the skills, education, and training which individuals
in the labor force possess.
A.
Human Capital
B.
Produced Assets
C.
Natural Ability
D.
Natural Assets
2.
The Gini-Coefficient provides a quantitative measure of
A.
income equality/inequality within a society.
B.
the fraction of the workforce that is currently unable to find a job.
C.
the total value of goods/services produced by a society.
D.
the rate at which prices are increasing in an economy over time.
3.
Per Capita GDP in Singapore is approximately $48,900. This figure:
A.
is less than the Per Capita GDP of both the United States (approximately
$51,230) and European Union (approximately $53,240).
B.
is greater than the Per Capita GDP of any other country in the World
(since the Per Capita GDP of Germany – the country with the second
highest value worldwide – is only $42,100).
C.
is greater than the Per Capita GDP of the United States as a whole
(approximately $46,000), but is less than the Per Capita GDP of the state
of Connecticut (approximately $55,319).
D.
is not greater than the Per Capita GDP of all other countries in the World
(since the Per Capita GDP of Russia is $51,380 and the Per Capita GDP of
Sweden is $49,850), but is almost twice as large as the Per Capita GDP of
the United States (approximately $25,120).
4.
Suppose that “County A” were to realize a constant Real GDP Growth Rate of 2%
per year. It follows that Real GDP would double
A.
in roughly 35 years.
B.
in exactly 50 years.
C.
in roughly 70 years.
D.
None of the above answers are correct (since Real GDP will actually
decrease over time for this country).
5.
Adam Smith was
A.
a 21st century American community organizer.
B.
a 19th century German philosopher, economist, and revolutionary.
C.
an 18th century Scottish economist.
D.
a 15th century British monarch.
6.
Which of the following countries experienced an annual inflation rate of roughly
12,563% in 2008?
A.
Japan.
B.
The United States.
C.
Mexico.
D.
Zimbabwe.
7.
Between 1980 and 2007 the “percentage of income earned by the Top 10% of
households in the United States”
A.
remained constant at roughly 10% of society’s income.
B.
increased from roughly 32.13% of society’s income to roughly 48.05% of
society’s income.
C.
decreased from roughly 65.14% of society’s income to roughly 25.22% of
society’s income.
D.
increased from roughly 71.89% of society’s income to roughly 82.61% of
society’s income.
8.
On September 4, 2009, Gov. Arnold Schwarzenegger offered a $100,000 reward
for anyone who could provide information leading to the arrest and conviction of
the arsonists who set a wildfire which was then burning in southern California (a
fire which claimed the lives of two firefighters). In this situation, Gov.
Schwarzenegger was attempting to obtain the desired information by
A.
moral persuasion.
B.
Command Planning.
C.
coercion.
D.
offering a material incentive.
9.
__________________ is the subfield of economics that compares the structure
and performance of different types of economic organization.
A.
Macroeconomics
B.
International Trade
C.
Public Finance
D.
Comparative Economic Systems
10.
Maurice is a citizen of Canada, but lives, works, and attends school in the United
States. Last year he went on vacation to Mexico during Spring Break. In order to
pay for his college tuition, he works at a carwash in Kennesaw, GA. Last year he
provided “car washing services” valued at $22,000. The value of these services
would be included in the calculation of GDP for
A.
Canada, since he is a Canadian citizen.
B.
the United States, since that is where the production took place.
C.
Mexico, since that is where he went to relax on vacation (which was a
necessary activity for him to be able to work hard in school and on the job
throughout the rest of the year).
D.
all three countries, since he has an “economic tie” to Canada, the United
States, and Mexico.
11.
Suppose that between 2011 and 2014 both the Unemployment Rate and Inflation
Rate were to decease in Germany. It follows that the value of the Misery Index in
2014 _____________ the value of the Misery Index in 2011.
A.
must be greater than
B.
must be less than
C.
must be exactly equal to
D.
could be greater than or could be less than
12.
______________ refers to “the degree to which decision makers in an economy
experience a real system that differs from the nominally defined system.”
A.
The “Invisible Hand”
B.
Economic Competitiveness
C.
Economic Freedom
D.
Corruption
13.
