Final; MGT

Which of the following is not an example of the "tragedy of the commons"?

A CEO who slowly destroys his company's machines by running them too long

White (1990) studies the reasons for stock growth and collapse during the late 1920s. What does he argue was the cause of the rapid collapse and subsequent low prices?

A business cycle downturn had begun just prior to the collapse

_______ describes a bank that is willing to lend to illiquid but solvent banks during a crisis?

A lender of last resort

Which is the most likely example of a design patent(as opposed to a utility or plant patent)?

A patent on the shape of the new VolksWagen Beetle car design

Acemoglu, Johnson, and Robinson (2001) and Engerman and Sokoloff (2002) agree that the North American colonies were likely to establish good institutions relative to other British colonies, but their reasons differ. Which of the following best explain the reasons for their positions?

Acemoglu, Johnson, and Robinson argue that European settlers were better able to survive the American conditions and thus more were available to demand better institutions, whereas Engerman and Sokoloff argue that the American colonies had more equality because they did not have indigenous labor or ability to produce cash crops on plantations

Which of the characteristics is nota key property of money in all places and periods?

Backed by gold/silver

Which of the following specifically describes wildcat banking?

Banks that enter remote locations that are hard to reach in order to redeem bank notes

The discount window at the Federal Reserve provides a place for _______?

Banks to borrow from the Fed if they need short-term liquidity

To push costs onto future generations, the U.S. primarily financed WWI expenditures by _______?

Borrowing from the public through bond issues

Stock prices nearly tripled during the late 1920s.Many of the stocks were bought on margin. What does buying stock on margin involve?

Borrowing money to purchase stock

We argued that American technology was not necessarily superior to the British, and that the British were unlikely to switch to American technology and the Americans were unlikely to switch to British technology. What was this the case?

British technology was labor-heavy because British wages were relatively low, and American technology was capital-heavy because the U.S. rental rate of capital was relatively low

Which of the following was nota way that GM competed with Ford for business?

Built a single factory that produced all the company's car brands at once

Granitz and Klein (1996) examine how Standard Oil was able to succeed in easily and cheaply buying out the other refiners in Cleveland and preventing new refiners from entering.They argue this was achieved by what?

By making deals with railroads to receive rebates for any oil shipped by their competitors

Which of the following best describes the reason for the high failure rate of free banks relative to other banks?

Collapse of state bond prices

Olmstead and Rhode (2002)find that northern agriculture productivity was relatively constant between 1860 and 1940. Calling it a"Red Queen Model", what do they argue?

Farmers were heavily investing in new technology to fight diseases/pests and allow planting in inhospitable climates, but it was all they could do to keep ahead of the frontier issues

Which of the following was not a key emphasis of the "American System"?

Focus on highly skilled labor

Despite canals and some railroads, most farmers sent their goods on rivers before 1860. What innovation most transformed travel times and costs along the rivers?

Fulton steam engine

Contrary to the approach states took with canals, the Federal government helped establish a nation-wide railroad system by:

Giving land to railroad companies in proportion to the amount of rail they laid

Immigration is typically driven by push and pull factors. Which of the following is an example of a pull factor?

Good economic performance in the receiving country

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Why did Britain initially allow the American colonies so much freedom and encourage development beyond the initial coastal locations?

Harass and challenge the nearby Spanish and French colonies

What is the drawback of the Gini Coefficient calculation of economic inequality?

Hard to calculate as you need to know the income of the entire distribution of population

The Agricultural Adjustment Act of 1933 kept crop prices high by _____?

Having the government buy excess crops and pay some farmers not to grow them

Even though he significantly increased government spending during the Great Depression, Herbert Hoover has a bad reputation next to FDR primarily because _______?

He did not establish federal work relief(i.e., government paying people to work)

How is economic development different from economic growth?

Economic growth measures total output growth while economic development measures the growth of peoples' well-being

Which of the following canals was so successful that it spawned a wave of canal building?

Erie Canal

In the absence of a federal banking regulation, the Suffolk Banking System was a private entity that stepped in to facilitate the use of bank notes. How did they achieve this?

