Econ 107 Fall 2004 Final Exam - to any multiple choice...

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Unformatted text preview: to any multiple choice question. i sometimes put two or more options on one line to save paper. Save this examination paper as you can check your answers on the Website. These will be available Wednesday December WARNING: Experience shows that if you make an erasure on your Scantron, you ran the risk that the optical scanner - which is very sensitive - wilt score your answer incorrectly. For obvious reasons, I am going to take the optical scanner ’5 grading as final. So don ’t make erasures. Hint: score your answers on this examination paper , and then transfer them to your former had described. c. - if we accept Polyani’s thesis - markets had become dis-embedded. d. continuing ! conversations! Were available to transmit the knowledge of the paradigm forward through time. @ll of the above. 2. We can view Smith as the inventor of the first paradigm because: :1. Richard Cantillon whom Jevons thought was the first great economist never formed a school to continue his word nor did it have the full scope of Smith’s work. 11. David Hume to whom we are indebted for the price-specie flow meachanism and early correct thoughts on monetary equilibrium - he anticipated post WW ll discussions on the Phillips Curve - failed to get a University chair, was positively disliked in his own time, and his work did not have the full scope of Smith’s work. using those specific words was: a. Aristotle. b. Sir Thomas Mun. c._ David Hume. @- Antoine Augustin Cournot in 1838. e. Baron Justus von Leibig. l at way. His assertionz: @ as empirically false. it was surely not true of his own time. . is just to vague to subject it to test. c. is a meaningless proposition as we simply could not make observations to falsify it. d. fails to comply with Hume's dictum. e. is simply a tautological statement. 5. What is wrong with .‘lalthus’s belief that population increases by a geometric progression is: a. .‘vlaithus is just wrong that the only checks to population are (a) starvation. wars. and (b) abstention from sex. b. some countries with developed economies have actually experienced population decline. . c. if this were true. it would not take many generations before the size of the world population would be ' ‘ staggeringly large [e.g. we would go from 5 billion to 160 billion in 6 generations. as countries develop economically their populations begin to increase at a decreasing rate. ‘all of the above. 6. The diagram to the right is distributed by a US organization concerned about the effects of immigration to the US. Given our discussion of U- S'A- " one Billion in 2100 Malthus in class. the first thing we would need Current Trend of U.S, Population Growth to check. before we made any conclusions about LUBE) I e diagram, would be to ask ourselves: 97s 4 whether the projections which underlie the 950 —j uiagram lowered blrtllrates as family wealth grew. 925 w; b. whether these were official data or not. 900 P uhti ‘ .. , c. whether the Bureau of the Census approved 375 j I “:3!“ m123g$$;:?:;m9£‘:ufi2‘ of the conclusion. 35” trmds continue . d. All of the above. 325 : Populatim growth insulting from the native » e. None of the above. 30‘] born P1115 pre1970 immmnts. and thdr / 775 descendants. i; current trends cmtinue / 75E! _ . . 725 "“ Projected total population using the 7. In the diagram below which appeared In early 700 growth rate per decade orthe 1990: versions of Samuelson’s text. the Malthusnan 675 equilibrium would be at: 653 a. x. - b. . @z. y 625 d. u. e. w. S" E 600 s -- 575 [ED 1. E 550 525 up? 2 sea 475 450 - 425 90551 400 M3! 375 1 350 2 far 133 .51 8. The curve below is known as the: 275 @he logistic curve of population growth. 150 . the law of eventually diminishing returns. 225 c. the law of increasing real cost. ZEJU 2010 2023 2080 2040 2050 2060 d. the law of satiation of demand. Year e. the law of bureaucratic growth. E: E U WW1.“ 1 *3 9. Samuelson sees four stages in population growth: a. a first stage when death rates and birth rates are stabilized at 20 per thousand. ‘ b. a second stage when industrialization raises death rates. c. a third stage when Malthusian pressures raise birthrates but infant mortality is high. d. a fourth stage due to globalization when availability of goods lowers death rates and f“ birth rates soar at 45 per thousand. .‘lone of the above. ? '¥ it). Portugal can produce 300 wheat or 500 wine. England can produce 100 wheat or 400 wine. 3. Portugal has absolute advantages in wheat only. b. England has absolute advantages in both wheat and wine. éPortugal will produce wine and export wheat. )3 Portugal has a comparative disadvantage in wine. - none of the above. 11. England can produce 100 wheat or NO wine. Portugal can produce 60 wheat or 30 wine. England has: a. a comparative advantage in wheat. b. Portugal has a comparative advantage in wine. c. England has an absolute advantage only in wine. d. Portugal has an absolute advantage only in wine. ngland has an absolute advantage in wheat and wine Ail?