Code Name: Part 1: (70 points. Answer on this paper. 2.5 pts each unless noted.)
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1 Code Name: Part 1: (70 points. Answer on this paper. 2.5 pts each unless noted.) 1-2: Haiti s GDP/capita is currently $2,500. Assume it will grow by 2.0%/year for the foreseeable future. 1. Below, show me the formula for Haiti s GDP/capita in 12 years based on these numbers (starting at $2,500 and growing 2%/year). You do not have to solve the formula, just show it to me. Use specific numbers (ex. $5,000) rather than definitions. The Value of Haiti s GDP/capita in 12 years = 2. Use a rule of thumb (i.e. an approximation). Again, Haiti s GDP/capita starts at $2,500 and grows by 2.0%/year. Approximately, what will Haiti s GDP/capita be after 70 years? $ 3. (3 points) Stephanie is an economic historian and hamster owner. She is about to present her data on differences in living standards between rich and poor nations over time. Unfortunately, her hamster got loose and cut pieces out of all of her graphs. Help Stephanie out. Which of the graphs GDP/capita of rich nations below is Stephanie s graph of the ratio? GDP/capita of poor nations a. b. c. d. e. 4. (3 points) Stephanie is an economic historian and iguana owner. She is about to present her data on world population over time. Unfortunately, her iguana got loose and cut pieces out of all of her graphs. Help Stephanie out. Which of the graphs above is Stephanie s graph of world population? 1
2 5. During Grandpa Paul s lifetime, real GDP/capita increased an average of 0.4%/year. During his grandson Trace s lifetime, real GDP/capita increased an average of 1.1%/year. As a result: a. Trace will see a doubling of living standards roughly every 10 years. In contrast, it will have taken Grandpa Paul his entire life to see living standards double. b. During his lifetime, Trace will have seen living standards fall significantly due to population growth. Grandpa Paul will have seen living standards fall even more. c. Trace will have seen easily noticeable changes in living standards during his lifetime. Grandpa Paul, in contrast, will likely not have noticed a significant change in living standards during his lifetime. d. Trace s living standard will have stayed about the same during his lifetime. Grandpa Paul, in contrast, will have seen living standards fall due to an increase in population. 6. (3 points. -1 for each incorrect blank with a minimum score of 0) Check ( ) each time period in which (long-run trend) Real GDP per capita grew at or above 1% per year? Check any and all blanks that apply. The late Roman republic and empire ( 100 BCE to 100 CE) The late Middle Ages in Western Europe ( 1300 to 1500) The late Middle Ages in Japan ( 1300 to 1500) The Renaissance in Europe ( 1450 to 1600) The Age of Enlightenment in Europe ( 1680 to 1790) The last two centuries (approximately 1820 to the present) 7. Beginning in the late 1400 s, European naval forces (including private merchants) were able to dominate other navies of the world. For example, small numbers of Portuguese ships repeatedly defeated larger fleets of Muslim and Indian ships. What, according to Stavrianos, was a major advantage the Europeans had in this matter? a. ships that were rowed with slave labor b. gunpowder and cannons c. ships with iron planking d. the crossbow and longbow 8. (3 points) What, according to Stravianos, happened to the size of the average political unit in Europe by the end of the fifteenth century (i.e. by the late 1400 s)? a. All of Western Europe except for the British Isles was, for a century at least, united under the Holy Roman Empire. b. Western Europe went from just a few large political units to a patchwork of many, small units. The number of political units in the Eastern Europe, however, decreased as that area came to be dominated by the Ottoman Empire and the Hungarian Empire. c. Political units were becoming larger. Nations states such as England and France were gradually supplanting a system of many, smaller, feudal units. d. Unlike the rest of the world which had by the end of the fifteenth century degenerated in 1,000s of small states, Europe s political units were roughly the same size as they had been in the Dark Ages. 2
3 9. It is the year 1433 and you live in Mogadishu, on the coast of East Africa. You see a large convoy of ships, from foreign lands, offshore. Where did these ships originate? a. Bulgaria e. France i. Portugal b. China f. Genoa, Italy j. Samarkand (Uzbekistan) c. The Dutch Republic g. India k. Spain d. England h. Northern Germany l. Sweden 10. Which of the following likely affected the timing of the first overseas European colonies and trading posts? a. A blight (disease) killed off most of Southern Europe s mulberry trees. Silkworms fed on the leaves of these trees. Therefore, the European silk industry declined, and Europe was desperate Asian silk. b. In order to get elected as Pope, (soon to be) Pope Urban VI secretly promised many rulers he would consider it God s sanction if that ruler captured a non-christian land by force. c. The Ottoman Empire took control of much of the trade out of the eastern Mediterranean. d. A workable sea-faring clock was invented. This allowed sailors to determine their longitude (eastwest) location by comparing the when the clock is at noon to when the sun is at its highest. 11. Think about the first two European nations to establish overseas colonial empires. What is an advantage these two nations had, that helps explain why they were Europe s first colonizers? a. Weather. At the time, Europe was in its Little Ice Age. Only the states of southern Europe had ice free access to the oceans year round. b. Geography. They had contact with both the Mediterranean trade and easy access to the Atlantic. c. Religion. While Protestantism was turning away from methods and deeds as the way to redemption, Catholicism was actively encouraging people to gather riches as proof of God s sanction. d. The commercial nature of a typical city state. Rulers in these two nations were more interested in commercial endeavors than in territorial conquest. 12. It s Which of the following countries has the highest GDP/capita? a. Albania b. The Dutch Republic d. Great Britain e. Italy g. Russia h. Spain c. France f. Poland i. Sweden 13. It s Which of these countries below are property rights the most Secure? In countries is one the least likely to lose their property simply by being on the wrong side of a ruler? a. Albania b. The Dutch Republic d. Great Britain e. Italy g. Russia h. Spain c. France f. Poland i. Sweden 14. It s Which of the following countries uses the most coal per capita as an energy source? a. The Dutch Republic b. Great Britain 15. Approximately, when did Joint Stock Companies Originate? JSC s originated around: a b c d e
