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Unformatted text preview: Me- Page1 m5 Will PEIAHT - Ell FfllITl‘r llEDlIL'I'EII. A and l to-S - ELF! 12W; B and C - Willi: Pl'lilt'l' 2250 T tel - noon "5. Economics 107 Midterm Examination May 9, 2005 WARNINGS: [1] Experience shows that it you make an erasure on your Scantron, you run the risk that the optical scanner will score your answer incorrectly. For obvious reasons, i All going to take the optical scanner’s grading as final. So don’t make erasures. {Hint score your answers on this examination paper , and then transfer them to your Scantron when you have completed the examination.] [2] As your Scantron tells you, use a lilo- 2 pencil only and make dark marks. One student missed an A last term due to using a very hard pencil. The scanner could not detect the answers. I All going to take the Scantron’s scoring of your exam as definitive. PLEASE flil'l'E: [3} 1l'ou may keep this examination. A key will be posted on the Class 1I'i'ebsite by noon today so you can check and review your answers. [A] There are 10 pages to this examination, and 50 questions. Each question has 5 options. [5} All dates stated in the examination questions are accurate ones. jPlroi H. .Econumic systems had and have the following characteristiclsl: ey do not exist' In Nature but had to he invented in language. b. Thinkers did not even perceive economic systems before the nineteenth century. Once the idea of the economic system was invented, scholars saw that economic systems existed very early on, and throughout human _ history. c. The in-your-iace quality of changes that Karl Polyani called “The Great Transi'onrlation", in other words, the growing and very visible presence of merchants, traders, markets, workshops, labor I‘orocs, banks. etc. that accompanied the Industrial Revolution drew attention to systematic aspects of human “economic" behavior . in the ordinary business oi ili‘e. cl. .Economic systems are those parts of social behavior [1] that lead to the production of the yearly Gross National Product. {2] that determine the selection of techniques used in the producdon oi the EMF, [3] that determine what will be produced and consumed now and what will be produced and consumed in the inture. and [4} that determine who is entitled to what share of the GNP. _e. All of the above. - 2. Prof M. said that we tend to think of scientific knowledge as steadiiy growing as new propositions are tested by scientific methods, and, it not rejected, then added to the stock of knowledge. However, new empirical truths may not be so readily accepted because: . a. scholars form into “schools" which tend to maintain their own stock of propositions unchallenged. b. scholars work within scientific paradigms whose effect Is to conserve the existing scientific frameworks. c. scholars work within “classical situations" in which a conventional wisdom emerges that practitioners in a science accept so that there' Is a bias against the introduction of new revolutionary propositions. _ d.’ our own life experiences and acquisition of knowledge produce frames, images, contexts that are neurally embedded and produce cognitive drag. e. All ofthe above. Page 2 3. Although the form of thinking can be subject to cognitive drag, we should expect economic thinking to emerge when economic complexity emerges and grows. Examples are: a. the concern with wealth in India from about some 3.,illllll years ago. h. the emergence of thinking about leconomlcl matters in China from about the same time onwards. c. Arab-lslamic thinking from Abu Yusof [731-798 MIL! onwards. d. All of the above. e. None of the above. 4. Aristotle argned that: a. private property served a useful function in society as it enabled men to live a good life in the poiis. b. there should be no regulation to limit the amount of private property in private hands. c. the pursuit of any form of private gain should not be condemned. :1. getting wealth through exchange was natural. Commerce and money-lending usury were also natural ways to get wealth. c. Idill ol' the above. 5. .ins gentium was a Roman concept. Romans believed: a. that all nations should be subject to a law of nations that was essentially Roman law made applicable to other 1 ,2’ countries. / h. nli that was good came from Greece. Many Romans were educated in Greece. So that Greek law, caliedjns gentlest. became Roman law. c. that legal decisions based on the laws of many countries had a higher order of legitimacy, than Roman law by itself. The body ot'decisions that came out oi‘this came to be known as jns genrium. d. that the natural law ,jas genome. that had emerged in the dim Roman past when values were superior had a higher moral force. e. that when Romans gathered in the Forum and as a whole gave a voice vote [or an edict, that such edict would be part of a speciai body oi" law the jars grandam. IS. The debate on the complexity of ancient economies was started when a. Eduard Meyer became outraged that Karl Bucher in 1893 has argued that die typical pnh's was not complex as it was based on the largely sell-sufficient cites. 