Established relationships among banks and forced them to redeem each other's notes at par

Tallman and Moen (1990) provide narrative evidence of the Panic of 1907. They argue that what event led to the immediate breakout of the crisis in New York City?

Failed corner on United Copper Company stock by F. Augustus Heinze

In addition to new seed varieties and scientific farming practices, what was the main reason for increasing productivity in Northern agriculture before the Civil War?

Labor-saving innovation and mechanization

Why was the transportation revolution vital for the growth of manufacturing?

Labor-saving machines are only useful if firms can sell a lot and transportation allows this by expanding the size of markets and the number of potential customers

The loosening of U.S. land policy quickly pushed the agricultural frontier west.What was main constraint on the speed of the western movement?

Land had to be cleared and it took families a lot of time and effort to do so

The New York Safety Fund was intended to do what?

Limit losses to depositors and note holders

The failure of the New York Safety Fund is often blamed on a principle-agent problem. Why did the Safety Fund fail from this issue while the Suffolk System was able to avoid it and survive?

Losses in the Suffolk System were concentrated in a single bank which prompted them to supervise other bank's actions, whereas losses in the Safety Fund were dispersed amongst all banks which did not prompt them to supervise

One of the ways that manufacturers (including FordMotor Co.) were increasing the speed of their production after 1900was to redesign their factories by _____?

Making them based on the order of the steps of production rather than on the power source

U.S. Neutrality during the Napoleonic War led to a large increase in exports. Nearly all of the increase was due to what?

Many countries sent goods to the U.S. in order to be reexported to the warring countries

The U.S. manufacturing system started very slow. Which of the following was the first major step to establishing U.S. manufacturers that could compete with European ones?

Migration of smart people who had "studied" European technology

Which description matchesU.S.land policy before the Civil War?

Minimum land prices started high and generally became cheaper over time

What are the dates and times of the professor's normal office hours?

Monday 3:00-4:15pm and Thursday 1:45-3:00pm

The two likely causes of the depth of the Great Depression are _______ which highlights the decline of the money supply due to hoarding of money outside the banking system and ________ which highlights how hard it was for firms to receive loans because bank failures destroyed borrowing relationships.

Monetary Effects; Non-Monetary Effects

How is profit calculated?

Total revenue minus total costs

Which one of the following is true in the Von Thünen's Featureless Plain Model before a railroad, canal, or road is built?

On a featureless plain, only those farmers that live within a certain distance from the city center will engage in commercial agriculture whereas the rest of farmers will produce only for their own family's consumption (i.e., subsistence farming)

The GDP of the American colonies grew nearly 10-fold over the 1700s, but per capita growth was less than 35%. What was responsible for this pattern?

Population growth was strong over the period due to high fertility and immigration

Railroads were often accused of manipulating prices by charging different prices to different people. This is called what?

Price discrimination

How did the Confederation primarily fund the Revolutionary War?

Printing paper money

What is the key difference between markets with perfect competition and those with imperfect competition?

Products in perfect competition cannot be differentiated from each other (i.e., virtually identical products), whereas those in imperfect competition can be differentiated (i.e., different brand names or quality)

Heckelman and Dougherty (2007) find that debtors were more likely to vote against a National system. As we discussed in class, what is the most likely cause of this vote:

State legislatures were more likely to print money and increase prices

Frydman and Jenter (2010) examine the rise of CEO compensation. They find that overall compensation has been rising since the 1970s, but argue that this rise was mostly driven by what type of compensation?

Stock options and long-term incentive plans

Which of the following was nota reason for the decline in child labor starting in the 1920s?

The birth control pill was invented

In addition to not having gold/silver mines, what is the main reason theAmerican colonies had relatively little hard currency(i.e., gold and silver coins)?

The colonies operated a large trade deficit with other countries

An entire production possibilities curve (and not just a point along the curve) illustrates what?

The combinations of products a country can produce using all its resources

To encourage greater productivity, some manufacturing firms implemented _______ whereby workers received a much higher wage rate if their output met or exceeded the daily standard.

The differential piece-rate method

Scholars often split the New Deal into two parts. What was the difference between the two?

