FinalExam06Short - Economics 508 Winter 2005 Professor...

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Economics 508 Winter 2005 Professor Fleisher Final Examination 35 points 1. (4 points). Describe the nature of “Indicative Planning” as used in India? What were the most important changes that occurred in India’s “planning” system when reform occurred? What evidence can you cite regarding the success or failure of these reforms (name 2-4)? 2. (5 points) Discuss the role of the banking and monetary systems in the privatization process in Russia. What impact, if any, did this role have on the emergence of a “middle class” of business people, the emergence of small business, efficiency of the business sector, and capital formation (investment)? 3. (5 points) Describe briefly the characteristics of Township and Village Enterprises (TVEs) in China’s economic transition. What kind of budget constraint to do face—soft or hard? How are profits distributed? Is there any likelihood that TVEs could evolve into capitalistic, private enterprises, and what would be involved in this development? Who would gain and who would lose? 4. (5 points) Discuss how Social Security (old-age “insurance”) worked under Communism (who funded it; who was eligible for it? what was the role of government?). Can you think of reasons why a “private” type of social security system, such as adopted in Chile might work, or not work, in a country like China? State 3 or 4 reasons supporting your claim. 5. (3 points) Suppose that in the year 2000, total production in China consisted of 1 ton of rice and 1 ton of wheat. The price of one ton of these two commodities in China was 2000 yuan for rice and 3000 yuan for wheat. a. If this was China’s total output in 2000, calculate China’s nominal GDP in 2000. b. Assuming that the exchange rate of the yuan for the U.S. $ was 8 yuan per dollar, what was China’s nominal GDP in terms of U.S. $? c. Suppose that the U.S. price of these two commodities in the year 2000 was $1000 for rice and $2000 for wheat. What would China’s PPP GDP have been in terms of U.S. $ in the year 2000? 6. (3 points) The following data are taken from the World Bank publication, Investment and Saving in China by Louis Kuijs (WB Policy research Paper 3633 June 2005) and slightly modified. All data are expressed as a % of GDP for the year 2003 (first quarter). Non-Government Saving Households 16.6 Enterprises 18.9 Non-Government Investment 40.4 Assume that government surplus was zero.
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Using the National Income saving-investment balance equation discussed in lecture, calculate whether China was a net exporter or net importer in the time period in question and by how much (as a percentage of GDP)? 7. (3 points) The following are excerpted from discussions of Land Reform in Wikipedia The forced removal of the white farmers brought about sharp rises in the prices of agricultural commodities such as corn and sugar and led to the collapse of Zimbabwe's economy. Zimbabwe was formerly an important net food exporter to the region but now in recent years
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FinalExam06Short - Economics 508 Winter 2005 Professor...

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