Econ Final
The inflation that Germany experienced from 1921 to 1923 is called
"hyper"inflation
With a GDP of about $14 trillion and a population of 1.4 billion people, China's GDP per capita was about ______________.
$10,000
Refer to Figure 1. At the equilibrium price, total surplus (well-being or wealth) would be
$1120
Pretend that a minimum price = $22 is imposed. This will reduce the quantity demanded to 40 units. At the imposed price of $22, what will be consumer surplus?
$120
With open trade, consumer surplus (CS) is now
$2500
The amount of revenue collected by the government from the $2 tariff is
$400.
Refer to Figure 1. At the equilibrium (market-clearing) price, consumer surplus equals
$480
Consider the imposing a $6 tariff. Please compare the no tariff outcome to the outcome with a $6 tariff. The amount of deadweight loss caused by the imposing of a $6 tariff equals
$800
Pretend that a minimum price = $22 is imposed. This will reduce the quantity demanded to 40 units. At the imposed price of $22, what will be producer surplus?
$800
Refer to the figure below. Without any trade (autarky), consumer surplus (CS) will equal _____________.
$900
A growth rate of 0.70% implies a "doubling time" (measured in years) of
100
In 2020, Russia had a population of about 146 million with a GDP per capita of $10500. In 2020 the U.S., had a population of 331 million people with a GDP per capita of about $53240; thus, U.S.'s 2020 GDP was ______ times Russia's 2020 GDP.
11.5
In 2020, Russia had a population of about 146 million with a GDP per capita of $10500. In the U.S., had a population of 331 million people with a GDP per capita of about $53240; thus, U.S.'s GDP was ______ times Russia's GDP.
11.5
The growth rate in world's GDP per capita from 1000 to 1820 was 0.0561%. Which of the following correctly expresses this growth rate as a doubling time (measured in years).
1250
The growth rate in world's GDP per capita from 1000 to 1820 was 0.0561%. Which of the following correctly expresses this growth rate as a doubling time (measured in years)?
1250
In 2020, Russia had a population of about 146 million with a GDP per capita of $9590. In the U.S., had a population of 331 million people with a GDP per capita of about $63233; thus, U.S.'s GDP was ______ times Russia's GDP.
14.9
Small differences in growth rates in the size of the economy, over several decades, will result in big differences in the size of the economy. Pretend we start in 1950 and the U.S. growth in real GDP has been around 3.15%. This has resulted in real GDP growing 8 times over this 70 year period (1950 to 2020). If real GDP growth had been 4.0%, real GDP would be _________ times larger.
16
Year that Russia is a net exporter of grains.
1870
The year A. Hitler comes to power as Chancellor in Germany.
1933
Year that World War II begins
1939
Year that World War II begins.
1939
The "great depression" ended around
1942
What year did M. Thatcher become prime minster of U.K.?
1979
What year did M. Thatcher become prime minster?
1979
Year that East and West German unite.
1990
The doubling time for the world's GDP per capita from 1950 to 2020 was about 33 years. Please express this growth rate as a percentage growth rate
2.1%
The doubling time for the world's GDP per capita from 1950 to 2020 was about 34 years. Please express this growth rate as a percentage growth rate.
2.1%
A growth rate of 0.30% implies a "doubling time" (measured in years) of
233
France has many labor laws that start to bind on firms with 50 or more employees. Our class notes reports that on study of the impact of these laws imposes regulatory welfare cost of about ___________% of GDP.
3.5
One estimate of the percent of publicly traded companies in Japan on life support was about ____________%
30
U.S growth rate of GDP per capita, 1820 to 2020, was about 2.0%. Please express this growth rate as a doubling time.
35 years
U.S growth rate of real GDP per capita, 1820 to 2020, was about 2.0%. Please express this growth rate as a doubling time.
35 years
According to the World Bank India's freight travel by road consumes only _________% of travel time. The remaining time is spent is spent waiting (state border checkpoints, paying sate regulatory bureaucracies)
40
Using GDP per capita data for 2019, we found that the typical French citizen was _____________ than the typical Texas citzen.