The early period legislation was seeking to deal with Great Depression itself whereas the later period legislation was focused on establishing safety nets and improving standards of living for working class people

Why did theFirst Banking Crisis of the Great Depression begin in 1930?

The failure of Caldwell and Company led to closures at connected banks

The Great Depression consisted of two distinct economic downturns. The second downturn during 1937-38 was driven by _____?

The government reducing New Deal expenditures and the Fed raising reserve requirements thinking the crisis was over

Why did nearly all slaves in the U.S. work on cotton farms?

The high price of cotton compensated plantation owners to bid away slaves from other crops

Why did people use bank notes in such a large number of transactions before the Civil War?

There was relatively little gold and silver coins available in circulation

The pyramiding of reserves describes_______?

A system where banks were allowed to keep reserves in other banks in larger cities

Most tech companies are located near Silicon Valley, most Hedge Funds are located nearNew York City, and most car companies are located near Detroit because firms are often more efficient when they operate around other similar firms. This concept is labeled what?

Agglomeration economies

After the Panic of 1907, Congress' immediate but temporary solution for the nation's inelastic currency was_________?

Allowing banks to monetize their assets(i.e., print bank notes)during panics under theAldrich Vreeland Act of 1908

Eli Whitney's cotton gin solved a major bottleneck in the early production of cotton by?

Allowing the quick and mechanized removal of seeds from raw cotton

The Manufacturing Belt is what?

An area of the country (i.e., mostly in the Midwest) where nearly all of the nation's manufacturing goods were produced for over a century

Which of the following best describes the U.S. Constitution?

Compromise between National and Federal Systems

Assuming the price of cotton is higher in the rest of the world than in the U.S. and countries freely trade with each others, which of the following would happen to consumers and producers if the cost of transporting goods was increased?

Consumers would remain the same, but producers would be worse off

The formation of a trust(such as those in the oil industry) is an attempt to do what?

Incentivize competing companies to collude and act like a monopoly by sharing profits

What was the main purpose of the Patent Cooperation Treaty of 1970?

Create a unified procedure for filing patents in more than one country

Ransom and Sutch (1972)argued that many farmers were trapped into debt because they had to take out high interest rate loans from dishonest lenders and often could not repay.This concept is called what?

Debt peonage

Reading (1973) studies the distribution of government funds during the New Deal. He finds which of the following factors led to a higher value of government funds per capita being directed to a state?

Decline in per capita real personal income in the state from 1929 to 1933

William Gibbs McAdoo thought Civil War bonds missed their chance to be marketed more broadly. So when he needed to sell a large number of WWI bonds, what did he do?

He sold bonds to the common man(as well as the rich)by capitalizing on patriotism

Charles Goodyear discovered the technique to vulcanize rubber, but was notable to earn a high profit-level from his invention because_______?

He spent a lot of time and money trying to defend his patent both domestically and internationally but had relatively limited success at doing so

In his first year, FDR restricted gold exports, banned the private holding of gold, and raised the price of gold in the U.S.What was he seeking to do with this gold legislation?

He wanted to prevent the money supply and prices from falling further

The Annapolis Convention of 1786 was held for what explicit reason?

Help eliminate trade barriers existing in between states

Ford's strategy on having the lowest priced car was successful in the market, but what was his strategy's distinct problem?

His focus on assembly line and economies of scale prevented him from innovating on the car itself or quickly implementing new technology

How didJay Gould spur the massive railroad consolidation movement after the Civil War?

His wild actions proved to Vanderbilt and others that collusion was not possible in the long run because people were always going to undercut prices and try to take over the system

Allen (1991) argues which of the following:

Homesteading allowed the U.S. to avoid high costs associated with land maintenance

According to the Von Thünen's Featureless Plain Model, what do we expect to occur to commercial agriculture when a railroad is built out from the city center in one direction?

In addition to the initial circle of commercial agriculture, commercial agriculture would occur in a cone-like shape starting at the city center and getting smaller on each side of the railroad as the distance along the railroad increased

Assuming the price of cars is lower in the rest of the world than in the U.S. and U.S.freely trades with others, which of the following would happen to the price, consumption, and production of car sin the U.S. economy if President Trump imposes a tariff on car imports from all other countries?