The _____________________ are nations without large stocks of technologically
advanced capital and a well educated labor force (such as Chile, Panama,
Thailand, Bolivia, India, Rwanda, and Ethiopia)
A.
“First World Countries”
B.
“Industrially Advanced Countries”
C.
“Less Developed Countries”
D.
“Economically Inferior Countries”
14.
Focusing on the “household at the 40th Percentile of earned income” in the United
States, over the past three decades the “real income” of the household at this
cutoff level
A.
decreased from $39,150 to $37,205 between 1980 and 1989, and then
further decreased to $35,230 by 2007.
B.
increased from $41,950 to $45,207 between 1980 and 1989, and then
further increased to $49,510 by 2007.
C.
increased from $18,650 to $24,109 between 1980 and 1989, but then
decreased to $17,312 by 2007.
D.
decreased from $65,254 to $56,104 between 1980 and 1989, but then
increased to $71,843 by 2007.
15.
The “Catch-up effect” suggests that, all other factors fixed,
A.
the global economy is “rigged against new entrants,” in that there is no
way for poor countries to catch-up with rich countries.
B.
those economies with currently low levels of GDP will tend to experience
higher GDP growth rates.
C.
whenever a countries experiences rapid growth in GDP, they must also
experience an increase in income inequality.
D.
the only way for new firms to catch up to existing firms (in terms of
profits and market share) is to reduce production costs by hiring only poor,
low skilled workers in Third World countries.
16.
Which of the following is NOT a basic characteristic of Capitalism?
A.
Economic decisions occur in markets.
B.
Factors of production are privately owned.
C.
Consumption goods are distributed to households on the basis of “need.”
D.
Businesses make their own production and pricing decisions.
17.
Based upon to the values of Gini-Coefficients noted in lecture, incomes in the
“market oriented economies” of Singapore ( G Sing  .52 ) and the United States
( GUS  .45 ) are distributed less equally than in the “less market oriented
economies” of Norway ( G Swdn  .23 ) and Canada ( GC  .32 ). Which of the
following statements is also true?
A.
Further, “GDP Per Capita (PPP)” is higher in the latter countries ($81,900
in Sweden and $73,240 in Canada), than in the former countries ($54,190
in Singapore and $51,230 in the United States).
B.
However, “GDP Per Capita (PPP)” is higher in the former countries
($48,900 in Singapore and $46,000 in the United States), than in the latter
countries ($36,900 in Sweden and $38,200 in Canada).
C.
Also, each of the former countries is currently experiencing “very positive
rates of annual GDP growth” (9.6% in Singapore and 5.7% in the United
States), while each of the latter countries is currently experiencing “very
negative rates of annual GDP growth” (–10.1% in Sweden and –7.9% in
Canada).
D.
None of the above answers are correct.
18.
A country would likely be able to realize “economic growth” as a result of
A.
not devoting any resources whatsoever to education, and instead using all
available resources to maximize the level of current consumption.
B.
choosing to decrease investments in “capital accumulation” during the
current period.
C.
being able to more easily access and use their available natural resources.
D.
More than one (perhaps all) of the above answers is correct.
19.
The “Agency of International Development” is
A.
a multi-national corporation that builds factories only in very poor
developing countries, in order to earn a large profit by exploiting the
workers of the poor country (who are willing to work for wages well
below what would be considered a “living wage”).
B.
a branch of the U.S. State Department, which oversees the administration
of U.S. foreign aid to developing countries.
C.
an environmental organization that lobbies governments around the
World, in an attempt to have stricter environmental regulations enacted in
high polluting developing countries (such as China and India).
D.
an international organization that makes short term high interest rate loans
to developing countries (loans which often prevent the recipient from
realizing economic growth, because the repayment terms are unfavorable).
20.
Based upon the discussion in lecture and the textbook, which of the following
economies has the highest level of corruption (i.e., is the “most corrupt”)?
A.
New Zealand.
B.
India.
C.
Finland.
D.
Singapore.
21.
Which of the following statements regarding “GDP in the U.S.” is accurate?
A.
“Nominal GDP was roughly 467.7 times larger in 2007 than in 1908.”
B.
“Real GDP did not change at all between 1908 and 2007.”
C.
“Real Per Capita GDP decreased between 1908 and 2007.”
D.
More than one of the above answers is correct.