40% poorer
One estimate of the impact of WWII on the Japanese economy was that its national income in 1946 was about what percent of its 1937 level?
45% lower
In 2020, Russia had a population of about 146 million with a GDP of $1533 billion. In the U.S., had a population of 331 million people with a GDP of about $17620; thus, U.S.'s GDP per capita was ______ times Russia's GDP.
5.1
As of 2019, China had a GDP of around $14 trillion. U.S. GDP was around $21 trillion in that same year. This means that U.S. GDP was about ____________% ________________ that China's GDP.
50; higher
India's GDP in 2020 was about $3.2 trillion. In that same year, US GDP was almost $21 trillion. In 2020, how much larger was US GDP compared to India's GDP?
6.5 times larger
Refer to Figure 1. At the equilibrium price (market-clearing), producer surplus would be
640
Our estimate of the "gains from trade" from Japan's opening of trade after a long period of autarky (roughly the years from 1647-1856), amounted to about _______ % of GDP.
7
Since 1978, China has experienced GDP growth of about 10% per year. Beginging in 1978, China also opened up (or relaxed economic controls/reguations) in the overall economy. This growth rate impliesa doubling time of about how many years?
7
In 2020, U.K. had a population of about 67 million with a GDP per capita of $40298. In the U.S., had a population of 329 million people with a GDP per capita of about $63550; thus, U.S.'s GDP was ______ times the U.K.'s GDP.
7.73
In 2020, U.K. had a population of about 67 million with a GDP per capita of $39403. In the U.S., had a population of 331 million people with a GDP per capita of about $63233; thus, U.S.'s GDP was ______ times the U.K.'s GDP.
7.93
During Ronald Reagan's terms in office, the top marginal tax rate on personal income fell from
70 percent to 28 percent
French soccer fans have recently protested the government's proposal (around 2014) for a ___________top marginal tax rate.
75%
Entrepreneurial activity varies widely across countries. In the U.S. about 10% of workers are self employed. What is the percentage of self employed workers in India?
95%
The most important (longest and deepest?) "depression" of the 20th century affected many countries. For the U.S., the largest economic contraction occurred in the years between 1929 and 1933, but the timing varied across different counties. Define a "recession"? Please compare a "recession" to a "depression".
A recession is two consecutive quarters where real GDP growth is negative. A recession is a brief decline in economic activity and only lasts about six months, but depression is an extreme fall in the economy that can last for years.
Relative to other countries in the world, South Korea's GDP per capita is best described as being
Above the world's average
The author of "The Wealth of Nations" is
Adam Smith
The following description of the study of economics is taken from which two writers/thinkers? "The study of economics deals with this yoke of scarcity and the modes of behavior intended to minimize the pains and maximize the gains of getting along - behavior which is restricted and channeled, sometimes helpful and efficiently but often hurtfully and wastefully, by the social ground rules and institutions we adopt and have had imposed on us."
Alchian and Allen
Thomas Sowell wrote (and we discussed in class) his two visions: constrained (or tragic) vision and unconstrained (or utopian) vision. Sowell linked the constrained vision back to ____________.
Aristotle
Germany and France have GDP per capita of between $36.000 and $34,000 (class notes). Which U.S. state's Gross State Product (GSP) is closest to that of Germany and France?
Arkansas
When we compared U.S. States to European counties (using GDP per capita measures), we found that France's GDP per capita closely matched which U.S. state?
Arkansas
The article about Japan by Joe Peek and Eric Rosengreen found that, during the 1990's, Japanese banks consistently "evergreened". Which of the following best captures the notion of evergreening?
Banks kept extending additional credit to companies that already had loans with them
Export-led growth" has been used to describe the recent economic success of which country?
China
Which of the following country's has relied on "state-owned enterprises (SOE)" as a component of their recent economic growth success?