- \. Ricardo’s own analysis of international trade is based on an example that has England needing 100 men years to pr _ 'cloth and 120 men years to produce wine. Portugal. on the other hand, requires only 90 men years to produce Igloth arm 80 men years to produce wine. Ricardo, incorrectly, concluded: ythat as England has an absolute advantage in both products, no trade will take place. ‘b. that the English will never import wine as British beer is so good. .c. that English cloth will be charged at the cost of 120 man-years and will exchange at the cost of 150 man years of wine. d. all of the above. ne of the above. 13. Ricardo talking about cost said: @flldr. Malthus shows that in fact the exchangeable value of commodities in not exactly proportioned to to the labour which has been employed on them, which I not only admit now, but have never denied.” b. “Mr. Malthus is clearly incorrect as the exchangeable value of commodities is clearly and exactly proportioned to the labour which has been employed on them. c. “Mr. Malthus has recently come to agreement with me that the exchangeable value of commodities has no relationship whatsoever to the amount of labor which has been employed on them.” d. “Mr. Malthus and l are in agreement that the cost of any product is some 60% composed of the cost of the labour which has been employed on them. e. None of the above. —~. nrofits at equilibrium are zero. in the next production period there would be incentive to use capital in production. -:. rents at equilibrium are zero. In the next production period there would be incentive to use land in production c. wages are at the absolute subsistence wage. This would produce a revolutionary situation just as Marx said. d. the marginal physical product schedule is monotonic increasing. This would ruin business as prices would fall. e. all of the above. i 4. Professor Murphy calls Gootzeit's model of Ricardo's stationary state "a catastrophe state model" because: . MPP=the real wage. “ . VMP=the money wage. c. everywhere P=MR=LRATC=SRATC=LRMC=SRMC [when S designates shortrun and L designates longrun.| d. where SMC=SMR. e. rents are zero. i. For Ricardo the stationary state equilibrium is where: a 3 c. was already optimally allocated. d. all of the above. as the time horizon of bond purchasers, and the constraints bond payments flee on future governments. ll of the above. e. none of the above. 18. Ricardo lived at a time when workers in England - the Luddites - were going around destroyed machines believing them to create unemployment. a. Ricardo recognized that machinery displaced workers. b. He also saw that workers were needed to build the new machinery. c. He also saw that workers . the lowered cost of goods using machinery would not only benefit workers but would also promote exports. .11 of the above. 19. Jeremy Bentham: a. was surely not the first to think in terms of utility. b. was not the first to use the idea of the was very successful in popularizing what became to be known as the ‘II of the above. \ . 20. Jean Baptiste Say argued that: a. GNP is always identical to GM. b. the monetary value of the GNP is always identical to the monetary value of the GNI. J _ the real value of the GNP is always identical to the real value of the GM. 9 market economies have strong tendencies to be fully employed. . None of the above. l’m giving you this one, as we didn’t really go over Mill in class except for the topics below. Prof M. a. a. demand and supply were perfectly elastic. b. demand and supply were perfectly inelastic. _ demand was perfectly inelastic and supply infinitely elastic. .upply was perfectly inelastic and demand was downward sloping. e. supply was downward sloping and so was demand but of a different slope. 1+ . Mill believed that industrial markets displayed: @ horizontal supply curve and a downward sloping demand curve. b.‘ a downward sloping supply curve and also a downward sloping demand curve but of a different slope. c. an upward sloping supply curve, and a downward sloping demand curve. d. a perfectly inelastic supply curve and a downward sloping demand curve. c. All of the above. 14 Mill believed that agricultural markets displayed: a. a horizontal supply curve and a downward sloping demand curve. b.,a downward sloping supply curve and also a downward sloping demand curve but of a different slope. an upward slaping supply curve. and a downward sloping demand curve. . a perfectly inelastic supply curve and a downward sloping demand curve. e. All of the above. 25. John Stuart Mill made an advance on Ricardo's theory of comparative advantage by showing that: ,- the ratios of exchange between two products will depend on the ratios of absolute advantages. Ole ratios of exchange between two products will depend on the strength of demand of the two countries for the other '7 ountries exports. - c. the ratios of exchange between two products will depend on purchasing power parity. d. All of the above. e. None of the above. 