Increased price, increased domestic production, decreased domestic consumption

How does the arrival or improvement of transportation affect competition in general?

Increases competition because multiple firms can serve the same market despite being located other places

While companies can secretly collude, set a high price, and earn high profits, most collusion does not last for very long. Why is this the case?

Individual firms have a large incentive to undercut the high collusive price and capture the entire market regardless of the deal they made

Banks help solve the maturity mediation problem. What describes this problem:

Individuals need short-term access to deposits, but loans often need to be long-term

Piketty and Saez (2003) create a new database on inequality in the United States from 1913 to 1998. Which of the following best describes their findings?

Inequality crashed during the Great Depressionand WWIIbut has rebounded since the 1970s

Inventive activity (i.e., the creation of new inventions) is nearly always driven by what:

Inventive activity (i.e., the creation of new inventions) is nearly always driven by what:

TheSherman Antitrust Act of 1890 was the first law that allowed for the breaking up of companies that had monopoly power and for the punishment trusts that were colluding. However, it did not initially see much success because _____?

It did not lay out clear legal definitions for the concepts of "trust" and "monopoly"

During most of the Great Depression, the Fed took a passive role and even discouraged banks from borrowing at the discount window because ______?

It failed to appreciate the magnitude of the panic and looked at the wrong indicators

What is the drawback of buying stock on margin?

It magnifies the losses of downturns in stock prices

Which of the following is not true about economic inequality?

It only affects lower income groups and their relative quality of life

The U.S. did not allow banks to branch(i.e., operate in more than one location)before the 1980s. Why did the lack of branching lead to more historical bank failures and financial panics?

It prevented banks from diversifying their loans across different areas

Which of the following was nota benefit of government land grants to fund railroads?

It prevented railroads from building wherever they wanted just to obtain extra land

The (re)discovery of New World was driven by countries trying to break whose initial monopoly over the spice trade?

Italian City-States

______ is defined as the percentage of the total population who are either employed(i.e., currently working)or unemployed(i.e., currently seeking work).

Labor force participation

How did the Panic of 1907 end?

J.P. Morgan deposited his and other wealthy individuals' money in trust companies and arranged to float bonds on European markets as needed

Which of the following events encouraged a large-scale but temporary increase in U.S. factory incorporations?

Jefferson Embargo of 1807-1809 and War of 1812

Jefferson and Hamilton represented the respective sides of the nation's early debate on land policy. Which of the following is a correct depiction of their competing views:

Jefferson wanted land to be sold very cheaply in order to encourage democracy, while Hamilton wanted land to be very expensive in order to encourage non-agricultural industries

According to our growth accounting model, which of the following inputs contributed the largest share to U.S. GDP growth from 1840-1870?

Labor

Throughout the entire development of the U.S. which input has been an important source of growth based on cost accounting models and is consistently lacking in size?

Labor

There are many possible effects that could be responsible for the recovery from the Great Depression. Romer (1990) calculates what output would have been like (1) without fiscal policy or (2) without monetary policy to determine what factor was most important. She finds that _______?

Nearly all the recovery was due to the expansion of money supply due to gold inflows

Which region in the American colonies imported from and exported to the West Indies the most?

Northeast

Patenting is important for economic growth, but is subject to a "balancing act". As such, countries typically limit a patent to a fixed amount of time. Why is this the case?

Patents allow inventors to receive a return, but we need to make sure protection does not discourage future inventions

White (1990) studies the reasons for stock growth and collapse during the late 1920s. What does he argue was the cause of the rapid growth?

People (particularly new investors) irrationally over-estimated the market

While the first railroad was built in 1820, railroads did not overtake canals until the 1860s. Which of the following is nota reason for this slow replacement?

People preferred canals because they offered year round service and straight routes compared to railroads

Which of the following types of competition is likely to lead to the lowest price and highest quantity produced in the market?

Perfect competition

Which of the following outcomes are not directly associated with the mercantilism approach?

Push for increased international trade without tariffs

What industry was the first to develop modern business management structures and why?

Railroads because they needed modern management techniques to operate in a variety of locations and provide a variety of services

Railroads reduced travel time compared to canals. While the higher speed of trains compared to boats is one factor, which drove this travel time reduction in a targeted and endogeneous way?

