ECON Modern European Economic History John Lovett Code Name: Part 1: (70.5 points. Answer on this paper. 2.5 pts each unless noted.
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1 ECON Modern European Economic History John Lovett Code Name: Part 1: (70.5 points. Answer on this paper. 2.5 pts each unless noted.) 1. Is the time period from 1500 to 1699 modernity by the criteria described in this class? a. Yes b. No c to 1599 is not to 1699 is. 2. A growth rate of Real GDP/Capita of 1% is significant because: a. income roughly doubles in a lifetime. Living standard changes are easily noticeable to humans. b. people can reproduce at or near the maximum biological rate without reducing living standards. c. nation-states can steadily increase their tax revenues without driving living standards back to subsistence levels. d. low income nations will converge on high income nations from below if both groups have a growth rate of Real GDP/Capita at or near 1%/year. 3. Smithian Growth is growth resulting from: a. a cascading cycle of technological changes. One change in technology leads to another and so on. Smithian growth has been called the nuclear fission of economic growth. b. increased specialization and division of labor but NOT due to significant changes in technology. c. healthy competition between states to have the best infrastructure and economic system. d. limiting population growth by changing social norms. Examples include people waiting until their late 20 s to get married. 4. Today, Nicaragua s Real GDP/Capita is $2,200. What will Nicaragua s GDP/capita be in 12 years if it grows at 2%/year? Write a numerical formula below. You do NOT have to solve it. 5. Today, Honduras s Real GDP/Capita is $4,000. What will Honduras s GDP/capita be in 40 years if it grows at 3.5%/year? Use a rule of thumb to approximate the answer. 6. How well does Smithian Growth explain changes in living standards over the past 250 years? a. By itself, Smithian Growth is limited. Most of the growth over the last 250 years is not well-described by Smithian Growth. b. Smithian Growth describes the experience of rich nations very well. It does not, however, describe the experience of poor nations well. c. Smithian Growth describes the experience of highly capitalist very well. It does not, however, describe the experience of nations with lots of government planning well. d. Most of the changes in living standards and technology over the past 250 years are easily characterized as Smithian Growth. 1
2 ECON Modern European Economic History John Lovett 7. According to our readings and lecture, what was true of living standards in rich versus poor nations around the year 1400? a. The relative difference between rich and poor nations was slightly larger in 1400 than today (ex. 16:1 back then versus 8:1 today). b. The relative difference between rich and poor was much smaller (ex. 3:1) in It was only in the last 200 years or so that the gap between rich and poor greatly increased (ex. 25:1). c. The relative difference between rich and poor 1400 was roughly the same as it is today. The gap between rich and poor opened up around the year 0 CE and has been roughly the same ever since. 8. Leadernam s GDP/capita ($35,000) is 5x that of Followerstan ($7,000). Then, starting in 2021, Followerstan adopts a legal, educational, and political system very similar to that of Leadernam. What Leadern's GDP/Capita does economic theory predict will happen to the ratio of over the next few decades? Followers' GDP/Capita a. It decreases (ex. 2:1) b. It remains roughly the same (5:1) c. It increases (ex. 8:1) 9. Below are four graphs. One of them plots the actual (estimated) World Income per Capita and World Population between 500 BCE and Each small dot is one century with some of the dots being labelled. Based on what was taught in class, which is the correct graph? a. c. c. b. d. d. 10. What, in the context of this course, is meant by Enclosure : a. Running short of land for each person because of very high population growth.. b. The Ottoman Empire s attempt to monopolize the trade between Europe and India by controlling the Middle East. c. Restricting a nation s ability to access markets through blockade and military force. d. The privatization of lands that were previously farmed using communal labor. 2
3 11. What is the putting out system? It is a system in which a. governments decide what will be produced (ex. military goods). The actual production of the goods, however, are done by the private sector. b. feudal lords would retain title to a piece of land, but make it available to peasants (i.e. put it out ) in exchange for approximately half the crop c. an entrepreneur distributes or puts out goods to many homes. In the homes the goods are processed. The individual workers then return the good to the entrepreneur. d. feudal lords would rent or put out their peasants to other lords 12. (2 pt) The putting out system illustrates that: a. commercial advances were possible under feudalism. Feudalism was not inherently anti-commercial. b. high levels of specialization are possible without production being centralized in factories. c. differences in land ownership explain much of why some countries became rich and others did not. 13. At right is a graph showing the GDP/capita of the country of Alphastan over a 50 year period. Betanam s GDP/capita for the starting year is shown, but the rest of the Betanam data is not. Prior to year 0, Alphastan and Betanam had many differences. Beginning in year 0, however, Alphastan becomes very much like Betanam. Starting in year 0, Alphastan and Betanam have the same savings rate, same rate of population growth, access to the same technology, and very similar laws and institutions. Draw a curve showing Betanam s GDP/capita according to the Solow Growth Model (according to our readings and lecture). Real GDP/Capita $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 0 Betanam s starting Real GDP/capita Alphastan 30 Years from Start Roughly when did nation-states first arise (according to our readings and lecture)? a. 55 BCE 300 CE b CE c CE d CE e CE f CE 15. (2 pt) Roughly where did nation-states first arise (according to our readings and lecture)? a. China b. Greece c. what is now the Middle East d. North Africa e. Sub-Saharan Africa f. Western Europe 16. How might Joint Stock Companies (JSC s) have played a major role in Europe s development? a. JSC s were the basis for the early nation-states of Europe. b. JSC s repeatedly bankrupted the Catholic Church thereby helping fuel the spread of Protestantism. c. JSC s repeatedly bankrupted the Spanish government thereby opening the door for other nations to become colonial powers. d. JSC s allowed the funds of many investors to be pooled. Large commercial enterprises became possible.
