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95 Cards in this Set

  • Front
  • Back
The Democratic Republic of the Congo (former Zaire)
a. has few natural resources and is one of the poorest countries on earth.
b. has a large amount of natural resources but is one of the poorest countries on earth.*
c. has few natural resources and is one of the richest countries in sub-Saharan Africa.
d. has a large amount of natural resources and is one of the richest countries in sub-Saharan Africa.
e. is smaller but richer than South Africa.
Corporations
a. were the main form of firm organization since the beginning of the industrial revolution.
b. have always been the most efficient form of firm organization.
c. arose in the late Middle ages and have been dominant since then.
d. became the dominant form of firm organization in the US in the late 19th century.*
e. a and c.
According to the 2009 data on Gross National Income (“GNI”) we examined
a. Bangladesh has a higher GNI per capita
than China.
b. Nigeria has a higher GNI per capita than India and China.
c. India and China have a higher GNI per capita than Mexico.
d. China had a higher GNI per capita than Nigeria.*
e. a and b.
Which of these attributes is NOT associated with the rise of agriculture?
a. less protein, more carbs consumption.
b. nomadic lifestyle*
c. more generalized trade
d. emergence of states
e. increasing specialization in production
In terms of Purchasing Power Parity, the United States' GDP/capita is around the following percentage of China's GDP/capita
a. 50%
b.120%
c. 200%
d. 650%*
e. 10,000%
The Industrial Revolution began in
a. Great Britain.*
b. The United States.
c. France.
d. Japan.
e. Scandinavia
John can solve 20 math problems per hour while Frank can only solve 17 math problems in the same time period. Which of the following are true?
a. John has a comparative advantage in solving math problems.
b. John has an absolute advantage in solving math problems.*
c. Frank has an absolute advantage in solving math problems
d. both a and b.
e. none of the above
Joe and Drew can both produce hats and shoes (and no other goods) and there is no else around. If Joe has a comparative advantage in producing shoes, what else do we know for certain?
a. Joe has an absolute advantage in producing shoes.
b. Drew has an absolute advantage in producing shoes.
c. Drew has a comparative advantage in producing hats.*
d. Joe has a comparative advantage in producing hats.
e. None of the above.
Restrictions on international trade
a. ​have increased since WWII.
b. include taxes on imported goods.*
c. were uncommon before WWII.
d. a and b.
e. All of the above.
Which of the following combination of policies maximizes the sum of growths for the U.S and China?
a. China chooses free trade and the U.S. chooses trade protection.
b. China chooses trade protection and the U.S. chooses free trade.
c. They both choose free trade.*
d. They both choose trade protection.
e. Either a or b should occur.
It would be in the U.S.’s interest to
a. pursue free trade regardless of what China does.
b. pursue trade protection regardless of what China does.*
c. pursue free trade only if China were to pursue free trade.
d. pursue trade protection only if China were to pursue trade protection.
e. pursue either free trade or protection, depending on the level of sunspots.
It would be in China’s interest to
a. pursue free trade regardless of what the U.S. does.
b. pursue trade protection regardless of what the U.S. does.*
c. pursue free trade only if the U.S. were to pursue free trade.
d. pursue trade protection only if the U.S. were to pursue trade protection.
e. pursue either free trade or protection, depending on the level of sunspots.
Then, if the U.S. and China were to choose their policies independently of one another so as to maximize their own growth, we would expect
a. China to choose free trade and the U.S. to choose trade protection.
b. China to choose trade protection and the U.S. to choose free trade.
c. both to choose free trade.
d. both to choose trade protection.*
e. Either a or b would occur.
When a quota is imposed on an import, typically in the importing country
a. consumers lose.
b. domestic producers gain
c. foreign exporters lose.
d. b and c.
e. All of the above.*
The U.S. unemployment rate in January was
a. 10% but total employment decreased.
b. below 9 % and total employment decreased.
c. higher than 10% but total employment increased.
d. below 9% and total employment increased.*
e. below 8% and total employment increased.
If United Airlines were to sell one of its used jets to Aero Boliviano, the transaction would
a. not be included in U.S. GDP.*
b. be included in Bolivian GDP.
c. be included in U.S. GDP.
d. lower U.S. GDP.
e. lower Bolivian GDP.
