ECON 1100 Global Economics (Section 02) Exam #4 Fall 2008 (Version A) 1 Multiple Choice Questions ( 2 2 points each): 1. The Great Leap Forward refers to a. the economic movement launched by Mao in the late 1950 s to harness the ideological fervor of the Chinese population to the task of raising economic output. b. the social movement launched by Mao in the 1960 s to rid China of liberal bourgeoisie elements and continue revolutionary class struggle. c. the free market economic reforms instituted in China starting in the late 1970 s under Deng Xiaoping. 2. Jeffrey Sachs a. advised the Soviet government to increase their military spending in the late 1980 s, in order to defeat the United States in the Cold War. b. advised all Eastern Europe economies to remain under command planning. c. was a strong supporter of Shock Therapy as a method of economic reform in Eastern Europe. 3. Life Expectancy at Birth in India a. has decreased dramatically during the last decade, as a result of the country becoming over-crowded. b. has increased dramatically in recent years (from a value of 63.62 in 2003, to a current value of 69.25). c. is lower than any other country in the world. 4. means restructuring, referring to restructuring of the Soviet economy. a. Glasnost b. Gossnab c. Perestroika d. Swadeshi 5. Under command planning in the Soviet Union a. the industrial sector was very efficient and could produce more output with fewer inputs than enterprises in similar sectors in other countries. b. 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. c. a very large fraction of total resources were devoted to national defense.
6. was established on 1/1/1995 as a successor to GATT, in order to supervise international trade and to promote free trade among member countries. a. The International Criminal Police Organization (INTERPOL) b. The North American Free Trade Agreement (NAFTA) c. The World Trade Organization (WTO) d. The Organization for Economic Co-operation and Development (OECD) 7. Which of the following was NOT a part of the Gaidar Reforms introduced in Russia? a. The creation of a Social Security System, including unemployment compensation for individuals currently out of work. b. Policies of market liberalization, including decontrolling prices, allowing free entry into markets, decreasing the share of output absorbed by government, and establishing a legal system to support market activity. c. Nationalizing the Commanding Heights of the Soviet economy. d. The shift of resource use away from the defense sector and toward the production of non-military goods. 8. Pandit Nehru a. strongly opposed Indian Independence from Great Britain, and instead wanted India to remain a colony indefinitely. b. was the first Prime Minister of India, holding office from 1947-1964. c. had an economic vision for India which focused on heavy industry and Soviet style Command Planning. 9. Deng Xiaoping was the a. central figure behind the Indian Independence movement in the 1940 s b. Chairman of the Communist Party in China from 1945 through 1976. c. person most responsible for the economic reform and economic growth which has occurred in China since 1978. 10. Much of the economic growth that occurred in China since 1978 was concentrated in, which grew at a rate of 17.3% per year between 1978 and 1993. a. the Pearl River Delta region of the Guangdong Province b. the highly productive agricultural regions of the Sichuan Province c. the autonomous region of Inner Mongolia d. the Tibetan Plateau 11. An Iron Rice Bowl a. refers to the emerging military power of China in the late part of the 20 th and early part of the 21 st centuries. b. describes the reforms instituted in Chinese agricultural starting in 1979. c. referred to a job within a Chinese State Owned Enterprise.
12. Which of the following individuals is NOT considered part of the Nehru-Gandhi Political Dynasty discussed in lecture? a. Pandit Nehru b. Mahatma Gandhi c. Indira Gandhi d. None of the above answers are correct (since each of these individuals was a member of the Nehru-Gandhi Political Dynasty ). 13. Solidarity was a. the title given to economic reforms instituted by Mikhail Gorbachev in Russia during the mid 1980 s. b. the notion that the free market is efficient in the long term, but in the short term gains may come from selective government intervention. c. the name of the Indian automotive company which produced the Ambassador (the highest quality car in the world by the late 1950 s). d. a trade union federation founded in 1980 at the Lenin Shipyards in Poland. 14. A Special Economic Zone a. was 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 to 1990. b. is an international organization designed to supervise international trade and to promote free trade among member countries. c. is a State Owned Enterprise, which operates more efficiently than a privately owned enterprise. d. is a geographical region in which the behavior of enterprises is constrained by fewer restrictions than in the rest of the country. 15. Mahatma Gandhi s economic vision for India was that of, which focused on home production of basic goods, called for a spinning wheel in every hut, and sought self-sufficiency for every village. a. The British Raj b. Disinvestment c. Dupatta d. Swadeshi 16. One of the unique characteristics of Chinese economic reform is gradualism, which could be described as a. reform which proceeded along a path of experimentation, moving forward only in areas where policies had been tested and seen to work. b. reforms which focus on increasing the role of the state in the economy, by having direct government ownership/control of critical industries. c. a willingness to accept long periods of very low (sometimes negative) GDP growth. d. a weakening of central control over the entire economy, giving local authorities the flexibility to make decisions within their own jurisdiction.