4 17. The year is 1430 and you are living in East Africa in what is now Ethiopia. You see a large fleet of ships from far away lands, with strange (to you) looking sailors. From where is this fleet? a. Britain b. China d. France e. Germany g. New Guinea h. Portugal c. The Dutch Republic f. Mexico i. Spain 18. The year is Which nation is the leading super-power of Europe? a. Britain b. The Dutch Republic c. France d. Germany e. Italy f. Portugal g. Spain h. Sweden 19. What is one of the reasons the above nation was such a major power in the year 1580? a. The country had, overall, the best property and most advanced financial institutions in all of Europe? b. The country had a monopoly on trade between Europe and India. c. Eruope s Little Ice Age allowed this country to grow crops other regions were not able to. d. The country had lots of silver and gold flowing in from her colonies. 20. (3 pt) It is Rank the three countries or regions in terms of GDP/capita and their general level of development. 1 is the richest (per capita) and most developed. 3 is the poorest (poor capita) and least developed. Spain England/Great Britain the Dutch Republic 21. (3 pt) It is Rank the three countries or regions in terms of GDP/capita and their general level of development. 1 is the richest (per capita) and most developed. 3 is the poorest (poor capita) and least developed. Spain England/Great Britain the Dutch Republic 22. (1.5 pt) Around 1600, what was the most valuable product (total dollar amount) that Spain received from her colonies? a. land to which her large population could migrate c. sugar b. silver and gold d. wool 23. How did the inflow of the above product into Spain affect Spain s economic development? a. Spain exported millions of Spaniards to the colonies allowing her to escape the Malthusian trap. b. Spain used profits from this material to fund mass amounts of new physical capital and thereby industrialize. c. Spain used this material as the basis for a new manufacturing industry. d. Spain saw the prices of her goods increase making it very hard for Spain to sell any exports. 24. The year is Which country arguably has the most secure property rights, most advanced banking, and best commercial institutions in Europe? a. Britain b. The Dutch Republic c. France d. Germany e. Portugal f. Spain
5 25. (2 pt) What happened in England in 1688 (and the years shortly thereafter)? a. The country had a change of government. This led to a long-lasting government that was effective at getting things done, but also restrained from abusing its powers. Property rights were very secure. b. The country had a change of government that, for a while, looked like it might lead to a long period of stability and good property rights. The country however, bounced back and forth between mob rule and autocratic rule for many decades thereafter. c. The country defeated its main European rival in a war thereby acquiring roughly 1 / 3 of all European colonies. 26. What, in the context of this course, is de-industrialization? De-industrialization is: a. transitioning from an economy based on manufacturing to one based on high-tech services such as finance b. transitioning from a country with either manufacturing a lot or on the path to manufacturing, to becoming an economy that mostly supplies simple raw materials to Europe c. transitioning from a country with lots of manufacturing to one with little manufacturing as a result of falling educational standards d. manufacturing without factories. Instead, each step of the manufacturing process takes place in homes or small shops via a system of contract labor. 27. Libby is an economic historian who strongly believes that Europe s colonization of Asia served to both: 1) greatly advance Europe s development, and 2) greatly retard the development of colonized areas. When does Libby likely believe that Europe pulled well ahead of Asia (China and India)? a. by at least 1100 CE b. around 1450 CE c. not until close to 1800 CE d. not until about 1980 CE 28. (2 pt) Which of the following best describe Eric Williams (1944) thesis? a. Colonies subjecting African slaves to harsh & often deadly conditions made large profits for Europeans. These sugar/slave profits were used to fund most of the capital needed for the Industrial Revolution. b. Europe had better economic fundamentals than China by at least 1000 CE. Europe s colonization was a symptom of her developmental superiority but did not actually cause the Europe/Asia divergence. c. European colonizers destroyed good native institutions and replaced them with very corrupt institutions. Because of this, European colonization was a major cause of the Europe/Asia divergence. 29. (2 pt) According to lecture, what, is the major significance of the Agricultural Revolution that preceded the Industrial Revolution was? a. Feudalism finally began to break up. Small farmers could now make enough money they did not need help from a large landowner. b. Most of the agricultural machines that were invented directly led to machines that were used in other industries. For example, the seed drill evolved into the textile industry s power loom. c. Labor was freed up for other purposes. A nation could now have lots of workers in industry instead of agriculture without having them starve.
6 Part 2: Answer 1 of the following 2 essays (30 points) 1. Describe Europe s Agricultural Revolution which preceded the Industrial Revolution. In particular: Indicate the approximate dates of this Agricultural Revolution. Tell the reader why the Agricultural Revolution is of importance, especially to someone studying the Industrial Revolution. Describe the major institutional changes that took place over this time period. What happened and how did these institutional changes affect agricultural productivity? Describe some of the technical changes (new techniques, equipment, etc.) that occurred over this time period. How and why did each change affect productivity? 2. In the given time, write an essay on how European colonization was related to the Great Divergence. Given that you only have 20 to 25 or so minutes to write this essay do not try to cover all the ways European colonization may have affected the Great Divergence. A brief overview of the basic position may be in order. Do not, however, try to cover everything in depth. Instead, pick a point of view that covers at least two of the theories discussed in class. Describe your position, and the reasoning and evidence behind it. Make sure you include some historical examples to support your position.
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