Exam 1, Fall Code Name:
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1 Exam 1, Fall 2017 Code Name: Part 1: (70 points. Answer on this paper. 2.5 pts each unless noted.) 1. (2 pts) $_ Assume Grenada s real GDP/capita currently is $4,500. If it grows at 1.0%/year, approximately what will it be in 70 years? Use a rule of thumb, discussed in the readings, to answer this. 2. (2 pts) Assume the Dominica s real GDP/capita currently is $6,500. If it grows at 3.0%/year, what will it be in 15 years? Do not solve the formula. Give me a formula with numbers. 3. It s 2017 and the U.S. currently has a GDP/capita about 5.5 times that of China. Based on mainstream economic growth theory, China s GDP/capita will roughly equal that of the U.S.: a. under no realistic conditions. Only if the U.S. is devastated by war, etc., does economy theory predict that a lagging nation can catch up. b. if China has a lower long-run inflation rate than that of the U.S. Inflation is all that really matters. c. if China s savings rate is equal to that of the U.S. Savings rates are all that really matter. d. if factors such as China s property rights, level of corruption, and savings rates, considered as a package, match that of the U.S. e. in nearly all circumstances. As long as China is not devastated by war, etc., her GDP/capita will almost certainly catch up that of the U.S. 4. How did the population density of the pre-contact Eastern U.S. compare to that of Mexico? a. The Eastern U.S. s pop/mile 2 was much greater than ( 4x) Mexico s pop/mile 2. b. The Eastern U.S. s pop/mile 2 was roughly equal to Mexico s pop/mile 2. c. The Eastern U.S. s pop/mile 2 was much lower than Mexico s pop/mile According to the readings and lecture, the above (# 4) meant that: a. the U.S. economy needed good institutions much, more than Mexico did if was to grow. b. The U.S. was pre-destined to be a low skill farming economy whereas Mexico was pre-destined to be a high skilled manufacturing economy. c. the U.S. economy would have a much easier time expanding than would the Mexican economy. 6. How did Andrew Johnson end up as Vice-President? a. There used to be split-ticket voting. A person could vote for a Republican President and Democrat Vice-President. Despite being from a different party than Lincoln, Johnson won the VP race. b. Abe Lincoln dropped his 1 st Vice-President when running for re-election. Lincoln chose Johnson to help win votes in the border states and among those who were still sympathetic to slavery. c. Lincoln s 1 st Vice-President died. Johnson, as Speaker of the House, was next in order of succession. d. Since no candidate won a majority of electoral votes in 1860, the House of Representatives decided who was President & Vice President. They chose Johnson to balance the radical Lincoln. e. A nice mommy Vice-President meets a nice Daddy Vice-President while in college. After getting their parents permission, they get married and the stork brings them a baby Vice-President. 1
2 7. (4.5 pts, 1.5 pts each blank) Afghanistan is holding a convention to draft a new constitution. Kamaal Sahar is the leader of a party advocating market preserving federalism. What do Kamaal and his party want the national (central) government to do? Check ( ) any and all blanks that apply. provide financial assistance to individual Afghan states if they have economic or financial trouble ensure that goods, people, and capital, can flow freely between individual Afghan states make sure that the tax and regulatory system is the same in all Afghan states 8. Which graph best illustrates the relationship between a nation s level of equality & GDP/capita? a. b. c. Real GDP/capita Real GDP/capita Real GDP/capita Least ity Most Least ity Most Least ity Most d. e. Real GDP/capita Real GDP/capita Least ity Most Least ity Most 9. (4.5 pts, 1.5 pts each blank) Which of the following are likely explanations for the above (# 8) relationship between GDP/capita and equality? Check ( ) any and all blanks that apply. ity generally means decision makers chose a government in which property rights are relatively secure. Greater equality can mean that resources, especially labor, are used efficiently. Careers are chosen based on desire and ability rather than luck of heredity or corruption. ity necessarily means few very high income earners. Therefore, average income in the nation much be relatively low. 10. What did Fogel and Engermann conclude regarding slavery in the United States? a. that American slavery was in a severe economic decline in the years before the war. Had the Civil War not happened, Southern states would have abolished on their own by about b. that slavery was the main reason the U.S. Economy was successful prior to the Civil War. The South provided the raw materials (cotton, etc.) and foodstuffs the North needed to industrialize. c. that American slaves actually had rather good living standards for the time period. d. that in addition to the physical and mental torment of slavery, slaves had nearly 2 / 3 of the products of their work effort taken away. 2