17. During the period of 1947-1991, India a. acquired the nickname of the Indian Elephant as a result of realizing annual GDP growth rates that were higher than any of the Asian Tigers or New Tigers which emerged during the 1960 s through 1980 s. b. enacted outward looking, Export Led Growth trade policies. c. rejected foreign trade and foreign investment, essentially excluding themselves from the emerging global economy. 18. The Household Responsibility System a. was Mahatma Ghandi s vision for the Indian economy, which focused on home production of basic goods, a spinning wheel in every hut, and selfsufficiency of every village. b. was the central component of reform within the agricultural sector in China. c. led to a substantial decrease in agricultural production in China from 1979 through the present day. 19. Which of the following was NOT part of the economic reforms instituted by the Rao government in India in 1991? a. A devaluation of the Rupee (India s currency) b. A rejection of international commerce and the pursuit of inwardlooking economic policies intended to promote self-sufficiency. c. An elimination of the requirements for large firms to obtain advanced government approval to expand or diversify their operations. d. The start of Disinvestment, whereby the government would sell off some of its shares in government owned enterprises. 20. Lech Wałęsa a. was the leader of Britain s colony in the Indian subcontinent from 1929-1947. b. was the first freely elected President of Poland. c. started the Velvet Revolution in Czechoslovakia by assassinating the Soviet leader Mikhail Gorbachev in 1991. 21. Bangalore became a major center of back office services for U.S. firms because a. the 9-to-12 hour time difference with the U.S. allows firms to easily provide U.S. customers with around the clock customer support. b. the workforce of the city is relatively unskilled and therefore willing to work for very low wages. c. Prime Minister Pandit Nehru made a deal with the U.S. government in 1952 to supply such services to U.S. firms in exchange for low interest rate loans.
22. refers to a rapid move to a market economy, characterized by immediate elimination of price and currency controls, state subsidies to enterprises, and trade restrictions. a. Disinvestment b. Export Pessimism c. The Velvet Revolution d. Shock Therapy 23. Loans-for-Shares refers to a. 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. b. low interest rate loans given to citizens in Russia, so that they had funds to purchase shares of privatized enterprises auctioned by the government. c. a program under which the government of India sold bonds to foreign investors in order to acquire funds to repurchase enterprises which they previously privatized. 24. Soviet style Command Planning was a. instituted in China before World War I. b. instituted in China by Mao Zedong in the 1950 s. c. instituted in China by Deng Xiaoping in the late 1970 s. d. never instituted in China. 25. The Czech Republic a. moved from a system of free market capitalism to Command Planning in the mid 1980 s. b. had such solid economic performance since 1994 that they became known as Europe s Elephant. c. instituted a program of Shock Therapy in 1991, quite similar to that which was used in Poland during the previous year. 26. The first enterprise to be privatized in Russia by way of voucher auction was a. Hindustan Motors. b. Norilsk Nickel. c. the Bolshevik Biscuit Factory. d. The Red Army. 27. Under the in India it took Narayana Murthy (CEO of Infosys) 12 to 24 months and 50 trips from Bangalore to Delhi to import a computer worth $1,500. a. economic system of Swadeshi b. rule of the British East India Company c. British Raj d. Permit Raj