1:. When the great Russian economic historian Rostov'tseff agreed with Bucher. This started oi'fthe debate. r c. When Karl Polanyi agreed with Bucher. This started off the debate. K cl. When Sir Moses Finley gave his Sather lecture at UCB in 1972. e. When Max Weber argued that class status in ancient societies depended solely neither on class nor on wealth and property. . 7i,- T.Jhere was actually a Renaissance In the Twelfth Century features ot‘whicb. according to Backhouse lyour text] or e: d: conflicts between emerging powers - notably the Catholic Church and new states. b. the loosening of the feudal system. c. the emergence of an urban middle class. d. rising prosperity and an increased demand [or learning, e. All of the above.- a. While the thinking or the Scholastics did have cognitive drag, from illiltl a. D. onwards, they did: a. set up the first Universities which helped transmit Greek and Arabic thought forward. . - . E E b. they did make attitudes towards economic trade and the use of interest somewhat more permissive. - ' c. they were led into exploring what determined the value ot'a commodity. and the role of competition in regulating prices. d. they also explored the nature of money, and paid attention to the development of new commercial institutions. c. All of the above. -.._.-_‘ me Page 3 9. Factors in the break up of the medieval order were: a. the declining authority of the Catholic Church during and after the Great Schism [lJTB—l-il'i']. This was a period when there were two and at one time three Popes. This brought into question the belief in Papal [nfallibillty. b. the growing wealth of Natlon States other the Great Discoveries increased world trade. c. The start of enclosures In agriculture. d. From Niccolo Machiavelli onwards, changing attitudes towards monarchs. e. All of the above. 10. Nicolo Machiavelli in if Principe, [1513] : a. essentially rejected that monarchs should be bound by moral precepts announced by a Universal Church that determined the moralityr of all individual actions. b. recommended that monarchs ensure that all changes Increased wealth for all parties. We can trace Pareto- deslrabillty back to Machiavelli. c. sought to define Ideal Justice. cl. was the first to carefully define cardinal utility. c. all of the above 11. The Balance of Payments makes economic sense because: a. double entry bookkeeping is used. b. because governments fudge statistics to make them balance. Even with perfect statistics they wouldn't balance overall. c.1nternatiouai demand necessarily equals supply. cl. persons and governments cannot buy foreign products and make gifts and foreign investments unless they earn. borrow or are given the necessary foreign currency to do that. ' e. None of the above. 12. The distinction between current transactions and capital transactions in the Balance of Payments depends on: a. whether a particular transaction involves the import or export of a debt [an LDJJI or not. b. whether a particular transaction will occur this year or next year. c. whether a particular transaction is initiated by a foreigner or by the citizen of a particular country. d. whether a particular transaction is initiated by a private Individual or by a corporate entity. c. all of the above. '13. One of the following Is a unilateral transfer. Which one? a. Monsieur Legrange from Paris visits Disneyland and purchases a ticket. h. Madame Lagrange sends her sister, in Whittier. 55D in Euros for Christmas. c. Mademiseile Legrange sends her boyfriend studying Economies ill'i'r at UCLA. :1 copy ofParisSoir. d. The chauffeur of Monsieur Lagrange orders a spare part for the Lagrange Family Toyota from Carson Toyota, in Carson, California. e. All of the above. 14 The fact that there are “net” entries as well as “gross" entries in the Balance of Payments means that: a. governments have something to hide and are pulling the wool over our eyes. b. gross entries are cif entries lin other words carriage. insurance, and freight has been paid] whereas net entries are fob entries [meaning costs areoniy included until a commodity ha been loaded on a ship or other means ol'transportationJ c. we are just going to have to convert net eon-lea in PPP [purchasing power parity} prices to get to gross prlcec. d. for some classes items recorded in the Balance of Payments we do not know the total volume of the item traded. e. All oi the above. _ ' Page at 15. You own stock In Harlan and Wolff in Belfast. Northern Ireland and get a check for 541E! euro-s which you deposit in the UCLA. Credit Union. This is: a. an Import of an [DU and will appear on the Capital Account as an export. h. an export of an IBM and will appear on the Capital Account as an import. c. actually won‘t appear on the US Balance of Payments but will appear in the Northern lrish Balance of Payments. d. recorded on the American Current Account as an earning on an investment and will appear on the export side of the Balance. e. None of the above. 