In the country of Walachia, a market basket of goods and services cost $120 in 2009 and $180 in 2011. Based on this information and considering 2009 as the base year, the price index in 2011 was:
a. 66.67
b. 100
c. 130
d. 150*
e. 180
Every working day at least 1 trillion dollars are traded in all foreign exchange markets. Most of this trading is due to
a. to the currency needs of those who import and export goods and services.
b. short-term speculation on currency rates.*
c. those who make long-term investments outside their own country.
d. the currency needs of tourists.
e. currency trading by governments.
The Eurozone consists of
a. 17 countries that share a common currency.
b. countries that do not have a common fiscal policy.
c. countries that do not have common bank supervision and regulation.
d. a and b.
e. All of the above.*
The “party of Davos” refers to
a. the participants of the World Business Forum.
b. the participants of the World Social Forum.
c. the party that takes place every March in Davos, Switzerland.
d. a hypothesized emerging world-wide elite.*
e. a and c.
A point outside a production possibilities frontier
a. indicates that some resources are unemployed.
b. is unattainable for production purposes.*
c. is worse than points on the production possibilities frontier.
d. implies that too much capital and not enough labor are used.
e. None of the above.
Changes in the following variable shift the demand curve for a good.
a. Marketing and advertising.
a.The preferences of the consumers.
b. The prices of related goods.
c. The income of consumers.
d. All of the above.*
Suppose that to produce one pound of rice in Japan requires 4 hours of labor, whereas in the U.S. it requires 2hours of labor. As a result, we can conclude that
a. Japan has a comparative advantage (“CA”) in producing rice.
b. Japan has the absolute advantage in producing rice.
c. The U.S. has a CA in producing rice.
d. The U.S. has the absolute advantage in producing rice.*
e. None of the above
When a country has a trade surplus,
a. The capital account must necessarily be negative.
b. The current account is positive.
c. the value of its exports is higher than the value of its imports.*
d. The capital account is positive.
e. a and c.
A reduction in the U.S. price level can be expected to lead to
a. the depreciation of the dollar and the appreciation of other currencies.
b. the appreciation of the dollar and the appreciation of other strong currencies.
c. the depreciation of the dollar and the depreciation of the euro.
d. the appreciation of the dollar and the depreciation of other currencies.*
e. the appreciation of the dollar and the appreciation of the euro.
In traditional, “old” banking and finance
a. the securitization of loans was normal practice.
b. financial institutions depended on rating agencies for the management of risk.
c. financial institutions depended on loan officers to ases risk.*
d. a and b.
e. a and c.
During the last couple of decades, in “new” banking and finance
a. the securitization of loans has been normal practice.
b. financial institutions typically keep the loans they make in their books.
c. financial institutions depend on personal relationships to manage their risk.
d. institutional investors depend on rating agencies for the management of risk.
e. a and d.*
The Great Recession
a. officially began in December 2007 and ended in mid-2009.
b. has had long-term lingering effects on unemployment.
c. was preceded by the largest housing bubble in U.S. history.
d. a and c.
e. All of the above.*
U.S. national house prices
a. peaked in 2006.*
b. peaked in 2011.
c. have been increasing ever since the early 1990s.
d. have been decreasing since 2001.
e. have been increasing since 2007.
Examples of “moral hazard” include the behavior of
a. all loan officers of banks in the 1950s.
b. many mortgage brokers during the housing bubble years.*
c. most bank CEOs during the 1950s.
d. most investment bank CEOs during the 1970s.
e. all loan officers of bank in the 1970s.
Recent total U.S. employment is
a. 1% higher than it was at the beginning of the Great Recession.
b. 4% lower than it was at the beginning of the Great Recession.*
c. 10% lower than it was at the beginning of the Great Recession.
d. 4% higher than it was at the beginning of the Great Recession.
e. 2% higher than it was at the beginning of the Great Recession
Fiscal policy refers to
a. the taxation and spending decisions of governments.*
b. the international policies of governments.
c. the production and spending decisions of private firms.
d. how much money the government prints.
e. the FICO scores created by credit bureaus.
The policy of “Quantitative Easing” refers to
a. the taxation and spending decisions of the Federal government.
b. internationally-coordinated exchange-rate policies.
c. the production and spending decisions of private firms.
d. the Federal Reserve’s policy of reducing long-term interest rates by buying bonds. *
e. the recent lending policies of banks.