28. In 2006, China a. exported goods valued at roughly $974 billion (the third most of any country in the world). b. imported goods valued at roughly $778 billion (the third most of any country in the world). c. had a per capita GDP of roughly $47,890 (higher than any country in Europe). 29. India a. was essentially a colony of the Franco-East India Company (a French company created to establish trade routes between France, India, and Japan) from 1608 through 1858. b. was a direct colony of Great Britain from 1858 through 1947. c. was a colony of the United States from 1913 through 1962 (at which time its citizens voted to become an independent country instead of the 51 st state of the United States). 30. In China, between 1981 and 2008 a. per capita GDP remained relatively constant, at roughly $49,850. b. per capita GDP increased from roughly $285 in 1981 to roughly $5,869 in 2008 (so that per capita GDP was roughly 20 times greater in 2008 than in 1981). c. the country experienced negative rates of GDP growth in 22 of the 28 years during this time period. 31. Economic planning in India in the 1950 s was influenced by the ideas of, who expressed the entire Indian economy in a single mathematical equation. a. P.V. Narasimha Rao b. Manmohan Singh c. P.C. Mahalanobis d. Debapriya Sen 32. Which of the following was recently built or is currently under construction in Dubai? a. The Burj Al Arab, the world s most luxurious and expensive hotel, built on an artificial island 919 feet out from the beach. b. The Dubai Air Shield, which is a missile defense system put in place to protect Dubai from Iranian nuclear attacks. c. The Burj Dubai, a skyscraper which (while still under construction) is already the tallest manmade structure of any kind in the world.
33. As a result of China s membership in the World Trade Organization a. financial markets in China will be opened up to foreigners, which should ultimately lead to increased efficiency in China s banking and financial sectors. b. Chinese farmers will likely become very wealthy, as they will be able to sell their output to consumers in the United States. c. overall standards of living in China will almost certainly decrease, since free trade between two countries always decreases incomes in the poorer country. 34. The economic system which has emerged in China (in which the assets of much of the industrialized sector are owned by the state but in which the primary functions of coordination are performed by the market) has been described as a. Chinese Democracy. b. China s Version of American Capitalism. c. China s Attempt to Emulate Poland. d. Socialism with Chinese Characteristics. 35. refers to a cross-border investment made with the intention of establishing a lasting, long-term financial interest in an enterprise in another country and subsequently exerting a degree of influence on the operations of the enterprise. a. Glasnost b. Small Scale Privatization c. Foreign Direct Investment d. Disinvestment 36. The experience of many Non-Resident Indians (NRI s) provided another indictment of the Permit Raj since a. Indians who had been successful business leaders in India in the 1950 s were able to achieve even higher levels of wealth under the Soviet system of Command planning in the 1970 s. b. the NRI s who settled in Great Britain in the 1970 s were able to explain why the relationship described by the Philips Curve was no longer true. c. after emigrating to North America and Europe in the 1960 s and 1970 s virtually no NRI s were able to succeed, due to their lack of education. d. after emigrating to North America and Europe in the 1960 s and 1970 s many NRI s were successful in their adopted countries by the 1980 s. 37. served as India s Minister of State under Prime Minister Rao, and played a central role in reforming trade policy and deconstructing the Permit Raj. a. Atal Behari Varpayee b. Palaniappan Chidambaram c. Manmohan Singh d. Jaideep Roy
38. In China, Special Economic Zones a. were created with an outward looking orientation, to serve as export processing zones and magnets to draw in foreign investment. b. were made illegal by Mao Zedong in 1959 as part of his Great Leap Forward. c. were first established in 1979. 39. After economic reforms were implemented in Russia a. per capita GDP in the country has increased to $43,580, higher than any country in all of Europe. b. there was an initial, sharp decline in economic output (during which total industrial output fell by almost 60% in four years). c. there was virtually no change in overall per capita incomes but there was a substantial decrease in income inequality (as the incomes of the wealthy tremendously decreased while the incomes of the poor greatly increased). 40. The economy of which of the following countries has been compared to an Elephant (i.e., slow to rise and get up to speed, but, once in motion, fast and steady, moving through thicket after thicket )? a. The Czech Republic. b. Poland. c. India. d. China.
(Blank Page)