4 16. Where did Joint Stock Companies Originate? a. Northern Italy d. England and the Dutch Republic b. Spain, in particular Aragon e. France c. The Ottoman Empire f. The Hanse of Northern Germany 17. What is a Joint Stock Company? a. A private company that is majority owned by the government. b. A private company that is 1 / 3 owned by the government. This golden ratio of 1 / 3 and 2 / 3 was thought to provide a good balance between government control and private interests providing the private shares were widely distributed. c. A company is which ownership is based on many, tradeable, shares. d. A partnership (although sometimes with up to 4 partners). 18. It s the year In country 1 Joint Stock Companies are legal and common. In Country 2, Joint Stock companies are not legal. Which of the following is likely true? a. Country 1 has the faster rate of growth. b. Country 2 has the faster rate of growth. c. Both have roughly the same growth rate. JSC s are thought to not have affected growth rates. 19. What likely explains the answer to # 18 above? a. The axiom of institutional irrelevance. In most cases, the legal environment is like culture. It affects how an economy appears to outsiders, but not economic performance. People have incentive to use laws to their advantage regardless of the wording of the law. b. JSC s allow a firm to raise large amounts of money and to last for a long time. c. JSC s while often profitable for their investors, divert both public & private money from other uses. d. JSC s are taxed at a lower rate than most businesses. 20. How was the Dutch Republic created? a. The largely Protestant Netherlands rebelled against Spanish rule. The rebellion was eventually successful in the Northeastern half. The rebels started a new country. b. The Kingdom of Holland was cut in half by a French army. While the King of Holland was captured in the western half, the eastern Hollanders formed what was supposed to be a temporary government until they were reunited with their King. c. A mommy Belgium Republic and a daddy German Republic fell in love and decided to start a family. d. In the early 1700 s there was a war in which France-led coalition fought a Prussian alliance. At the peace negotiations, the great powers decided to create a buffer state between France and Germany. 21. How did the Dutch Republic, as a political entity, come to an end? a. It survived as a political entity until 1940 when Nazi Germany invaded. In 1945, two countries were created out of the area of the former Dutch Republic: The Republic of the Netherlands, and Belgium. b. The Dutch Republic suffered many wars on its borders and even invasions. Finally, in 1795, the French invaded and dissolved the Dutch Republic. c. In an interesting twist of the history of democracy, in 1688, Dutch voters voted to dissolve their elected parliament and establish a hereditary monarchy with few checks on its power. d. The Dutch Republic has survived to the modern day. 4
5 22. What happened in England (Great Britain) in 1688? a. England was invaded by France. The French forcibly dissolved Parliament and imposed a new King. b. England kicked out one King and invited a foreigner to be their New King. c. The House of Lords, acting as England s Supreme Court, declared that while the nation has divine sanction, the King does not necessarily have divine sanction. d. England invaded the Dutch Republic and ruled it as a colony for 15 years. 23. (3 points) What else happened in England (Great Britain) in 1688? a. Catholicism was temporarily reinstated as the official religion of England. b. Suffrage was increased. All free men could vote and women were given the right to vote if they owned enough property. c. A percentage tax, a tax roughly equal to 15% of income, replaced the 1/person head tax. d. The English Parliament put significant checks on the King s powers by asserting full power of the purse and other restrictions. 24. About 50 years ago, the idea was put forward that the sugar producing colonies were extremely important in explaining the Industrial Revolution? What was the hypothesized link between the sugar colonies and the Industrial revolution? a. Sugar and caffeine built the Industrial Revolution. Without sugar, Europeans would not have become big consumers of coffee and tea. Without the caffeine in coffee and tea, there would have been less work effort and entrepreneurship. b. It became known in Europe that the sugar plantations were nearly the equivalent of death camps for African slaves. It became common for Europeans to justify this slavery with the ideology of the White Man s Burden. Europeans felt obligated to give the world new inventions in order to justify their colonial hegemony. c. The sugar colonies generated large profits for their European owners, especially those in Britain and France. These profits, in turn, were the main source of financial capital used to fund the new industries of the Industrial Revolution. 25. When later economists & historians attempted to test the above (# 24) thesis, what did they find? a. The argument is partly correct in that it explains some of the Industrial Revolution. However the magnitude is relatively small. Most of the Industrial Revolution is explained by other factors. b. The argument is wholly wrong. The hypothesized relationship actually hindered Industrialization. c. It is nearly impossible to test the argument. Nothing in the argument can be quantified. d. The argument explains nearly all about why the Industrial Revolution started. One does, however, need to remember that once it began, the Industrial Revolution took on a life of its own. 26. According to our readings, in particular a supply and demand analysis, during the Industrial Revolution, the largest shift in the market for most industrial goods was: a. a decrease in demand c. a decrease in supply b. an increase in demand d. an increase in supply 27. According to our readings, in particular a supply and demand analysis, during the Industrial Revolution, the largest shift in the market for most industrial goods was: a. increased consumer spending c. the development of new technology b. decreased consumer spending 5
6 Part 2: Answer 1 of the following 2 essays (30 points) 1. How, according to our lecture and readings, might Spain s empire have negatively affected Spain s later economic development? Make sure you explain your answer and illustrate it with examples. 2. What, based on our readings and lecture, are the two (or so) most certain ways that European colonization helped Europe break into modernity. Explain your answer. If a specific country was to become an early modernizer, via the methods you described above, did this country have to have its own colonial empire? 6
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