EC229 - Final Exam Practice

An economic system that relies primarily upon custom and habit in economic decision making is a

traditional system.

mixed system.

market system.

communist system.

command system.

traditional system.

Which of the following correctly states why property rights are important in a market system?

Those who have property rights are more likely to create more because they will get more money in the market.

Without property rights there are few incentives to create or produce goods, because you cannot legally trade it.

Property rights allow companies to have monopoly power.

Property rights force others to pay you more for the good or service.

Without property rights there are few incentives to create or produce goods, because you cannot legally trade it.

In command economies, economic behaviour is

largely determined by a central authority.

directed by individual self interest.

based primarily on custom and habit.

random and unpredictable.

largely affected by elements of tradition and market incentives.

largely determined by a central authority.

Which of the following is NOT a typical characteristic of a market system?

government ownership of most property resources

freedom of enterprise

competition in product and resource markets

private property

government ownership of most property resources

Property rights are important because they

guarantee an equal distribution of income.

encourage cooperation.

guarantee that any exchange will make everyone better off.

allow the government to strictly control how resources are allocated.

encourage cooperation.

Suppose the government decides to increase taxes on those with very high incomes in order to increase support payments to those unemployed. Which of the following fundamental questions of economics does the government's decision reflect?

For whom to produce?

The example does not relate to any of the three fundamental questions.

What to produce?

How to produce?

For whom to produce?

Consider the following table containing GDP data for a deserted island economy.

Suppose Year 1 is the base year.

In Year 2: nominal GDP is ______ and real GDP is ______.

$964; $895

$1,074; $301

$1,055; $995

$995; $1,074

$1,055; $995

Using the "rule of 70", how can we find the number of years it will take for a variable to double?

By subtracting the annual change in the variable from 70.

By multiplying the variable by 70.

By dividing the variable's growth rate by 70.

By dividing 70 by the variable's growth rate.

By dividing 70 by the variable's growth rate.

Jamie bought an new iPod Touch from a retailer for $240. It broke later that year. When he complained, the store gave him a new one but charged him a service fee of $60. These two events caused nominal GDP to increase by:

$300.

$60.

$240.

$180.

$0.

$300.

The table below includes data for a one-year period required to calculate GDP for this economy. All figures are in billions of dollars.

Refer to the table above.

What is the value of GDP (in billions of dollars), as calculated from the income side?

$3590

$3968

$3866

$3708

$3784

$3866

Below are two statements regarding China's geographical setting:

I) China currently has 38 province-level administrative units and 22 provinces.

II) The largest population is in Tibet and the smallest is in Guangdong.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are false.

Below are two statements regarding China's geographical setting:

I) In relation to its enormous population, China is short of arable land, forests, and water.

II) But when account is taken of the highly uneven distribution of resources and population—especially the scarcity of water in the north and west—it is clear that any environmental issues can be easily solved.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

I is true but II is false.

Below are two statements regarding growth and development in China:

I) The "middle-income" trap refers to the fact that developing the requisite skills to industrialize, urbanize, and move out of poverty, is relatively easy compared with what is required to reach a high-income status.

II) China has no obstacles in its way to becoming a high-income status country and many economists believe that would have occurred by the year 2021 notwithstanding the Covid19 pandemic.Among these statements:

I is true but II is false.

Both are correct.

II is true but I is false.

Both are false.

I is true but II is false.

Below are two statements regarding growth and development in China:

I) The "middle-income" trap refers to the fact that developing the requisite skills to industrialize, urbanize, and move out of poverty, is relatively difficult but once achieved the movement to high-income status is much less difficult.

II) China has little obstacles in its way to becoming a high-income status country and many economists believe that has likely occurred already.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are false.

Consider the Aihui-Tengchong line that is shown in the following diagram:

Which of these statements about the Aihui-Tengchong line is accurate?

To the northeast of it, farmland is relatively abundant.

To the southwest of it, the minority population is relatively large (compared to the Han, or "ethnically Chinese" population).

To the southeast of it, per capita availability of good farmland is much lower.

It is an imaginary line that divides the area of China into two parts.

To the northwest of it, water is relatively abundant.

It is an imaginary line that divides the area of China into two parts.

Below are two statements regarding growth and development in China:

I) Overall, China is fairly representative of world average development levels; it is no longer poor but a short distance from being a rich country.

II) From a global standpoint, China is substantially above average in terms of its PPP-adjusted GDP per capita.Among these statements:

Both are correct.

I is true but II is false.

Both are false.

II is true but I is false.

Both are false.

Which of the following correctly lists the two Special Administrative Regions (SARs) of China?

Macau; Hong Kong

Taiwan; Guangdong

Guangdong; Macau

Hong Kong; Mikao

Macau; Hong Kong

Refer to the map of China below. Which of the following correctly states the name of the shaded province?

Harbin

Liaoning

Heilongjiang

Jilin

Jilin

Refer to the map of China below. Which of the following correctly states the name of the shaded province?

Guangxi

Yunnan

Kunming

Hunan

Yunnan

Refer to the map of China below. Which of the following correctly states the name of the shaded province?