26. Karl Marx on history: a. thought there was a dialectical process. b. But the dialectical process was not like Hegel’s dialectic. Marx accepted Feuerbach’s materialist conception of history. c. wrote that it was the history of class struggles. d. believed the dialectical process would end at the stage of communism. .All of the above. 27. Karl Marx believed that capitalists would get a decreasing share of the national income [the falling rate of uroflt argument] because: .the rate of increase of the rate of surplus value was slower than the rate of increase of the organic composition of 4 capital. Capitalists would then put increasing pressure on labor to get more surplus value. b. the marginal productivity of labor grew due to a greater abundance of capital. c. increasingly all social income would go to landowners. d. technology actually was unfavorable, destroying resources everywhere. As the capitalists owned everything, environmental degradation naturally hurt the capitalists most of all. e. the State would come in and attack monopolies and their monopoly profits. ari Marx thought that the communist revolution: - !uld create a unique opportunity for humans to create conditions so that the purpose of living would be life itself free of the insecurities of the capitalist system. b. was 0k in theory but un achievable in practice. c. would take many millennia before it could be realized. d. depended on the emergence of Great Men needed to lead the proleteriat. c: All of the above. 29. Karl Marx thought that the communist revolution would be produced by: a. the increased exploitation of capitalists. b. workers who became aware of the greater extent of exploitation they were subjected to. c. workers who became aware of the disproportion in the number of workers and capitalists. d. workers who were not only stressed by exploitation and unemployment but by capitalist wars and the capitalist business cycle. .All of the above 5 3i. Herman Heinrich Gossen’s Second Law was: r: . that his first Law was not true at Christmas. Due to Santa Claus, marginal utilities are stupendous then. that a consumer maximizes satisfaction when M U/P * MUIP = MU/P = MU/P = MU/P etc. for each and every good consumed. is maximized. e. none of the above. c. argued a satisfactory theory cl. accepted the arguments of R.G.D. Allen and John R. Hicks that ordinal utility theory gave satisfactory answers. .c] and [d]. 33. Marshall: father loved Math and drilled the son incessantly at math - b. la} and he kept that vow with great delight. ' c. thought Economies should use math, bu slender capabilities. ' 3 .Was a top-flight mathematician at Cambridge, used math to make sen ' " his work as he wished to infl e. None of the above. . TR-TVC. b. P-ATC. ‘(P—ATC). d. q(P-AVC). . q . zero. I). TR-TC. . TR—TFC d. TR-AVC. e. AR-AF C. :56. In the long run of pure competition, total quasi-rents equal: 37. [n -the Marshallian market period: .5" a. quasi-rents equals zero. b. pure profit equals zero. sdemand and supply are both infiniteiy elastic. Q! 0 factor of production is variable. 2. every factor of production is variable. _ 38. While Xenophon made an observation consistent with the Law of Diminishing Returns. it appeared first as a i recognizable law in the work of: Turgot b. West. c. Torrens. d. Ricardo. e. none of the above 39. Prof M. said that in the American economy most current production takes place: a. in the Marshailian market period. b. in the Marshailian long run period. c. under conditions of decreasing returns to scale. It the Marshallian short run period. ”‘e’. under conditions of constant returns to scale. \The Marshallian long run equilibrium in pure competition is: @w ere all profits are zero. b. when quasi-rents are large enough to cover variable costs. over a century. Which is why he called it the secular period. .hen a firm, and the industry it is in. have had time to adjust to exit and entry, for factor imputation to have been -/" completed, and for all firms to have adopted the appropriate scale. At this point pure profit will be zero, and product exhaustion occurs. e. ail of the above. \- . Marshall made use of the idea of consumer surplus which goes back to Emil Dupuit. E} n individuai’s consumer surplus is the difference between what the consumer is willing to pay for a commodity - " and what he or she actually pays. b. Consumer surplus is realty an adaptation of Marx’s notion of surplus value. ; c. Consumer surplus was an English adaptation of the French Physiocrat’s produit net. d. Consumer surplus is another name for pure rent. 5. All of the above. 42. If there are 9 workers in a firm, and the span of control is 3, then: a. management had got to be really inefficient. b. the workers cannot be willing agents. c. workers must be slanting information making them difficult to manage. .there will be three tiers in a firm. [Top manager, middle managers, workers.] ‘ e. All of the above. 