China
In 1978 the leader of China, Deng Xiaoping, broke with the Maoist variant of Socialism. Since then China's economy and economic performance improved dramatically. Which of the following best describes China's economic performance since 1978?
China's economic growth has dramatically increased
The "PPP" adjustment that we like to make when dealing with the international comparisons, basically adjusts for
Cost of living differences between countries
One suggested contributor to more economic growth (measured by increases in GDP per capita) was to have a "government that enables innovation and production" not maintaining power to engage in massive redistribution of wealth. The author of this recommendation was
David Landes
One suggested contributor to more economic growth (measured by increases in GDP per capita) was to have a "government that enables innovation and production" not maintaining power to engage in massive redistribution of wealth. The author of this recommendation was _____________
David Landes
One suggestion for promoting economic growth was for governmental policy that encourages innovation and production. Who of the following was linked to this policy proposal?
David Landes
The principle of comparative advantage was developed by
David Ricardo
This Englishman developed the concept of "comparative advantage".
David Ricardo
The principle of comparative advantage was developed by which of the following economist?
David Ricardo.
Which two countries are members of the EU, but not part of the currency monetary union (Euro)?
Denmark and Sweden
Use the PPF framework to describe (explain) the concepts of "full employment" and "economic growth".
Economic growth on the PPF framework is represented by growing outward into the right. Getting more and better resources and better workers can help a company grow and cause a shift in the PPF framework. On the PPF framework, a company is operating at full employment when it is on or near the PPF curve.
What is "economic growth"? Why is "economic growth" a frequent goal of nations (or societies)?
Economic growth on the PPF framework is represented by growing outward into the right. It is the increase in the production of goods and services in an economy. Economic growth is a frequent goal of nations because the more goods a society can provide, then the better off the society is. Economic growth not only increases production but it increases employment
The research economist who presented evidence on the decline in work week hours in France (relative to the U.S.) between early 1970s and middle of 1990s is _______________.
Ed Prescott
Which of the following is correct?
Efficiency deals with the size of the economic pie and equity deals with how fairly the pie is sliced.
Looking at the 1913-1918 years, which of the following countries experienced the largest decline in real GDP?
France
On our review sheet for Test 2, we looked at a chart which indicated that the distribution of income (as measured by the Gini Ratio for the overall population before taxes and transfers) in U.S. is about the same as
France
The monetary unit of this country is "euro".
France
The president of this country recently (around 2014) proposed a tax rate of top incomes of 75%.
France
The president of this country recently proposed (this occur around 2014) a tax rate of 75% on incomes above 1 million euro ( a tax on millionaires).
France
This country has union membership of about 8%, but its "collective bargaining" covers around 90% of labor market. In our lecture we suggested that this means that this country's labor market is much less flexible than the U.S. This country is
France
Use the production possibilities curve (PPC or PPF-frontier) to explain/define the concept of "full employment"? Finally, explain the economist concept of "economic inefficiency" using the PPC/PPF idea.
Full employment is when the points on a PPF frontier are on the curve. It means the economy is utilizing the resources at full capacity. Economic inefficiency is when they points on a PPC graph are in the inside of the curve. It means that the economy is not utilizing all of their resources efficiently.
One success of M. Thatcher in the U.K was catured as a dramatic improvement in _______________ relative to ___________.
GDP per capita, France
GDP is often used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is
GDP per person.
GDP is often used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is
GDP per person.
GDP is often used as the basic measure of a society's economic well-being. Another measure, believed by many to be a better measure of the economicwell-being of individuals in society, is
GDP per person.
This country was divided (separated) from 1945 to 1990 and then unified in 1990.
Germany
One widely used measure of inequality (income, wealth) is
Gini ratio
Based on Mankiw, Romer, and Weil (1992), with conditional convergence holding fertility rates, education, and government spending, as a share of GDP constant
Income per capita in poor countries grows faster than in rich countries
Britain controlled (colonized) which of the following country for about 200 years?