Railroads could be built straight to specific large cities whereas canals took roundabout routes based on where rivers were located

In Railroads and American Economic Growth, Fogel ties to calculate the value of railroads to the entire nation by hand. He finds what:

Railroads had a relatively small positive effect on growth

Before the arrival of Ford'sModel T in 1908, the automobile industry could best be described as being in what step of the industry life cycle?

Startup

______ is defined as the difference at birth between the discounted lifetime earnings of a free laborer and the discounted lifetime slave net income?

Rate of exploitation

_____ is calculated as the percent of income concentrated in largest group divided by the percent of income concentrated in the smallest group?

Relative Concentration Ratio

Which of the following describes the pattern of immigration restrictions before the start of WWII in 1939?

Relatively low restrictions early but becoming tighter in the 1900s

Before 1837, the U.S.financial system consisted mostly of banks that had to receive a special charter from their state legislature. Which of the following was a clear result of this approach?

Relatively slow growth in the number of banks

As described by FDR, the three pillars of NewDeal were _________?

Relief, Recovery, and Reform

While we do not have data between 1780 and 1840, we know that growth per capita after 1840 was faster than before 1780. This has led many scholars to point towards various causes of the accelerated growth. Which of the following authors argued that the so-called "take-off" was driven by the establishment of infrastructure(i.e.,railroads)?

Rostow

As opposed to the Glass-Steagall Act of 1935 which centralized power in the Federal Reserve, the Glass-Steagall Act of 1933 _____?

Separated depository banks from investment banks and installed deposit insurance

Which of the following does not describe free banking laws?

Set absolutely no requirements on everyday bank operation

The industry life cycle describes the birth, rise, and decline of industries over time. During which of the steps is the number of competitors declining (i.e., consolidation) and there is often a separation of the market into segments based on price or quality?

Shakeout

The Navigation Acts had little effect on the general population of the American colonies. Which of the following was not a reason for the limited reaction?

Southern farmers mostly produced crops that were sold throughout theAmerican colonies and not exported by sea

Frydman and Jenter(2010) argue that the particular rise in CEO compensation was likely due to firms trying to avoid the principle-agent problem. What is the typical principle agent problem with CEO compensation that existed before the modern period?

Stockholders want to see long-run growth whereas managers pursuing higher wages and bonuses have incentive to sacrifice long-run growth for short term gains

When the attempt by plantation owners after the Civil War to hire former slaves and work them the same long hours failed, they established the Tenant System by ______?

Subdividing their land and renting the pieces to other farmers

The _________ was designed to raise revenue and achieve mercantilist goals, while the _________ was simply intended to raise revenue.

Sugar Act; Stamp Act

Immediately upon taking office in 1933, FDR ordered a Bank Holiday in order to shore up confidence in the banking system by ______?

Supposedly allowing time for banks to be inspected and unsound banks to be closed

The Beard Hacker Thesis argues two things. The first and often disputed argument is that production for the Civil War allowed Northern manufacturing to suddenly develop. What is the second and more lasting argument?

The Civil War allowed the North to accelerate growth by passing legislation that unified markets and propelled industrialization (e.g., Homestead Act, Land-Grant College Act, and Transcontinental Railroad Acts) when the South could not object

What was the turning point of Britain's hands-off policy towards the colonies?

The End of the French and Indian War in 1763

In his Report on Manufactures, Hamilton argued that the government needed to support manufacturing. Which of the following was not one of the main reasons Hamilton gave?

The U.S. needed a positive trade balance in order for it succeed relative to others

Allen (1991) highlights that relatively little homesteading was done in Utah. What does he associate this pattern with?

The Utah population reached out to help the nearby Indian communities rather than to fight them

Examining the location of patenting activity, Perlman (2016) argues that the size of a market increases the number of patents. She makes this claim based on seeing what pattern?

The arrival of transportation improvements to an area(particularly railroads)greatly increased the number of patents produced

Why was there a sudden large increase in female labor force participation after the late-1950s?