Social Security
a. is already bankrupt.
b. will be bankrupt within the next ten years.
c. has accumulated a significant surplus in the Social Security trust fund since the 1980s.*
d. has accumulated a significant deficit in the Social Security trust fund since the 1980s.
e. is a government defense program.
Over the past three decades in the U.S.
a. median wages for males have increased.
b. most households moved to rural areas.
c. most households increased their debts.*
d. the cost of housing went down.
e. investment banks became more heavily regulated.
Modern economic growth is correlated with the following characteristics EXCEPT for
a. investment in economic infrastructure
b. the reduction of government’s share in
GDP.*
c. the expansion of social safety nets.
d. government investment in sewers and public health.
e. an increase in life expectancy.
If output is growing at 7% per year, approximately how many years will it take for output to double?
a. 10.*
b. 14.
c. 20.
d. 28
e. 70.
An economy that grows at 1% a year can be expected to double its income in about
a. 20 years
b. 35 years
c. 50 years
d. 70 years*
e. 100 years
Productivity usually refers to
a. output per dollar of invested capital.
b. output per acre of land.
c. output per worker.*
d. output per unit of human capital.
e. output per unit of physical capital.
One reason Sub-Saharan Africa is so poor:
a. The soil is less fertile because of the Sahara.
b. there are few natural resources available in most countries.
c. political instability and civil wars.*
d. because of the “brain drain:” all the bright people go to neighboring countries.
e. b and d.
Building dams on the Nile river for power generation and irrigation is important for the economic development of
a. Vietman
b. Laos
c. The People’s Republic of the Congo.
d. Egypt.*
e. Syria.
Modern economic growth is correlated
a. with an increase in the size of the public sector.*
b. with the reduction of social safety nets.
c. with a reduction in regulation and other government interference in business.
d. a and b.
e. b and c.
If growth of per capita income were to be expected to be negative over the next century and the interest rate (or, discount rate) were close to 0, then
a. we should be valuing one dollar available to future generations (a century from now) less than one dollar in today’s money.
b. we should be valuing one dollar available to future generations (a century from now) more than one dollar in today’s money.
c. it would imply that more should be expended today to reduce the effects of climate change.
d. it would imply that less should be expended today to reduce the effects of climate change.
e. b and c.*
Making cost-benefit analyses of climate change is
a. useless because of the large uncertainties that exist in making predictions about the future.
b. useless because we cannot possibly agree on how to value the welfare of future generations.
c. useless because there is no certainty about what will occur in a couple of decades.
d. difficult because of the uncertainty of predictions and the valuation methods of the welfare of future generations.*
e. a and c
When an activity has positive externalities,
a. social costs equal social benefits.
b. private costs equal social benefits.
c. its privately optimal level is higher than its socially optimal level.
d. its privately optimal level is lower than its socially optimal level.*
e. its privately optimal level is the same as its socially optimal level.
Examples of activities that typically have positive externalities include
a. fishing.
b. smoking.
c. eating junk food.
d. driving.
e. public debate.*
Marginal Social Cost equals
a. Average Social Cost.
b. Marginal Private Cost plus Marginal External Cost.*
c. Marginal External Cost.
d. Price plus Marginal Private Cost.
e. Marginal Social Benefit.
Measures that could be taken to alleviate the effects of climate change include
a. subsidies to fossil fuels
b. investing in new technologies that would make logging more efficient.
c. curbing deforestation.*
d. taxing solar power plants.
e. b and d.
An abandoned house is a source of a
a. positive externality because it can be taken over by others in the neighborhood.
b. positive externality because it frees up income that would otherwise be used on maintenance by its owners.
c. positive externality because the “boyz in the hood” can use it for their own purposes.
d. negative externality because it tends to decrease the values of neighboring houses.*
e. a and c.
When an activity has a positive externality,
a. its social costs exceed its private costs.
b. its social benefits exceed its private benefits.*
c. its private costs exceed its social costs.
d. its private benefits exceed its social benefits.
e. its external costs exceed its social costs.
Getting a flu shot
a. has no external effects on the costs or benefits of others.
b. has external costs only because of the pain it causes.
c. has external benefits because it benefits you during flu season.
d. has external benefits because it reduces not only your chance of getting the flu but also the chance that you will pass it on to someone else.*
e. has external costs because others get the flu from you.