43. Analyzing Santa Claus's operations we can conclude that: a. he has an absolute disadvantage compared to Fedex, UPS, the United States Mail. etc. in the delivery of Xmas gifts. b. he has a comparative disadvantage in getting down chimneys quickly. c. he has a comparative disadvantage in distinguishing "naughty" from "nice." 5 his elves are highly intelligent , willing agents who report their output correctly, and as there is no such thing as “noise” in Santa Claus Land [accept these statements as true: Prof M.] what Santa Claus wants to produce, Santa Claus gets. e. All of the above. 44» An industry has a cost ladder if: when we can array average total cost curves from high to low [in terms of dollar cost] such that each successive ATC cost curve's low point is lower [or higher} than the preceding one. h. if there are different fixed costs. E c. a there are different variable costs. ' i it the uprising part of the marginal cost curve has different slopes for different firms. 1:. if Won has raised average total cost over the secular period. 7 We. None of the above. 46. Factor imputation is the process whereby: a. a cost ladder is established in an industry. b. factor income are pushed down to c. factors are varied in the longrun. l;- the Ricardian stationary state reaches equilibrium. A ctors compete away pure profits to themselves. the cultural subsistence wage. 47. Marshall’s “secular period” : ,._. a. deals with a particular economy in real time. d. is not a period for whic .ll of the above. Marshall: X‘ ‘ "a. was the first to invent the notion of consumer surplus. b.3did not make use of the idea of consumer surplus. c. got the idea of consumer surplus from the Physiocrats. . thought consumer surplus was always negative. one of the above. Ida. p depression looked at changes in government sible methods to use. reason to suppose that the existing system seriously use.” He thus saw no case for regulatory change. regulatory policy, monetary policy and fiscal policy all as pos a. He concluded that as regards regulatory policy “i see no misemploys the factors of production which are in "I 50. Keynes was, of course, a fine monetary economist. And in a fully employed, or almost fully employed, economy that had rising prices or other economic problems, monetary policy would be his recomme nded policy. However, I‘ ' nes believed in a real deep depression, monetary policy would not work due to: a e liquidity trap. 'a. the fact Central Banks would not have suffi cient reserves. c. the fact that there are extremely long identification, policy and implementation lags. d. the fact using monetary policy would have unfortunate foreign exchange implications. e. All of the above. d. over expanding loans. c. all of the above. nsidered as a random variabie. 52. Keynes believed that: a “consumption function a. consumption spending was D ®consumption spending was highly estimated from past data. an they earned. that consumptio c. as consumers typically spent more th credit companies and banks charged. d. whatever the level of the GNP, consumption spe " erAll of the above. ie and could be co ” could be highly variab table. Past experience 5 predic hOWed n was a function of the interest rates that nding was a constant. ory of the business cycle. He argued that: e Pigou. had a psychological the ' ' he consumption function. 53. Keynes. not unlik ‘ ‘ us because of panics a. a drop in consumer confi b. governments typical over that spread in Parliam @bsisinessmen were subject to “c investment spending. Soc gaps. d. All of the above. to increases or decreases in cuts or Congresses. ources or spending hanges in animals spirits“ that wouid lead it changes were critical because they led to pressure on res e. None of the above. esian model we discussed in class, if we treat government spending and exports are 54. For the simple Keyn reasonably constant. then the key variable whose fluct 'ons will determine the GNP is: investment spending. a. consumption spending. c. monetary policy. '“ 'd. regulatory policy. e. none of the above. e there is no other spending. Full employment GDP is ‘ - would have to spend: 5 C = 100 +30 GDP. Assum 55. The consumption function i 1,500. To reach full employment. the govern t - assuming a Keynesian analvsts a. 100 \FI ’ w: * Uri-1' 9-"? 6200 c.300 e. 500 .7 M d. 400 is concerned, among other things, to show that: \jfiLord Lionel Robbins in “Malthus as an Economist” .. a. t, althus. had worked out a consumption function before Keynes. b. Malthus had independently solved the product exhaustion problem. Malthus‘s arithmetic for increases in agricu returns in agriculture. d. M althus was not so hard heart e. All of the above. of diminishing lture Was based on a fairly well developed idea ed as some represent. He was in favor of the Poor Laws. ning of the abstract study of the bution” notes that the begin \ohn Maurice Clark in his article “Distri dist bution of income starts with: a....
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