For questions 22 and 23, refer to the graph below, which illustrates the Lorenz Curve
in Brazil in 1983 and 2011. “Area A” refers to the area between the 1983 Lorenz
Curve and the 45 degree line; “Area B” refers to the area between the 2011 Lorenz
Curve and the 1983 Lorenz Curve; “Area C” refers to the area between the horizontal
axis and the 2011 Lorenz Curve.
Cumulative fraction
of total income
1
1983 Lorenz
Curve for Brazil
Area A
Area B
Area C
0
22.
23.
2011 Lorenz
Curve for Brazil
Cumulative fraction
of total population
1
0
Based upon this graph, we can tell that
A.
income in Brazil was distributed less equally in 2011 than in 1983.
B.
Brazil had a negative rate of GDP growth between 1983 and 2011.
C.
the Unemployment Rate in Brazil was higher in 1983 than in 2011.
D.
average incomes in Brazil were higher in 1983 than in 2011.
Suppose (Area A)=(.14), (Area B)=(.06), and (Area C)=(.30). It follows that
between 1983 and 2011 the value of the Gini-Coefficient in Brazil
A.
increased from (.14) to (.20).
B.
increased from (.28) to (.40).
C.
decreased from (.14) to (.06).
D.
decreased from (.36) to (.30).
24.
The Index of Economic Competitiveness (which was discussed in lecture)
attempts to measure
A.
the degree to which decision makers in an economy experience a “real
system” that differs from the “nominally defined system.”
B.
the capacity of the national economy to achieve growth over the medium
term, controlling for the current level of development.
C.
the degree to which households and businesses are able to decide how to
use productive resources and which goods/services to produce/consume.
D.
the rate at which prices are changing for an economy.
25.
___________________ refers to improvements (over time) in a society’s quality
of life and standard of living.
A.
Inflation
B.
The GDP Growth Rate
C.
Economic Development
D.
Industrial Advancement
26.
The “Great Inflation” refers to the period of high inflation in the U.S.
A.
during the last year of the Reagan Administration (from March 1988
through January 1989).
B.
during the early 1970’s through the early 1980’s (from roughly June 1973
to July 1982).
C.
for several decades after WW-II, from December 1945 to March 1964.
D.
throughout the Great Depression from 1929 through 1939.
27.
__________________ refers to “attempts to convince individuals to behave in a
certain manner because doing so is the right thing to do.”
A.
Moral Persuasion
B.
Coercion
C.
The Rule of 70
D.
A Material Incentive
28.
The Phillips Curve directly illustrates
A.
how a society’s income is distributed across different segments of the
population.
B.
the tradeoff between unemployment and inflation that an economy faces.
C.
different combinations of output that an economy can produce with their
available resources.
D.
why total tax revenue could actually be lower under very high rates of
taxation than under moderate rates of taxation.
29.
“Real GDP Per Capita” is defined as
A.
the fraction of people in workforce who currently do not have jobs.
B.
the value of Real GDP multiplied by the value of total population.
C.
the value of Real GDP divided by the value of total population.
D.
the value of Nominal GDP minus the value of Real GDP.
30.
From 1983-2009, the U.S. experienced Inflation Rates which
A.
fluctuated tremendously from year to year, evidenced by the observation
that the rate was below 1% in 12 of these 27 years but over 8% in 11 of
these 27 years.
B.
were relatively low, exceeding a value of 4.83% in only one year during
this 27 period.
C.
were relatively high, exceeding a value of 7.88% in 22 of the 27 years
during this period.
D.
None of the above answers are correct, since no accurate measures of
inflation rates have been computed for the U.S. since the creation of the
Federal Cost of Living Council by President Reagan in 1982.
For Questions 31 and 32, consider a society facing the tradeoffs between
“Consumption Goods” and “Capital Goods” which are illustrated by the Production
Possibilities Curves below. The curve labeled “1992 PPC” illustrates the PPC of this
society in 1992. In 1992 this society chose “Point A” on this curve. As a result, by
2011 the society faced the PPC labeled “2011 PPC.”
Capital
Goods
2011
PPC
1992
PPC
B
A
Consumption
Goods
0
0
31.