Typically, excessive fishing occurs because
a. fishermen rely on enforcers to worry about fish populations.
b. fishermen do not fully take into account the effect their fishing has on the future stock of fish.
c. fishermen are unionized, so they are not concerned with externalities.
d. fishermen do not fully take into account the effect their fishing has on the catch of other fishermen.
e. b and d.*
Methane produced by cattle, an activity that adversely affects the environment,
a. could be reduced by subsidizing cattle production.
b. could be reduced by taxing cattle production.*
c. could be increased by taxing cattle production.
d. is an example of a positive externality.
e. b and d.
When you ask a question in class
a. you create a positive externality because your friend has a positive view of you
b. you create a negative externality because you interrupt the train of thought of others around you.
c. you create a positive externality because you make a positive impression on the professor.
d. you create a positive externality because other students who had the same question, but did not ask, benefit.*
e. you never induce an external effect on others.
The greater openness of the U.S. economy over the past three decades has induced
a. higher incomes for almost all U.S. workers because of cheaper imported goods.
b. a downward pressure on U.S. low-skilled workers.*
c. an upward pressure on U.S. low-skilled workers.
d. lower competition in the U.S. job market.
e. c and d.
A well-maintained yard
a. induces a positive externality because it increases the value of adjacent properties in the neighborhood.*
b. induces a positive externality because it increases the home’s own market value.
b. induces a negative externality because it increases the property tax liability of the owner.
d. cannot provide any type of externality.
e. a and d.
Mr. Greg Smith, the former Goldman Sachs executive,
a. accused the company of systematically cheating its clients in a New York Times op-ed.*
b. was prosecuted and convicted for
securities fraud.
c. was prosecuted and but not convicted for securities fraud.
d. was hired by JPMorgan for his derivatives expertise.
e. c and d.
U.S. median household income
a. peaked in the 70s.
b. peaked in the 80s.
c. is higher now than it was 40 years ago.*
d. has steadily fallen over the past 40 years.
e. a and d.
Taking account of population growth, recent total U.S.employment is
a. 1% higher than it was at the beginning of the Great Recession.
b. 8% lower than it was at the beginning of the Great Recession.*
c. 2% lower than it was at the beginning of the Great Recession.
d. 4% higher than it was at the beginning of the Great Recession.
e. 2% higher than it was at the beginning of the Great Recession
The following factors were correlated with the Great Recession:
a.A historically low savings rate.
b. Current account deficits.
c. The non-enforcement of existing regulations of financial markets.
d. a and c.
e. All of the above.*
61. Over the past few decades the great reduction in the price of computers (while simultaneously their computing power increased) could best be attributed to:
a. A shift of the demand curve to the right (or, upwards) due to the greater number of applications of computers.
b. A shift of the demand curve to the left (or, downwards) due to the greater number of applications of computers.
c. A shift of the supply curve to the right (or, downwards) due to the great reduction in the cost of production.*
d. A shift of the supply curve to the left (or, upwards) due to the great reduction in the cost of production.
e. b and c.
Institutions of transnational governance include
a. the Securities and Exchange Commission (“SEC”).
b. the Bank of International Settlements (“BIS”).*
c. The United Fruit Organization (“UFO”).
d. a and c.
e. b and c.
The following transactions would enter into the U.S. current account
a. A French importer buys a case of Canadian wine for $500.
b. A foreign investor buys U.S. real estate.
c. An American investor buys Japanese bonds.
d. The U.S. sends military aid to Egypt.*
e. A German corporation buys a U.S. corporation.
When you talk during class with your friend
a. you create a positive externality because your friend is lonely.
b. you create a positive externality because your friend has a positive view of you.
c. you create a positive externality when your friend was late in class.
d. you create a negative externality because you bother others around you.*
e. a and b.
The average material standard of living in the U.S. is at least five times higher than that of most countries in the world. Yet, most industrial technology can be easily transferred to the developing world. Why, then, does that wide disparity in income persist?
a. Partly because poor countries have trouble accumulating enough capital.
b. Partly because poor people are often lazy
c. Partly because many poor countries are lacking effective governance.
d. b and c.
e. a and c.*
In the absence of societal interventions, an activity with positive externalities takes place so that
a. marginal private benefit equals marginal private cost.*
b. marginal social cost exceeds marginal private cost.
c. marginal external benefit exceeds marginal private benefit.
d. marginal social benefit equals marginal cost.
e. a and c.