India
The newly passed Goods and Services Tax (GST) has a primary goal of simplifying and encouraging intra-national in which country?
India
In the movie, Lost in Translation, the hotel setting was the New York Bar in the Park Hyatt Tokyo Hotel. This was important because
It was an example of Japanese fascination with American culture
The Soviet leader who was committed to and was responsible of the collectivization of agriculture sector was
J. Stalin
This person was the leader of the USSR (Soviet Union) from the 1920's to 1953 was
J. Stalin
One important critic of Franklin Roosevelt's policy of keeping prices from declining using the National Industrial Recovery Act (NIRA) was ___________.
JM Keynes
One important criticism of Franklin Roosevelt's policy of keeping prices from declining using the National Industrial Recovery Act (NIRA) was ___________.
JM Keynes
A country that fought on the side of Allies in WWI, but against the Allies in WWII, was
Japan
One "natural experiment" that we use to examine the benefits of open trade was the country of ___________ over the time period ____________.
Japan, 1647 - 1856
Eurasian societies acquired a big advantage (compared to other societies) in their resistance to germs. This idea is associated with __________.
Jared Diamond
The author that asks the question: "Why didn't the Incas....conquer the Eurasians?" was
Jared Diamond
Each of these individuals have made important insights into the concept of "economic growth". Choose one individual and write a brief description of their insight(s) into the notion of "economic growth".
Jared Diamond's theory was that some countries are wealthier and better developed because of their geography. Some countries had natural resources available to them and animals that enhanced their way of life, they didn't have to be so reliant on searching for food or materials. Because of their availability of resources, these countries were able to build on their society to become stronger, more profitable, and powerful. The construction of roads and canals in these countries makes their way of living cheaper than other countries that lack the necessary resources to become successful.
He authored "Ten days that Shook the World" as a first person account of the Russian revolution.
John Reed
The president that championed a reduction in top federal tax rate from 91% to 70% in order to stimulate aggregate economic activity was
Kennedy
He was assassinated in Mexico City at Stalin's direction.
L. Trotsky
China's national income accounts tend to be biased upward (the reported numbers are higher than actual economic performance). Which of the following is the source of this bias?
Local governments collect the data and they are rewarded for meeting local economic growth targets
in 1979 real GDP per capita in UK was 10% lower than France's GGP per capita and by 1990 UK's GDP per capita was 10% higher than France. Who was the UK's prime minster over those years?
M. Thatcher
The term "capitalism" is frequently used as a description of an economic system. Another phrase we used to describe the economic system of the United States was _
Market-tested innovation system
He served as Poland's Minster of Finance after World War II.
O. Lange
We discuss several possible reasons for the failure of the soviet socialist (communist) system. Discuss one of the reasons we mentioned in class.
One reason for the failure of the soviet socialist system was the economic system. The economic system created many inefficiencies in how things were operated and distributed. They were able to produce a lot but they were not producing what people wanted and their products were produced at a higher cost.
If I construct a curve with Guns (G) on vertical axis and Butter (B) on horizontal axis. Then, draw and label a curve "PPF1" that describes an innovation that occurs only for butter (B) production; that is, no innovation in production of guns (G). Which of the following best describes the shift of the PPF?
PPF will shift to the right for butter, but no shift for guns
Thomas Sowell wrote (and we discussed in class) his two visions: constrained (or tragic) vision and unconstrained (or utopian) vision. Sowell linked the unconstrained vision back to ____________.
Plato
One of Japan's demographic concerns is that ________________?
Population growth will be negative, falling by 40% by 2050
One of Japan's demographic concerns, based on current forecasts, is that ________________?
Population growth will be negative, falling by 40% by 2050
This country fought a war with Japan, 1904-05
Russia
This country fought war with Japan, 1904-05
Russia
Comparing the growth "miracles" in China, Japan and S. Korea over a 38 year period, the growth magnitudes (measured by % growth in personal income) in _____________ were the largest of the three.