46'. You are part of a group of persons who set up a company and buy a pub in Dublin where you plan to feature Murphy‘s Irish Stout and play and sing American rap. a. this will show up on the capital account of the USA. as an Import. b. this will show up on the capital account ofthe USA as an export. c. this will show up on the current account of the USA as an import. if I: d. this will show up on the current account of the USA as an export. e. this will not show up on the Balance of Payments of ireland. 1?. Some of the reasons why bulilonists wanted imports of gold were: a. gold Imports provided “a slnew ol'war." b. monarchs hry owning mints could debase currenclfi in tlmfi of emergency. c. “money qulcltens trade”. d. that national availability of more gold facilitated a switch from [using our language and conceptsi natural to money economy. e. All of the above. 13. Mun might be viewed as making Mercantilist thinking a tad more enlightened because: a. he argued that exporting gold to India was OK as this helped Britain overall to have an import surplus. b. he made a strong pitch for governments to leave business to business and stop worrying about the BOP. c. be argued monarchs should promote the natural liberties of all citizens of a country. d. be was the first person to argue for the removal of all tariffs. e. None of the above. 19. To mercantilist thinkers a Balance of Payments was “favorable” if: a. it was very small, and diminishing over time. b. it produced an export surplus. c. it produced an import surplus. d. it enabled the purchase of luxury items for the rich. e. It enabled the pursuit of contracyciical policy. It}. Sir Thomas Mun influenced European thought on foreign trade for many decades. He did this: a. despite the fact he clearlyr was involved in special pleading for the East India Company. b. by thoroughly rejecting mercantiiism. c. by introducing the first systematic use of statistics into mereaniilist literature. d. by helping Bacon work out the illusions that affect thinking. e. none of the above. - 2i. There have been those who have argued that Meccantilism was ' Page i K“amiropriate thinking for state of economies that existed at that time. a.They argued that as economies of the day were what we would now call “young economies“I with “infant industries“ then tariffs. subsidies. protection ofdomestic Industry all made sense in terms of economic development. . is. They argued that we have just failed to understand Mecantilist arguments and translate them into the competitive model equations. Mercantillsts actually were early general equilibrium theorists. .e.’ They argued that Mercantillsts have been widely misunderstood and misrepresented. If we see them as primitive game theorists we would do a lot better with them. We need to rewrite the books on Mercantilisrn. d. i’rof M. remarked that we might want to consider the Mercantilists in the light of Seabright’s argument that an important issue has alway been building up trust in the increasingly complex societies which produced greater prosperity. We could see Mun as saying: “ look we can grow stronger with trade. and trading with distant countries. Have trust in international trade!“ e. [a] and id]. EELSir Francis Bacon in talking about the “liiusions” that influence the creation and transmission of useful fiwledge: was providing a discussion only of use in understanding intellectual history ot'the sixteenth and early seventeenth century - a dead man talking about dead issues. b. was plain wrong. As a neol’latonlst. he was completely out of touch with the scientific revolution of his times. 1.__- c. put his finger on forms of thought that continue even today to slow down the expansion of useful knowledge. ' d. was merely reflecting the neoAristotleianistn of European universities of the day. e. showed hiinsellr to he a typical English aristocrat with little concern for the general welfare. 13. Newton's revolution in physics had direct influence on the development of economics. a. Home as a young person proposed for himself to produce “a Copernican revolution in the moral sciences“ akin to what Copernicus and Newton had produced in the natural sciences. _ _ b. Smith was not only deeply influenced by Home and Hume’s circle of friends in Edinburgh but had lectured on science. Smith was an admirer of Newton. c. Smith’s “natural system of liberty” in the social sphere is similar to Newton 5 system or the Universe. d. Both Home and Smith thought in terms of gravity. For Smith. market prices “"gravltate towards nature] prices. For HumeI akin to the physical attraction generated by gravitational forces, there was a moral attraction" arising from the Interests and passions of men.“ e. All of the above. 