The “outward shift” of the PPC (from “1992 PPC” to “2011 PPC”) which
occurred between 1992 and 2011 could be best described as
A.
a Recession.
B.
Deflation.
C.
Economic Growth.
D.
Economic Development.
32.
If this society had instead chosen “Point B” in 1992, then the relevant PPC in
2011 would likely lie ___________________ in the graph above.
A.
somewhere below the curve labeled “1992 PPC”
B.
somewhere between the curves labeled “1992 PPC” and “2011 PPC”
C.
exactly on the curve labeled “2011 PPC”
D.
somewhere beyond the curve labeled “2011 PPC” (i.e., further from the
origin)
33.
Comparing “macroeconomic outcomes and standards of living” around the world
(by looking at things such as “per capita GDP,” “life expectancy at birth,” “infant
mortality rates,” and “unemployment rates”), it is clear that
A.
in almost every country in the world, the standard of living is lower today
than it was in previous centuries (e.g., lower GDP per capita in real terms,
shorter “life expectancy at birth,” higher unemployment rates, etc.).
B.
while there is tremendous variation between countries with respect to Per
Capita GDP, when it comes to important measures of “quality of life”
(such as “life expectancy,” “infant mortality rates,” and “literacy rates”)
there is no variation whatsoever.
C.
humanity is essentially divided into two groups, the “haves” (consisting of
the roughly 12% of people who live in countries with per capita GDP
above $60,000 per year) and the “have nots” (consisting of the roughly
86% of people who live in countries with per capita GDP below $5,000
per year).
D.
None of the above answers are correct.
34.
Per Capita GDP in South Korea is $24,600, while Per Capita GDP in Bolivia is
only $4,300. These values directly imply that
A.
South Korea has more abundant natural resources than does Bolivia.
B.
people in South Korea must be happier than people in Bolivia.
C.
the market value of goods/services produced per person is greater in South
Korea than in Bolivia.
D.
More than one (perhaps all) of the above answers is correct.
35.
In order to include many different goods and services in a single aggregate
measure, GDP is computed by weighting goods/services according to
A.
their production costs.
B.
their market prices.
C.
the values that consumers place on the items as revealed by telephone
surveys.
D.
an estimate of the “social value” of the good/service, a value with is
approximated by bureaucrats employed by the “U.S. Agency of
Macroeconomic Measurement.”
36.
____________________ was a 19th century German philosopher, economist, and
revolutionary, who wrote “Das Kapital” and in considered by many to be the most
influential economist in the history of Socialism.
A.
Karl Marx
B.
Gordon Tullock
C.
Adam Smith
D.
Karl Popper
37.
The _____________________ refers to the “trap” in which countries are poor
because they cannot afford to save and invest, but they cannot easily save and
invest because they are poor.
A.
Vicious Cycle of Poverty
B.
Business Cycle
C.
Phillips Curve
D.
GDP Deflator
38.
Considering the Unemployment Rate in the U.S. reported on a monthly basis, this
rate took on a value of 10.0% or 10.1% for the three consecutive months from
October 2010 through December 2010. This three month period was
A.
the first time ever that the unemployment rate was below 11%.
B.
the first time that the unemployment rate was below 11% since January
2001.
C.
the first time that the unemployment rate was above 10% since June 1983.
D.
the first time ever that the unemployment rate was above 10%.
39.
The economy of the former Soviet Union
A.
perhaps provides the best example of a large society with an economic
system close to “pure socialism.”
B.
failed to achieve Karl Marx’s vision of an “ideal communist society,”
since in practice the ownership and use of most resources was controlled
by the government (and not by “the people” without any intervention
whatsoever by the government).
C.
functioned so efficiently that the country produced a combination of goods
beyond its production possibilities curve year after year after year.
D.
More than one (perhaps all) of the above answers is correct.
For Question 40, consider the continuum between the economic systems of Pure
Socialism and Pure Capitalism illustrated below.
Point A
Point B
Point C
Pure
Socialism
Cuba
40.
North
Korea
Point D
Pure
Capitalism
Germany
Israel
United
Kingdom
New Zealand
Based upon the discussion in lecture, along the continuum illustrated above the
economy of the United States would most accurately lie at ____________.
A.
Point A
B.
Point B
C.
Point C
D.
Point D
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