S. Korea
This country was obsessed with giant manufacturing firms which led to central planning for giant firms all over the country. Central planners often seemed to equate sheer size of a factory with technological advancement. This resulted in the size factories that often outstripped the capacities of the central planners, leading to grotesque inefficiencies. This country was __________.
Soviet Union
This European country remained "neutral" during both the World War I and World War II.
Sweden
This country had a motorcycle gang named "Stubborn".
Sweden
This country had a top marginal tax rate of 80% in 1980. One estimate found that this top tax rate reduced labor supply curve by around 10%. This country is __________.
Sweden
This country moved from driving on left to driving on the right in 1967.
Sweden
This country used tax rate reductions in 1990-1991 to help spark growth in the economy.
Sweden
Workers in this country take 2.4 times more sick days than the rest of Europe.
Sweden
You read about the impact of taxes and transfers policy in reducing income inequality (as measured by the Gini ratio). One country whose tax and transfer policy that resulted in bigger changes than average was _________. A country that whose polices were smaller than average was __________________.
Sweden, United States
Define the concepts of efficiency (both technical and allocative). Why do many economists argue these are proper (worthy?) goals?
Technical efficiency is when you get the most output you can get. Allocative efficiency is what combination of outputs will be produced or what outputs does the society want. Economists argue that these are proper goals because when efficiency is maximized it means that all resources are being used.
Between 1980 and 2019, income inequality in the United States has increased in part due to rapid technological change. How does technological change contribute to income inequality?
Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers.
Between 1980 and 2020, income inequality in the United States has increased in part due to rapid technological change. How does technological change contribute to income inequality?
Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers.
Paul Krugman's study of the Korean growth experience (years 1970-1992) implied that
The Korean economy will grow at a slower rate than it grew over the 1970 - 1992 period
Discuss how the framework of production possibilities frontier (or curve--PPF) as it is used to describe "scarcity". Define the concepts of "efficiency", both technical efficiency and allocative efficiency.
The PPF curve is used to illustrate technical and allocative efficiency, the points outside the curve represent scarcity. It is when the curve cannot reach those outside points because they are in short supply. Technical efficiency is when you get the most output you can get. Allocative efficiency is what combination of outputs will be produced or what outputs does society want.
Compared to the United States, Spain has higher unemployment rates. One factor in the Spain economy that is the likely cause of much of this difference seems to be _______________________.
The Spanish are in the wrong time zone.
The most important (longest and deepest?) "depression" of the 20th century affected many countries (for the U.S. the largest contraction occurred between 1929 and 1933). Using the years 1929-1933, discuss and describe the concepts of a. "full employment" and b. "unemployment".
The concept of full employment is when all available resources are being used in the most efficient way possible. In 1933, the U.S. economy was operating with 25% unemployment of resources, they were not operating with technical efficiency. Between 1929 and 1933 the decline in real output was about 30%. Unemployment is when the economy is using an inefficient use of its resources. It is when people are out of work and actively looking for jobs. Between the years 1929 and 1933, one out of four people was unemployed.
Suppose the Mexico has a Gini coefficient of 0.58 and Sweden has a Gini coefficient of 0.26. Which of the following statements is true?
The distribution of income is more equal in the Sweden.
Using the years 1929-1933, discuss and describe the economic concept of "full employment". Mention some numbers that relate to this time period of 1929 to 1933.
The economic concept of full employment is when all available resources are being used in the most efficient way possible. In 1933, the U.S. economy was operating with 25% unemployment of resources, they were not operating with technical efficiency. Between 1929 and 1933 the decline in real output was about 30%
Match the following socialists with their "type or flavor" of socialism.
This person is closely linked top "pragmatic" socialism. V. Lenin Most closely associated with "inefficient" socialism. F. von Hayek Most closely associated with "market" socialism. Oskar Lange Most closely associated with "oppressive" socialism. J. Stalin Most closely associated with "utopian" socialism. Saint-Simon, Robert Owen
Author of "Conflict of Visions"
Tom Sowell
Author of "Conflict of Visions".