Hubei

Hunan

Changsha

Guangxi

Hunan

A production function measures how

a firm minimizes cost.

a firm transforms inputs into output.

a firm transforms output into input.

an individual maximizes utility.

a firm transforms inputs into output.

What is significant about the level of output at which marginal product begins to decline?

It is the point of maximum average product.

It is the point at which the division of labour begins.

It is the point at which diminishing returns begins.

It is the point of minimum average cost.

It is the point at which diminishing returns begins.

The change in total output associated with one additional unit of input is the:

Average productivity.

Marginal product.

Marginal cost.

Opportunity cost of the output.

Marginal product.

Below are two statements regarding China's commercialized countryside:

I) In the commercialized countryside there existed sophisticated institutions that supported the economy.

II) However, paper money was not supported and so trade was accomplished through a system of bartering.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

I is true but II is false.

Below are two statements regarding China's traditional agricultural system:

I) Farmers employed a sophisticated agricultural technology to wrest high crop yields per unit of land cultivated.

II) These yields depended on the massive application of human labour to small plots of farmland, so high productivity per unit of land coexisted with low productivity per worker.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are correct.

Below are two statements regarding the beginnings of modernization between 1912-1937:

I) The period immediately after 1911 was troubled by warlord domination, political fragmentation, and civil war.

II) This ensued until 1937 when the Nationalist (Guomindang) Party finally succeeded in decentralizing the political structure in China again.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

I is true but II is false.

Below are two statements regarding the War and Civil War between 1937-1949:

I) Before the war there was no significant public sector in Chinese industry.

II) During the war decade, the Nationalist government turned to the Natural Resources Commission (NRC) to run government sponsored development.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are correct.

Refer to the graph below to answer this question. After which quantity of labour does diminishing returns start to take effect?

1.

3.

6.

9.

12.

6.

Suppose a firm's production function is given by Q = 10KL, where K is capital and L is labour. What is the marginal product of labour (MPL) when 2 units of capital are employed?

25.

20.

10.

5.

20.

Refer to the graph below to answer this question Which level of output is associated with the maximum level of productivity?

11.

1.

6.

8.

8.

Which of the following programs were designed to foster a greater degree of economic liberalism?

The Hundred Flowers campaign

The Great Leap Forward

The Third Front

The Cultural Revolution

The Hundred Flowers campaign

The "Third Front" refers to

The struggle for scientific knowledge, following the struggle for subsistence, and the struggle for political power.

The simultaneous struggle against Japanese, English, and US imperialism

The Northeast, the third area where foreign investment is now flowing in, after starting in Guangdong, and then moving to the Yangtze Delta.

The third area to build industries, in remote, mountainous areas of inland China.

Today's technological revolution, building on the earlier Industrial Revolution, and the Electric/Chemical revolution.

The third area to build industries, in remote, mountainous areas of inland China.

The Second Five Year Plan, or Great Leap Forward, began in which year?

1957

1959

1956

1958

1958

Which of the following statements is NOT a feature of the the "Third Front"?

A massive construction program focused on China's inland provinces.

An initiative that dominated economic construction from late 1964 onward.

A system to provide greater inputs into agriculture.

A system to create an entire industrial base that would provide China with strategic independence

A system to provide greater inputs into agriculture.

What happened between 1972-1976 in China?

The Great Famine

Consolidation and Drift

The "Hundred Flowers

Launch of the Third Front

Consolidation and Drift

Consider the figure below which show's China's Investment as a share of GDP for the years 1952-2016:Which one of the following statements regarding the data shown in the figure is correct?

Between 1952 and 1978, industrial output grew at an average annual rate of 35.5%.

Even though China abandoned the Big Push strategy after 1978, investment rates continued rising and plateaued in 2009-2014.

China's investment rates have been steadily rising with little to no variation.

steadily from 28% to 56%.

Between 1952 and 1978, industry's share of total GDP climbed

Even though China abandoned the Big Push strategy after 1978, investment rates continued rising and plateaued in 2009-2014.

Below are two statements regarding the the Socialist Era, 1949-1978:

I) After 1949, the People's Republic of China followed a socialist development strategy - or "Big Push" strategy.

II) As part of this strategy, the government indirectly controlled about half of the companies involved in heavy industry.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

I is true but II is false.

Below are two statements regarding the Command-Economy System in China:

I) The surpluses of government-controlled firms were the main source of government revenue.

II) The distorted price system meant that state-owned industrial enterprises were extremely profitable even when they were not very efficient.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are correct.

Below are two statements regarding the cultural revolution that occurred during the socialist era:

I) The cultural revolution refers to period of political disruption and unrest between 1966 and 1969.

II) Mao encouraged groups of students, called Red Guards, to overthrow the entrenched Communist Party leadership, except for Mao himself.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are correct.

Below are two statements regarding political instability during the socialist era:

I) Mao Zedong was very rigid and consistent in terms of his economic policies.

II) When changes in policy were made on the rare occasion they were always consistent with concurrent changes implemented in the Soviet Union.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

Both are false.