3 11. Which of the graphs below best illustrate the ratio of GDP/capita in the richest 20% of nation to GDP richest 20% of nations GDP/capita in the poorest 20% capita over the past several centuries? GDP poorest 20 % of nations capita a. c. b. d. 12. What did the Tenure of Office Act say or do? The Tenure of Office Act: a. made it illegal for a President to remove anyone from office that had been confirmed by the Senate, without getting the Senate s consent. b. made slavery, and equivalent forms of bondage, illegal. c. made it illegal to deny voting rights based on race or class. d. made it illegal to deny citizenship based on race or class. e. put a party s vice-president on the same ticket at that party s president. No longer could one vote for a Republican President and Democrat Vice-President. 13. It is 1866, one year after the end of the Civil War. The state of Alabama has just formed a new post-war state government. After an election, Jefferson Beauregard is chosen to become (one of) Alabama s new senator? What happens after Senator Beauregard gets to Washington, D.C.? a. Congress refuses to seat him. Congress will argue that the South s new state govts are invalid. b. He can attend the Congress, but will not be able to vote in committees or on the floor until c. He can attend the Congress as a voting member. Northern Senators, however, will keep him, and other Southerners, off of committees until they lose their overwhelming majority around
4 14. What do Ransom & Sutch conclude regarding the conditions of African-Americans in the post war South? Ransom & Sutch argue that after the war African-Americans saw their material living standards: a. roughly double. African-Americans were producing less than they did as slaves. However, the kept all of the product of their labor and benefited from more leisure time. b. roughly double. Part of the increase was due to African Americans working more hours due to increased incentives. The rest came from being able to keep 100% of the product of their labor. c. stay roughly the same. African-Americans kept all of the product of their labor which led to gains. However, they worked much less which meant the product of their labor was much less. d. fall. African-Americans kept all of the product of their labor which led to gains. However, the former slave owners no longer saw the freed slaves as assets to be cared for and gave them less room and board. 15. What did Ransom and Sutch conclude regarding slavery? a. that American slavery was in a severe economic decline in the years before the war. Had the Civil War not happened, Southern states would have abolished on their own by about b. that slavery was the main reason the U.S. Economy was successful prior to the Civil War. The South provided the raw materials (cotton, etc.) and foodstuffs the North needed to industrialize. c. that American slaves actually had rather good living standards for the time period. d. that in addition to the physical and mental torment of slavery, slaves had nearly 2 / 3 of the products of their work effort taken away. 16. What did the 13 th amendment do or state? The 13 th amendment: a. made it illegal for a President to remove anyone from office that had been confirmed by the Senate, without getting the Senate s consent. b. made slavery, and equivalent forms of bondage, illegal. c. made it illegal to deny voting rights based on race or class. d. made it illegal to deny citizenship based on race or class. e. put a party s vice-president on the same ticket at that party s president. No longer could one vote for a Republican President and Democrat Vice-President. 17. What did the 14 th amendment do or state? The 14 th amendment: a. made it illegal for a President to remove anyone from office that had been confirmed by the Senate, without getting the Senate s consent. b. made slavery, and equivalent forms of bondage, illegal. c. made it illegal to deny voting rights based on race or class. d. made it illegal to deny citizenship based on race or class. e. put a party s vice-president on the same ticket at that party s president. No longer could one vote for a Republican President and Democrat Vice-President. 18. After the Civil War, African-Americans in the U.S. South: a. could borrow at low interest rates if they could find a private lender. There were, however, very few private lenders. b. could borrow at low interest rates from the U.S. government s Freedman s Bureau until c. were banned from borrowing money by Black Codes and Jim Crow laws. d. could and usually did borrow from the private sector, but paid very high interest rates. 4