Tom Sowell
Based on our chapter notes and video lecture, which of the following country's redistribution policy has the least impact on that country's Gini ratio?
U.S.
Based on our review sheet for Test 2, which of the following country's redistribution policy has the least impact on that country's Gini ratio
U.S.
Based on our review sheet for Test 2, which of the following country's redistribution policy has the least impact on that country's Gini ratio?
U.S.
The two super powers that emerged after the end of World War II were _____________.
US and USSR
"Never trust anyone over the age of 30" represents which vision (Use Sowell's classification system)?
Unconstrained
Using the years 1929-1933, discuss and describe the concept of "unemployment". Why would economists be so concerned about the harms of "unemployment"?
Unemployment is when the economy is using an inefficient use of its resources. It is when people are out of work and actively looking for jobs. Between the years 1929 and 1933, one out of four people was unemployed. Economists are concerned about the harms of unemployment because it means that the economy is wasting its resources, it is not operating at its full potential which increases poverty.
This country chose M. Thatcher as leader in 1979.
United Kingdom
If you measure tax progressivity by the following: taxes paid by the rich / income of the richest, which country shows the most progressive tax system?
United states
Using a measure tax progressivity in the the following way: taxes paid by the rich / income of the richest. Which country shows the most progressive tax system?
United states
The claim that "small-scale production gives birth to capitalism..." was made by
V. Lenin
Who was the author of the "New Economic Plan"?
V. Lenin
One strong prediction of Karl Marx's view of crude communism (writing in mid-1800s) was
Worker's real wages will stagnate toward the subsistence level.
Which of the following best describes the world's poverty rate from 1820 to 2016
World's poverty rate fell from 94% to 10%.
Joe Peek coined the following phrase as a description of Japanese banks in the 1990s to early 2000s:
Zombie banks
A demand curve measures
a buyer's willingness to pay.
The gains from trade are
a result of more efficient resource allocation.
Table I: Growth in U.S. real GDP per capita Time period % growth rate Years to double 1500-1820 _____ 200 1820-1870 _____ 54 1870-1913 1.82 _____ 1913-1950 ____ 45 Using Table I, find the following: a. What was the average percentage growth rate in real U.S. GDP per capita between 1500 and 1820? Show your work. b. What was the doubling time in real GDP per capita between 1870 and 1913? Show your work.
a. 70/200 = .35% b. 70/1.82 = 38
Table I: Growth in U.S. GDP per capita Time period % growth rate Years to double 1500-1820 _____ 200 1820-1870 _____ 54 1870-1913 1.82 _____ 1913-1950 ____ 45 Using Table I, find the following: What was the average percentage growth rate in U.S. GDP per capita between 1913 and 1950? Show your work.
a. 70/200 = 0.35% b. 70/1.82 = 38 1913 to 1950: 70 / 45 = 1.55%
When we graph the official poverty rate from early 1960s to present, what trend do we see in this graph?
after declining over the 1960s, official poverty rate has remained steady over this 60 year period
When we graph the U.S. official poverty rate from early 1960s to present, what trend do we see in this graph?
after declining over the 1960s, official poverty rate has remained steady over this 60 year period.
Trade
allows a person to consume at a point outside his production possibilities frontier.
Voluntary trade can make everybody better off because it
allows people to specialize according to comparative advantage.
During the 1970s (and 1980s), the CIA estimated that the USSR spent about 7% of GDP on defense. Independent assessments of USSR defense placed the spending estimated to be actually ____________% of GDP.
around 15
During the early years of the "great depression", John M. Keynes argued that FDR's policies were mistaken because they
artiifically tried to raise prices with programs like NIRA..
A friend of yours asks you why market prices are better than government-determined prices. You say that market-determined prices are better because they generally reflect
both the value of a good to society and the cost of making it.
