ECON 1100 Global Economics (Section 03) Exam #4 Fall 2008 (Version D) Multiple Choice Questions ( 2. points each):

Transcription

1 ECON 1100 Global Economics (Section 03) Exam #4 Fall 2008 (Version D) 1 Multiple Choice Questions ( 2 2 points each): 1. was the leader of China during the time when the country implemented a system of Soviet style Command Planning. a. Deng Xiaoping b. Mao Zedong c. P.V. Narasimha Rao 2. The British East India Company a. was an English corporation founded in 1600, which would establish trade routes between Great Britain, India, and China. b. implemented economic policies in India which lead to the creation of the Permit Raj during the second half of the 20 th century. c. directly ruled India from 1858 up until Currently China a. has a population of over 1.3 billion people (roughly 20% of the global population), making it one of the largest consumer markets in the world. b. exports a great deal of output to the rest of the world, but imports virtually no goods from the rest of the world. c. is an entirely free market economy, with no role for government in the economy whatsoever. 4. Under command planning in the Soviet Union a. it was more expensive to take a cab from the airport in Moscow to Red Square than it was to fly from Vladivostok to Moscow. b. the industrial sector was very efficient and could produce more output with fewer inputs than enterprises in similar sectors in other countries. c. a great deal of resources were devoted to national defense (specifically, more than 30% of GDP by the end of the Cold War). 5. The Balcerowicz Group a. supported gradual economic reform and not Shock Therapy. b. gained control of the Commanding Heights of the Russian Economy through Voucher Privatization. c. was led by Leszek Balcerowicz, who served as Finance Minister and Deputy Prime Minister in the new Solidarity government in Poland.

2 6. The current population of India is approximately a. 304,823,774, which is roughly equal to that of the United States. b. 617,455,329, which is roughly twice that of the United States. c. 1,147,995,898, which is roughly 17.2% of the world s population. d. 2,769,873,824, which is just over 40% of the world s population. 7. became known as Europe s New Tiger, because of its strong economic performance starting in the mid 1990 s. a. Russia b. The Czech Republic c. Poland d. Great Britain 8. The Mahalanobis Equation a. expressed the entire Indian economy in a single mathematical equation. b. estimated the amount of revenue that the Russian government could expect to generate by selling a government owned enterprise by way of voucher auction. c. explained why the Phillips Curve (i.e., the inverse relation between unemployment and inflation ) would not hold in India after independence. d. explained why standards of living in India would have to decline as a result of the election of P.V. Narasimha Rao as Prime Minister in In Las Vegas there are many fewer restrictions on individual behavior than in most other cities in the U.S. (e.g. gambling is legal, consumption of alcohol in public is legal, etc.). A parallel could be drawn between the different rules that people face when in Las Vegas and the a. establishment of a Special Economic Zone. b. attempt at Soviet style Command Planning in China post WW-II. c. the Contract Responsibility System, which was implemented in China during its time of economic reform. d. Permit Raj that emerged in India post WW-II. 10. was an economist who served as Finance Minister of India under Prime Minister Rao from , and is currently the Prime Minister of India. a. Manmohan Singh b. Atal Behari Varpayee c. Rajiv Ghandi d. Palaniappan Chidambaram 11. The non-violent 1989 revolution in Czechoslovakia that led to the overthrow of the communist government was known as a. The Cultural Revolution. b. The Velvet Revolution. c. Chinese Democracy. d. The Gaidar Reforms.