The ozone depletion in the upper layers of the atmosphere
a. is an example of a positive externality.
b. has been largely mitigated through the banning of chlorofluorocarbons (CFCs).
c. was co-discovered by Professor Sherry Rowland of UCI.
d. has reduced air pollution is Southern California.
e. b and c.*
In comparing different scenarios or measures against climate change in terms of costs and benefits, the following considerations need to be taken into account EXCEPT
a. the uncertainty inherent in each scenario about the future.
b. the views expressed by members of the CATO institute.*
c. the well-being of future generations.
d. the effects on the losers of such measures.
e. the political feasibility of such measures.
The U.S. median wage for males peaked
a. just before the Great Recession.
b. during the 90s.
c. during the 80s.
d. during the 70s.*
e. during the 60s
Economic and financial globalization has
a. reduced the need for transnational governance.
b. reduced the power of national governments.*
c. increased the bargaining power of workers in rich countries.
d. increased the bargaining power of workers in poor countries.
e. a and d.
Modern economic growth is correlated with
a. the rise of the corporation as a dominant
form of firm organization.
b. a reduction of government’s share in
GDP.
c. an expansion of social safety nets.
d. a and c.*
e. All of the above
If a country has a population of 1,000, an area
of 100 square miles, and a GDP of $5,000,000,
then its GDP per capita is:
a. $500.
b. $5,000.*
c. $50,000.
d. $1,000.
e. $100.
An example of physical capital is
a. a truck that a company purchases for
work.*
b. a worker who physica
lly learns to work on
a truck his company buys.
c. a truck a worker buys for personal use like
hunting or going to work.
d. a natural resource like oil.
e. a natural resource like timber.
South Korea
a. was poorer than most Sub-Saharan
countries in the 1950s.*
b. grew so fast because it followed the advice
of the World Bank in the 1960s about its
comparative advantage at the time.
c. regained its pre-war economic preeminence
in the Pacific.
d. first built its service industry in the 1960s
and then expanded into laptop manufacturing
in the 1980s.
e. a and b.
Countries that the World Bank classifies are
“High-Income” have about the following
percentage of the world’s population:
a. 5%.
b. 15%.*
c. 25%.
d. 40%.
e. 50%
The modern era of globalization
a. has been present continuously since the
late 1950s.
b. has led to the creation of a global
government that supercedes national
governments..
c. is correlated with worsening distribution
of income within countries.*
d. b and c.
e. all of the above
Globalization is associated with the
following tendencies EXCEPT
a. economic dynamism.
b. worsening distribution of income
within
countries.
c. increasing competition for natural
resources.
d. less movement of capital across
countries*
e. greater information transmission and
cultural exchanges across countries.
Since the Industrial Revolution,
a. governments have lost power to the
benefit of markets.
b. governments have become more
autocratic in high-income countries.
c. the share of priv
ate economic activity in
GDP has been increasing over time.
d. the share of private economic activity in
GDP has been decreasing over time. *
e. a and c.
Most people in low-income countries have
purchasing power that is
a. about the same as the income per capita
of Mexico.
b. ten times less than U.S. per capita
income.
c. lower than the income per capita of
Mexico*
d. less than one hundredth of U.S. per
capita income.
e. about twice the income per capita of
Mexico.
The building of railroads during the
nineteenth century
a. was the catalyst of computer and
information technology.
b. was the catalyst of the second part of
the industrial revolution and was
characterized by the emergence and
development of the modern corporation
c. required large amounts of capital
investment.
d. was a direct consequence of the
invention of the internal combustion
engine.
e. b and c.*
Adam Smith
a. considered the corporate form of firm
organization critical for the success of the
industrial revolution.
b. considered the co
rporate form of firm
organization appropriate for the nineteenth
century economy.
c. was highly doubtful of the effectiveness
of the corporate form of firm organization.*
d. considered the co
rporate form of firm
organization too immature for the nineteenth
century economy
e. a and b.