One sub-group of mercantilists who associated the accumulation of precious metals (gold and silver) were called
bullionists
One cultural change that we discussed in our video lecture as being both important and interesting was
coffee
One important outcome of the ending of World War II is that the world transitioned away from _____________.
colonialism
The "corn laws" of the early 1800s were repealed in 1846. The repeal allowed for a test of which economic idea?
comparative advantage.
Using Thomas Sowell's approach, when social processes are described in terms of the systematic characteristics deemed necessary to contribute to those goals, "property rights, free enterprise" or "strict construction" of the Constitution, is defined as the _______________.
constrained vision
If we graph the consumption poverty rate from early 1960s to 2020 (present), what trend would we see in this graph?
consumption poverty rate has declined steadily over this 60 year period.
When we graph the consumption poverty rate from early 1960s to present, what trend do you see in this graph?
consumption poverty rate has declined steadily over this 60 year period.
In the early 1970s , German tax rates on income were around 52% and average work week was at 24.6 hours. By the late 1990s German tax rates had risen (to 59%). We predict that between the early 1970s and late 1990s the average work week will _________. This is consistent with the research of ____________.
declined; E. Prescott
The finding that the level of taxation can be viewed as a type of "institution" found that higher rates of taxation (both personal and corporate) resulted in __________.
decreased the quantity of inventive activity.
When you answer the questions what? how? for whom? and what is rate of economic growth? you are describing
economic system
The German economic miracle (actually the West German miracle) describes the 10-year period after World War II. Which of the following was listed in class as the "cause" of this miracle?
elimination of government price controls
In the nation of run by a Dictator (a command-type economy), farmers traditionally feed grain to their livestock. Central planners, however, decide to increase the price of grain to make grain farmers happy and, at the same time, reduce the price of bread made from that grain in order to make city dwellers happy. Now the price of bread is lower than the price of grain. We might now expect
farmers to start feeding bread to their livestock.
Compared to the "no-tariff, open trade case", imposing a $2 tariff in this market, producer surplus (PS) will
gain by $300.
As the value of the Gini coefficient approaches zero,
income distribution becomes less unequal.
As the value of the Gini coefficient approaches one,
income distribution is getting more unequal.
When a country is on the downward-sloping side of the Laffer curves, cutting tax rates will
increase tax revenues and decrease deadweight loss
The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from largest to the smallest.
individual income tax, payroll tax, corporate income tax, excise tax
A common feature of mercantilist's policies regarding tariffs is ______________.
keep tariffs high, especially on manufactured goods
A common feature of mercantilist's policies regarding tariffs is
keep the high, especially manufactured goods
Using Gini ratio to measure the size of redistribution before and after government policies (e.g.,taxing, spending) shows that redistribution in the US is _______________ than Sweden.
less than
The specific price where quantity supplied (Qs) equals quantity demanded (Qd) can be described as the "best" (competitive or market-clearing) price because it ____________
maximizes the total surplus (total "well-being") to buyers and sellers.
The specific price where quantity supplied (Qs) equals quantity demanded (Qd) can be described as the "best" (competitive or market-clearing) price because it ____________.
maximizes the total surplus (total "well-being") to buyers and sellers.
The economic system that views a nation's wealth being measured by its accumulation of gold and/or silver is called
mercantilism
The view that a nation's wealth will be increased if it limits its dependence upon foreign suppliers is associated with which economic thinkers?
mercantilists
Economic resources include
natural resources
Ed Prescott compared hours worked between France and U.S. (between earlier 1970s and mid 1990s) and found average hours worked and tax rates were
negatively related
Inefficiency exists in an economy when a good is
not being produced by the lowest-cost producers.
David Ricardo, a millionaire stockbroker, landlord and economist
opposed the Corn Laws as a member of Parliament.
The portion of the labor force unionized in Sweden is about
over 80%
In 1927 less that 1% of farms (farmsteads) in the USSR were organized as collectives (nationalized). By 1940 what portion of farms in the USSR were collectivized (nationalized)?
over 90%.