3 12. Jeffrey Sachs a. advised Poland to institute Shock Therapy in order to reform their economy. b. acquired Norilsk Nickel (a Russian enterprise with annual revenues of $1.5 billion) for roughly $180 million as part of a loans-for-shares deal. c. was the head of the Planning Commission of India from 1949 to 1964, a time during which the first of India s Five Year Plans was implemented. 13. refers to the complex system of licenses, controls, regulation, and red-tape that influenced economic decisions at all levels of production, investment, and foreign trade in India s private sector from 1947 through a. Swadeshi b. The Indian Elephant. c. The Permit Raj d. The British Raj 14. Economies of Agglomeration refer to a. the creation of a special geographic region in which the behavior of enterprises is constrained by fewer restrictions than in the rest of the country. b. benefits that firms obtain from locating near other firms. c. the sale of a government owned enterprise by way of auction. d. benefits that governments realize from decreasing the amount of resources used for military purposes. 15. Which of the following policies was NOT supported by the Bharatiya Janata Party (BJP) when they came to power in March 1998? a. Reversing the market based economic reforms begun under Prime Minister Rao, and reinstituting the Permit Raj. b. Pursuing so called Hindu Nationalism (i.e., a revivalist emphasis on rolling back minority privileges in favor of India s Hindu majority). c. Increased national defense spending by India, including a revitalization of India s nuclear weapons program. d. None of the above answers are correct (since all of the stated policies were supported by the BJP when they gained power in March 1998). 16. Perestroika a. refers to the period of direct British rule of the Indian subcontinent from 1858 through b. refers to the movement launched by Mao Zedong to rid China of liberal bourgeoisie elements and to continue revolutionary class struggle. c. means restructuring, referring to restructuring of the Soviet economy. d. means openness, referring to the shift toward openness and transparency in governmental decision making, along with freedom of access to information, in Soviet society.

4 17. Which of the following was a part of the Gaidar Reforms introduced in Russia? a. The Nationalization of the Commanding Heights of the Soviet economy. b. The creation of Gosten, a government agency responsible for setting prices in all markets. c. The creation of a Social Security System, including unemployment compensation. 18. Economic reform was instituted by way of Shock Therapy in a. China, starting in the late 1970 s (when Deng Xiaoping came to power). b. Poland, shortly after the Solidarity Party came to power. c. the Czech Republic, in January Between 1978 and 1996, the Chinese economy experienced a. a rate of GDP growth greater than that of any other part of the world during the same time-period. b. historically high levels of inflation and unemployment, accompanied by negative GDP growth. c. a rapid movement away from a free market economy and toward a system of Command Planning. 20. Bangalore has come to be known as a. India s Detroit, because it is the home of Hindustan Motors and the automotive producing center of India. b. India s Georgia, because it where virtually all of the peanuts and peaches produced in India are grown. c. India s Silicon Valley, because of its emphasis on high-tech, Information Technology based industry. d. India s Napa Valley, because it is the center of India s world renown wine industry. 21. Under command planning in the Soviet Union prices were a. determined by the free interplay of Supply and Demand. b. set by the government agency Gosten. c. set directly by Mikhail Gorbachev, Russia s President from d. set directly by Michael Boskin, a former economic advisor to President George H.W. Bush. 22. refers to the movement launched by Mao Zedong to rid China of liberal bourgeoisie elements and continue revolutionary class struggle. a. The New Deal b. The Cultural Revolution c. The Great Leap Forward d. Export Pessimism

5 23. Following Indian s Independence, Mahatma Ghandi s vision for the Indian economy a. was one of self reliance, focusing on home production of basic goods, a spinning wheel in every hut, and self-sufficiency of every village. b. emphasized heavy industry, along with the implementation of Soviet Style Command Planning. c. called for implementing export led growth trade policies. d. was to replace the existing system of Soviet Style Command Planning with a free market economy, by way of Shock Therapy. 24. Loans-for-Shares refers to a. low interest rate loans given to citizens in Poland, so that they had funds to purchase shares of privatized enterprises auctioned by the government. b. a program under which the Russian government used shares in public enterprises as collateral for loans from the private sector, with no intention of ever repaying the loans. c. a program under which Pandit Nehru loaned shares in nationalized Indian enterprises to political supporters, in an attempt to solidify his political support before the 1949 national election. 25. An Iron Rice Bowl refers to a. the emerging military power of China in the early part of the 21 st century. b. a job within a Chinese State Owned Enterprise. c. the reform instituted in Chinese agricultural starting in d. the geographic portion of Tibet which is currently claimed by both China and India. 26. As a result of Privatization in Russia, by 1996 a. the ownership of all enterprises had been transferred from the government to the general public. b. more than 75% of all large and midsize industrial firms had been privatized. c. only 15% of workers were employed in the private sector. 27. The economic system which has emerged in China could be described as Socialism with Chinese Characteristics. This system a. is the first instance of Pure Communism instituted in the real world. b. is one in which the assets of much of the industrial sector are owned by the state, but in which the primary functions of economic coordination are performed by the market. c. is one in which most assets are privately owned, but all decisions regarding the use of resources are made by government bureaucrats.