Markets
a. are always efficient in the production
and consumption of all types of goods.
b. did not exist before the industrial
revolution.
c. are usually more efficient in providing
private goods whereas they tend to
underprovide public goods.*
d. a and b.
e. b and c.
Subsidies to U.S. farm products
a. are highly uncommon.
b. tend to lower their international price.
c. can be considered a form of trade
protection
d. b and c.*
e. All of the above.
A tariff on an imported good shifts the
a. supply curve upward
and increases both
the equilibrium price and equilibrium
quantity.
b. demand curve upward and decreases
the equilibrium price and equilibrium
quantity.
c. demand curve upward and increases
both the equilibrium price and
equilibrium quantity.
d. supply curve upward and decreases both
the equilibrium price and equilibrium
quantity.
e. supply curve upward, increases the
equilibrium price and decreases the
equilibrium quantity.*
The following are factors that help explain
trade protection EXCEPT for
a. differential distributional effects of
trade policy and lobbying.
b. strategic trade policy.
c. security concerns.
d. comparative advantage.*
e. the infant industry argument.
Increases in GDP per capita do not
necessarily translate into improvements in well-
being because
a. pollution and other environmental
externalities could become worse as
GDP increases.
b. people could work more and have less
leisure time.
c. Activities, like cooking, that were not
counted as part of
GDP before are now
counted as part of GDP.
d. b and c.
e. all of the above.
An example of a government transfer is a(n)
a. bequest from a deceased relative.
b. subsidy to corn producers.*
c. tax on inheritance.
d. salary for members of the armed forces.
e. expenditure on an interstate highway.
Which of the following transactions will be
included in Canadian GDP?
a. An American buys a bottle of French
perfume.
b. Mr. Moneybags buys an existing share of
the Bank of Montreal.
c. Coca-Cola builds a new bottling plant in
California for export to Canada.
d. A California winery produces a bottle of
Pinot Noir and sells it to a customer in
Vancouver, Canada.
e. United Airlines buys a new plane from
Canada’s Bombardier.*
If Delta Airlines were to sell one of its used
jets to Aeromexico, the transaction would
a. be included in Mexican GDP.
b. be included in U.S. GDP.
c. not be included in U.S. or Mexico’s
GDP.*
d. lower U.S. GDP.
e. lower Mexico GDP.
Suppose the U.S. market for a certain
industry, say textiles, opens to international
competition through a complete elimination of
trade barriers. Then, other things being equal,
we can expect
a. no effect on employment or wages since industries such as textiles are never affected by international competition.
b. a decrease in the number of U.S. workers employed in that industry and a decrease in their wages.*
c. an increase in the number of U.S. workers employed in that industry and an increase in their wages.
d. a decrease in the number of U.S. workers employed in that industry and an increase in their wages.
e. an increase in the number of U.S. workers employed in that industry and a decrease in their wages.
In the absence of appropriate interventions, an activity with positive externalities takes place so that
a. marginal private benefit equals marginal
private cost.
b. marginal social cost exceeds marginal
private cost.
c. marginal social
benefit exceeds marginal
private benefit.
d. marginal social benefit equals marginal
cost.
e. a and c.*
The Bretton Woods system was characterized by
a. the universal adoption of the Gold
standard.
b. the absence of recessions.
c. flexible exchange rates.
d. low levels of cross-country capital
movements.*
e. All of the above.
Purchasing power parity refers to:
a. How many units of foreign exchange a
current dollar will buy.
b. How many foreign assets the United
States is buying.
c. How many foreign assets a foreign
country is buying.
d. The exchange rate for which a market
basket would cost the same in each
country.*
e. a and b.
For the U.S. economy to recover robustly from the lingering effects of the Great Recession, it will most likely be necessary to
a. increase interest rates and reduce
consumer prices further.
b. fix the financial system.*
c. induce high inflation.
d. a and b.
e. b and c.
There is evidence that those who enter the job market during recessions
a. experience higher levels of unemployment initially but their lifetime earnings are virtually the same as those who enter the job market in better times.
b. experience higher levels of unemployment initially and have significantly lower lifetime earnings than those who enter the job market in better times.*
c. experience higher levels of unemployment initially but their lifetime earnings are actually higher than those who enter the job market in better times.
d. learn how to cope with adversity and have higher happiness ratings than those who enter the job market in better times.
e. c and d.