If we look at two variables, Germany's unemployment rate and % vote supporting the Nazi party (over the years 1924 to 1933), what relationship between these two would we observed?
positive
Producer surplus equals
price received by sellers - resource cost to sellers.
To analyze economic well-being in an economy it is necessary to use
producer and consumer surplus
If the market price in figure above is $20, the red area represents _________ surplus with a value of $_______.
producer; $64
In chapter 7, we defined the "tax wedge" as the ratio of the marginal tax rate to the average tax rate. I this ratio is greater than 1, then the tax is a __________________.
progressive
When Ronald Reagan ran for the office of President of the United States, he promised that, if elected, he would work for
reduced Federal income tax rates.
In chapter 7, we defined the "tax wedge" as the ratio of the marginal tax rate to the average tax rate. I this ratio is less than 1, then the tax is a __________________.
regressive
The Laffer curve
relates marginal income tax rates to total income taxes collected.
The Laffer curve is an economic framework that
relates marginal income tax rates to total income taxes collected.
Studies (e.g., one by Charles Stuart) indicate that a reduction income tax rates in Sweden, income tax collections would have
risen.
Studies (e.g., one by Charles Stuart) indicated that a reduction income tax rates in Sweden, income tax collections would have
risen.
Jared Diamond described the long-run success (measured by real GDP per capita) of European countries compared to the rest of the world as resting on _______________.
seeds, germs, guns
Economic growth is frequently pictured as the PPF (or PPC) doing which of the following?
shift outward
Max Roser's graph picturing the proportion of poor people on the planet showed a ___________ in world poverty since 1820.
sizable decrease
The views held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as
supply-side economics.
Deadweight losses (DWL) from taxation are associated with
taxes that distort the incentives that people face.
Deadweight losses from taxation are associated with
taxes that distort the incentives that people face.
A statistical tool used to commonly used to measure income inequality is
the Gini coefficient.
A statistical tool used to measure income inequality is
the Gini coefficient.
In 1870, the richest country in the world (measured by GDP per capita) was
the United Kingdom.
Consumer surplus measures
the difference between a buyer's willingness to pay and the actual price of the product
Steve Johnson wrote (and had a video) about the role of coffee in 1700s London. Why did he argue that coffee was important?
the introduction of coffee changed the culture of London's scientific community.
We would expect that the more generous unemployment compensation a country has,
the longer the duration of each spell of unemployment, and the higher the unemployment rate.
The term "inflation" is used to describe a situation in which
the overall level of prices in the economy is increasing.
The Gini ratios for over-65 population in the U.S. (before taxes and transfers) had a value= 0.659. The after tax and transfer for the over-65 population in the U.S. was 0.386. Compared to the U.S., the size of this redistribution is larger in which of the following countries?
the size of the redistribution is larger in all the above countries than in the U.S.
Total surplus in a market is
the total value to buyers of the goods less the costs to sellers of providing those goods.
Efficiency is reached when
total surplus is maximized.
Efficiency occurs when
total surplus is maximized.
We can say that the allocation of resources is efficient if
total surplus is maximized.
We can say that the allocation of resources is most efficient if
total surplus is maximized.
In situations where price is set by government below the equilibrium price (Pe > Pactual), then there will be a shortage (Qd > Qs). In this case what happens to "total surplus"?
total surplus will be decreased
Using 2014 data that divides European countries into two groups: Those with a minimum wage and those countries without a minimum wage. We observed that the unemployment rates in countries with the minimum wage were ____________ as those countries without the minimum wage.
twice as high
"When Rousseau said that man 'is born free' but 'is everywhere in chains,' he expressed the essence of the ________________, in which the fundamental problem is not nature or man but institutions."
unconstrained vision
The Gini coefficient is measured by
using the formula: area between the line of perfect equality and the Lorenz curve ÷ the area under the line of perfect equality.
One strong prediction about capitalism's future made by K. Marx was that workers' real wages will
will stagnate and move toward subsistence level