6 28. was the term used for Privatization in India, whereby the government sold off some of its shares in government owned enterprises (starting when P.V. Narasimha Rao was Prime Minister). a. Nationalization b. Denationalization c. Disinvestment d. Planification 29. The Household Responsibility System a. was the central component of reform within State Owned Enterprises in China. b. allowed farmers to sell output above a quota level for a profit in the marketplace. c. reintroduced economic incentives into the agricultural sector in China. 30. Lech Wałęsa a. was the first freely elected President of Poland. b. strongly opposed the free market economic reforms instituted in Poland in c. assassinated Boris Yeltsin in 1991, triggering the collapse of the Soviet Union. 31. The World Trade Organization a. dropped China as a member in late 2001, due to China s horrific human rights record. b. is an organization designed to increase barriers to international trade. c. was created on 1/1/1995, as a successor to GATT. 32. was the first Prime Minister of India, following their independence from Great Britain. a. Mahatma Ghandi b. Pandit Nehru c. Indira Ghandi d. Narayana Murthy 33. The Hindustan Fertilizer Company a. earned large profits for the Indian government in the 1970 s and 1980 s by selling their output to farmers throughout Africa, Asia, and Australia. b. employed roughly 1,200 on a daily basis from 1979 to 1991, but did not produce any output during this time. c. produced nearly all of the fertilizer used by the highly productive Indian farmers during the time of British rule in India. d. was privatized by way of voucher auction in 1996.

7 34. The tremendous economic development which has occurred in Dubai during the last couple of decades has resulted from a. the creation of Industry Specific Free Trade Zones (e.g., Dubai Internet City which attracted firms such as Microsoft, IBM, HP, and Nokia), which helped to make Dubai an international center for finance and media. b. the Maktoum family articulating a strong case for investing in Dubai and jump starting the development with their own investment. c. current Iranian leader Mahmoud Ahmadinejad seizing control of the Commanding Heights of Dubai s economy in the late 1970s and implementing Shock Therapy. 35. A general criticism of Special Economic Zones is that a. an SEZ might not actually generate any new economic activity, but rather might simply move existing economic activity from one area to another in a potentially inefficient manner. b. the establishment of a SEZ will make it less likely that firms can realize economies of agglomeration. c. if a region is dependent upon a declining industry, then new investment can be attracted to the area by the incentives that result from SEZ status. 36. The Ambassador automobile was a. the name of the car which Toyota sold in India between 1947 and b. produced by Hindustan Motors in India for roughly five decades without any major changes to its basic design. c. manufactured in the Soviet Union by the Bolshevik Motor Company, an enterprise that was privatized via voucher auction in January d. produced by Wałęsa Motors in Poland starting in 1983, and for a time was considered the highest quality car in the world. 37. One of the distinguishing characteristics of economic reform in China was that the leaders in China often implemented partial reform, which refers to a. the willingness to implement economic reforms along a path of experimentation, moving slowly forward only in areas where policies had been tested and seen to work. b. the fact that individuals in China presently have a substantial amount of Economic Freedom, even though they have not yet realized Chinese Democracy. c. the willingness to create situations in which market reform is incomplete, thereby introducing incentives without completely altering the environment in which individuals must make decisions. d. a recognition in hindsight that almost all of the reforms enacted in China were at best partially successful.

8 38. lifted 300 million people out of poverty in just two decades by instituting the economic reforms which moved China away from a planned economy and toward a market economy. a. Qihong Liu b. Deng Xiaoping c. Mao Zedong d. David Lee 39. In regards to international trade during the several decades immediately after achieving independence, India a. played an ever increasing role in the global economy as a result of their implementation of export lead growth trade policies. b. quickly became a vital trading partner with Europe and the United States, to the point that by 1990 they were exporting goods valued at $41 billion and importing goods valued at $39 billion per year. c. attempted to protect domestic industries by enacting import substitution policies, and as a result essentially excluded itself from the emerging global economy. 40. In Russia, the ownership of many small shops was transferred to current managers, agricultural land was decollectivized, and apartments were sold to current occupants as a part of a. the program of Voucher Privatization. b. the Loans for Shares Deals. c. Small Scale Privatization. d. the Potanin Reforms.

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