The introduction of reliable birth control methods and decline of fertility

How did theCoinage Acts of 1792 and 1834 differ from each other?

The latter act decreased the value of silver relative to gold to be paid by the U.S. Treasury.

Fogel and Engerman's Time on the Cross examines the data behind slavery and finds which of the following?

The material conditions of life (i.e., height and diet) for slaves were similar to that of low income free whites

Between1850and 1858, there was a sudden increase in reaper sales. What was the main reason for the rise in reapers during the decade?

The price of wheat in the U.S. rose dramatically due to the Crimean War in Europe thus increasing the number of acres that most farmers wanted to plant

When transportation costs fall in a world without international trade, we often say that the transportation "wedge"gets smaller and everyone wins. Why is this the case?

The price paid by the consumer falls and the price ultimately received after shipping costs by the producer rises

During the 1920s, the American high school structure became finalized and graduating high school became standard rite of passage. Why was this push so successful?

The rate of return to high school was large with new manufacturing industries

Even after the invention of the reaper, many farmers still used a grain cradle due to their cost differences. Which of the following best describes the relative costs of each tool?

The reaper had a high fixed cost and low variable costs compared to the cradle

Bodenhorn (2006) argued that while free banking ideas were growing for some time in New York it was what event that solidified political support and led to the passage of a Free Banking Act?

The rise ofAnti-Mason groups after disappearance of William Morgan

Jefferson and Hamilton may have differed on land policy, but they agreed that a rectangular land registration system should be used. What was the main reason behind this belief?

The system prevented land disputes over boundaries and secured property rights

The stock market crashes in October of 1929often date the start of the Great Depression. However, because ______, the crashes were probably more psychologically damaging than anything.

There were no bank or firm failures for almost a year after the crash

Before 1900, manufacturers were focused on decreasing costs by increasing the quantity that they produced. However, after 1900, modern manufacturing firms began to focus on increasing their _______ (i.e., the speed of their production).

Throughput

The Gallatin Plan of 1808 called for the government to do what?

Undertake a system of land and water transportation improvements in order to bring the nation together

What is the difference between vertical integration and horizontal integration?

Vertical integration is when companies own their supply chain, and horizontal integration is when companies begin to produce related goods/services

Standard Oil fortified their management by shifting from a trust structure to a holding company structure in the mid-1880s. What was the reason for this switch?

Wanted to create a single unified chain of command with punishment for managers for deviations from the agreed upon strategy

Heckelman and Dougherty (2007) argue that personal characteristics affected politicians' votes on the U.S. Constitution. Which of the following do they find to be significant predictor of an anti-national position?

Western Landowners

In terms of land policy, what describes the term "graduation"?

When land is initially unpurchased and then is sold for cheap

The Bank War was waged betweenAndrew Jackson and Nicholas Biddle over the renewal of the Second Bank of United States' charter. Hammond (1947) tries to correct the impression given by previous authors by arguing that:

While Biddle was not very discreet in this statements or actions, the bank was successful in supervising the banking system and preventing risk-taking by other banks and may have prevented the Panics of 1837 and 1839

Which of the following is one of the factors for the continued gender wage gap(i.e., higher pay for men than women) in the modern period?

Women are employed in different industries or jobs

Steckel (1986) uses new data to document the causes of slave children mortality. The data indicate that which one of the following variables increased the death rates?

Work during late pregnancy(i.e., mothers that were just about to give birth during planting or harvest seasons were different from others)

The Infant Industry Argument states which of the following?

Young firms are initially inefficient and thus temporary tariffs are sometimes necessary to protect them until they become efficient

In his Report on a National Bank, Hamilton made several claims in support of establishing a Bank. Which of the following is not among the principal advantages he highlights?

a national bank would establish more private banks and avoid political favoritism

A patent is an:

exclusive right granted for a product or a process that provides a new way of doing something, or offers a new technical solution to a problem

When trying to calculate the total benefits of the railroad to the nation, we have to account for two types of externalities. Specifically, _______ consists of benefits to producers of products that railroads purchased in order to operate, whereas ______ consists of benefits to all producers because of the railroad's ability to allow larger markets to develop and goods to arrive faster.

backwards linkages; forward linkages