5 19. Which system is arguably provides the best incentives to have high labor productivity (output per hour) and good preservation of land? Assume there are no economies of scale. a. A very large plantation. The landowner hires freed Blacks & organizes them into large work gangs. b. A system in which small farmers own their own and farm their own land. c. A system in which small farmers make cash payments to land owners to rent the land they farm. d. A system in which small farmers get seed, fertilizer and the use of a plot of land from a landowner. The farmer grows crops and then gives the land owner roughly half of the crop as payment. 20. It is Emanuel is a 35 year old African-American living in the U.S. South. Why is he likely to need to borrow money? Emanuel needs the money to: a. pay off the freedom payment that is wed to his former owner. After the war, the U.S. government loaned him the money needed to compensate his former owner. It did not give him the money. b. move his family to the North where factories are higher. Post-war African-Americans generally did not borrow unless they were one of the few leaving the region. c. to survive for several months until his crop is harvested and sold. d. to pay off his gambling debts. The combination of unscrupulous Carpet baggers and former slaves not being used to autonomy led to many African-Americans gambling themselves into debt. 21. (6 pts, 1.5 pt each blank) In the 1 st (leftmost) column of the table below indicate what economic historians have suggested as causes for the credit situation faced by African-Americans in the U.S. South after the Civil War over the past half century or so. i.e. What causes were discussed in lecture and our readings? Check ( ) any blank that applies. 22. (6 pts, 1.5 pt each blank) In the 2 nd column of the table below indicate what (according to lecture) is the current consensus among economic historians regarding the credit situation faced by African- Americans in the U.S. South after the Civil War. i.e. What causes do most of today s (2017) economic historian believe? Check ( ) any blank that applies. 21. This has been posited by econ historians over the past ½ century. Sample Sample 22. This explanation is the current (2017) consensus. Sample left blank Sample Explanation In 1987, CeCe & Rocky argued that was true of Southern credit markets. Today (2017) we still believe they were right. In 1972, Huey & Duey argued that was true of Southern credit markets. Today (2017) however, we don t believe they were right. While national govt. lending programs for African-Americans were well funded, they were racked by corruption. Lenders were extremely prejudiced against Blacks. They charged African-Americans much higher interest rates than Whites with the same credit rating. Freed slaves started with no assets to use as collateral. This meant having paying high interest rates to borrow. There was little competition in Southern credit markets. Credit markets were characterized by local monopolies. 5
6 23. In which country would one expect to see lots of sharecropping in agriculture? a. Country A. A small percent of the population owns most of the land. The potential workers are very poor. Credit is very easy and cheap to get, even for the poorer workers. b. Country B. The potential agricultural workers are very poor but most own some land. In fact, large plots of land are uncommon. Credit is very easy and cheap to get, even for the poorer workers. c. Country C. The potential agricultural workers are very poor but most of these poor own some land. In fact, large plots of land are uncommon. Credit is very expensive to come by. d. Country D. A small percent of the population owns most of the land. The potential workers are very poor. Credit is very expensive to come by. 24. Who were (or are) the Little Rock 9? a. A group of African-American students who enrolled in a formerly segregated public school in b. A 1970 s Folk/Rock band that sang about Jim Crow and Slavery. Ransom and Sutch chose one of the band s songs as the title of their book. c. The 9 Congressmen from Arkansas who brokered the Compromise of d. The 9 Congressmen from Arkansas who, at the last minute, decided not to vote to impeach President Johnson. They have been blamed for much of Reconstruction s failure. Part 2: Answer 1 of the following 2 essays (30 points) 1. What is Market Preserving Federalism? How might it affect growth both negatively and positively? Illustrate your answer with an example or two (perhaps a fictional example). Did the U.S. have Market Preserving Federalism prior to the Civil War? What factors caused the U.S. to have, or not have, Market Preserving Federalism prior to the Civil War? Does the U.S. have Market Preserving Federalism today? Explain. 2. What labor and farming system did the U.S. come to rely on after the Civil War? Describe how this system works. According to lecture, and a bit of what we read in Ransom and Sutch, why did the U.S. South come to rely on this labor and farming system? 6
7 and you ll have plenty of pages for your essays. I give you about 6 pages. 7
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ECON U.S. Economic History II John Lovett. Exam 1 - Fall 2015
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