14. in the intellectual revolution in Europe during the seventeemh and eighteenth century. the first major successful attack on Platonistn was by: a. John Locke who argued that far from having innate ideas at birth. humans were born with a tehnia rose [empty slate] on which Nature wrote using our experiences, and our reflections on our experiences. h. Spinoza who argued that the ideal Republic was fascisttc. c. Machiavelli who argued that Plato was overly concerned with ethics and econondc efficiency. d. Quesnay who argued that Plato failed to understand the virtues of foreign trade. e. None ol'the above. FE? Francois Quesnay El69+lfidl was physician to Madame de Pompadour and 1749' and the French King in 1755. e wrote dissertations on suppuration, gangrene and levers. [True facts I didn’t have time to tell you in class. So you are learning something else on this exam.] Some commentators leg. Schumpeter] speculate because William Harvey s [1573-1657] discovery of the circulation of blood was still fresh in the European conversation [more true facts]. Ques nay was led. a. to see that a healthy circulation of money throughout the whole world would prevent the disease of mercantilism. b. to independently see circulation of commodities and expenditures in “L‘Etat.” [The State]. c. to invent social security systems for the French. , d. to invent medical economics. 5" Fr e. none of the above. _ ET . Page i 26. Prodnit Net was a Physlocratic notion: a. and is not out of line with Aristotle’s metaphor of productivity: an apple tree is productive - it produces an apple. Craftsmen making a table merely change the form ofthe materials going into the table. Unprodustive. is. And was the surplus over costs in agricultural production. I:— and was the product of French hair net factories. [French ladies were very complicated hairdos at this time] d. {a} and [h]. e. all of the above. 21". The Physlocrats believed in a single tar, Pimpot unique, on landowners: a. believing that only agriculture produced a surplus with this surplus being largely an unearned. one due to the productivity of Nature. So the tax was a fair one. b. because they were Marsist revolutionaries and wanted to overthrow the landowning class. t. Statement is is an esample of anachronistic thinking. Mars wasn't even horn yet. The Phyisocrab: were primitive anarchists whose brains had been rotted by drinking too much French wine, and sea. d. because when you considered the internal money circulation of France only the landowners had much money, and so sheer expediency required landowners be taxed. e. because Plato had advocated that. 18. Economic or preeconomlc thinking despite cognitive drag, at any point in time, is always influenced by the then current state of economic complesity. So Physlocratic thinking reflected the facts that: ' a. the major part of the French GNP originated in agriculture. b. France did not have a large volume of International trade. c. France's internal arrangements had been much affected by mercantilist regulation which under Colbert had been reached a highly detailed form. d. the French system of tar. farming was highly inefficient and corrupt and surely needed changing. c. All of the above. Iii. Date of the advantages of promoting manufactures to Hume was that this: a. would give Great Britain a long and lasting comparative advantage is manufactured products. h. would give Great Britain a labor reserve In wartime. Labor in manufacturing industries could be diverted to die armed forces or to production of commodities needed to prosecute a war. c. would lead to a permanent export surplus and a build up of the gold needed to finance British output. d. would insulate Britain from changes in the balance of payments. e. All or the above. [30? Hume’s dictum is important as it underlies the positiveinormative distinction that contemporary so’cial sciences including economics uses. Generalizing broadly. we can represent it. essentially, as saying: a. no scientist can believe in religion. r—H h. we have to be totally skeptical about everything. c. we should not attempt to predict about the future. d. empirical facts and propositions cannot provide us with our moral beliefs. c. all of the above. 31. David Hume defined his “degree of assurance" by: a. the root mean square deviation. b. the covariance of s. on y, divided by the variance of a. c. the following. Assume an event [p| can occur or not. Deduct the number of thnes p did not occur from the times that it did. . d. the number of falsification: of a proposition. e. using Locke’s “degrees of assent." Page 7 31. David Home would sag.r a proposition described a fact if: a. everybody you asked about the proposition said it was true. b. all previous trials or experiments had had one particular outcome. Any time you drop lead in water. it sinks. It is fact that lead sinks in water. Being a sceptic, and believing only in the evidence of our present senses, he still had a problem finding epistemological support for this proposition when it dealt with luture droppings of lead in iuture water. c. it was listed in the French Ency...
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