Ec229 Final

In command economies, economic behaviour is

random and unpredictable.

based primarily on custom and habit.

largely determined by a central authority.

directed by individual self interest.

largely affected by elements of tradition and market incentives.

largely determined by a central authority.

In a command economy, who primarily decides for whom the produced goods and services are distributed?

Consumers based on their purchasing choices

Market forces through supply and demand

The government based on its central plan

Independent businesses based on profitability analysis

The government based on its central plan

Which countries have mostly public ownership of resources?

Sweden and Norway

France and Germany

Cuba and North Korea

Brazil and Argentina

United States and Canada

Cuba and North Korea

Given the production data for the economy of Academia in 2020:

Textbooks: 150 units at $40 each, Laptops: 80 units at $750 each, Desks: 300 units at $120 each, Coffee Cups: 500 units at $8 each.

Which product's production contributed the highest amount to the GDP?

Coffee Cups - had the lowest GDP contribution of $4,000.

Textbooks - contributed $6,000, which is less than other options.

Laptops - had the highest GDP contribution, calculated as 80 units x $750 each = $60,000.

Desks - contributed $36,000, less than Laptops.

Laptops - had the highest GDP contribution, calculated as 80 units x $750 each = $60,000.

Using the same detailed production data for Academia in 2020:

Textbooks: 150 units at $40 each, Laptops: 80 units at $750 each, Desks: 300 units at $120 each, Coffee Cups: 500 units at $8 each.

What is the total GDP of Academia for 2020?

$106,000 - correct, it is the sum of all individual contributions: $6,000 (Textbooks) + $60,000 (Laptops) + $36,000 (Desks) + $4,000 (Coffee Cups).

$104,000 - underestimates the total GDP.

$100,000 - underestimates the total GDP.

$110,000 - overestimates the total GDP.

$106,000 - correct, it is the sum of all individual contributions: $6,000 (Textbooks) + $60,000 (Laptops) + $36,000 (Desks) + $4,000 (Coffee Cups).

Suppose a company decided to introduce a new "environmentally friendly" electric car in order to appeal to an increasing number of consumers who are concerned about climate change. Which of the following fundamental questions of economics does this company's decision reflect?

How to produce?

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

What to produce?

For whom to produce?

What to produce?

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

By multiplying the variable by 70.

By dividing 70 by the variable's growth rate.

By subtracting the annual change in the variable from 70.

By dividing the variable's growth rate by 70.

By dividing 70 by the variable's growth rate.

Daniel paid her brother Jeff $50 to buy a bottle of aged rum. Jeff spends $40 on the liquor and keeps the remaining $10 for himself. These events cause nominal GDP to increase by:

$0.

$60.

$40.

$10.

$50.

$40.

Below are two statements regarding China's geographical setting:I) The lack of a coastal orientation contributed to China's late start in economic modernization. II) China's links to the modern world economy began to multiply only when foreign-dominated Treaty Ports were forcibly implanted into China's key economic regions after 1842.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.

Which of the following correctly lists the four common features that are shared among countries who have experienced "growth miracles"?

Low interest rates; an open economic policy; a "demographic dividend"; rural-urban divide

Rapid structural change; high interest rates; high tariffs; Rapid population growth;

Rapid labor-force growth; rapid structural change; high investment rates; an open economic policy

Rapid growth in higher education; rapid structural change; low savings rates; an open economic policy

Rapid labor-force growth; rapid structural change; high investment rates; an open economic policy

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 is still a long distance from being a rich country.II) From a global standpoint, China is remarkably above average in terms of its PPP-adjusted GDP per capita.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.

Which of the following correctly lists the four enabling conditions that are believed to be behind China's dramatic growth in recent decades?

Extraordinary human resources; highly educated labour force; catch-up potential; a socialist government.

Extraordinary human resources; global division of labour; catch-up potential; a government with a capacity to learn.

Highly educated workforce; rural-urban divide; catch-up potential; significant government intervention.

Global specialization of labour; follow-up potential; command institutions; a government with a capacity to learn.

Extraordinary human resources; global division of labour; catch-up potential; a government with a capacity to learn.

Below are two statements regarding growth and development in China:I) In 2015 China had the world's forth-largest GDP after the United States.II) If the 2015 figures are adjusted for purchasing power differences China actually had the world's largest GDP.Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

II is true but I is false.

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

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

To the northeast of it, farmland is relatively abundant.

Above the line, most people wear hats for protection from the bright sunlight.

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

A shortage of available water sharply limits the population potential of the western regions.

A shortage of available water sharply limits the population potential of the western regions.

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.

Which of the following was NOT a consequence of China's Great Leap Forward in 1958-1960?

Restrictions on rural-to-urban migration were tightened

The Chinese people experience a famine during the following "Three Years of Hardship."

Mao Zedong was forced to re-evaluate his strategies, which led him to launch the Cultural Revolution.

The Communes were abolished.

The Communes were abolished.

Which of the following years correspond to the Crisis and "Readjustment" period?

1958-1960

1953-1956

1961-1963

1949-1952

1961-1963

Why did the Great Leap Forward fail?

Privatization of companies owned by the government

US tried to enlarge its influence in Asia.

Crop failures and poor planning

The strategy deviated drastically from a similar strategy implemented in the Soviet Union.

Crop failures and poor planning

What took place in 1958-1960 in China?

Boxer Rebellion

Nanchang Uprising

The Great Leap Forward

War of Liberalization

Sino-Japanese War

The Great Leap Forward

Which of the following was (is) the main purpose of the nomenklatura system in both the Soviet Union and China?

centralization of economic regulation

devolution of political authority to subnational governments

control of political protests

integration of political and military authority

recruitment of political leaders

recruitment of political leaders

Below are two statements regarding the the Socialist Era, 1949-1978:I) The command economy was a very effective way to subordinate individual economic decision-making to the overall national development strategy. II) State-owned enterprises dominated the key industrial sectors and were unresponsive to market prices and profitability; instead, they were charged with carrying out the commands of their superiors and fulfilling planned targets. 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 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 political instability during the socialist era:I) A negative aspect of China's policies in the 1952-1978 period is the lack of investment in basic human capital. I) The flow of resources into basic health and education were dismal throughout the socialist period, and the Chinese people experienced a significant decline in health and education levels at the end of the socialist era. 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 political instability during the socialist era:I) Mao was an enormous obstacle to China's development, confusing his own personal power and self-justifications with China's realities and needs.II) A major advantage of Mao's governance was the ability of agriculture to rapidly generate adequate food surpluses and generate productive employment for its abundant labor.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.

Which of the following statements does NOT correspond to the origin of the urban-rural divide?

It came about when virtually every business and productive enterprise was converted to public ownership where this massive change was implemented in systematically different ways in urban and rural areas.

It is rooted in the market reform era where almost all urban work units were privatized but in rural areas private property was eliminated and replaced with a "collective".

It is rooted in the socialist period where almost all urban work units were nationalized and in rural areas private property was eliminated and replaced with a "collective" system.

It came about when extensive administrative barriers were set in place during the 1950s as part of the command economy were urban and rural areas had different governance structures and systems of property rights.

It is rooted in the market reform era where almost all urban work units were privatized but in rural areas private property was eliminated and replaced with a "collective".

Introduced in 1956, hukou prevented citizens from undertaking what activity without official approval?

joining a union

changing jobs

internal travel

leaving China

internal travel

The hukou system in China makes it difficult for citizens to:

join the Communist Party.

live in rural areas.

work for foreign companies.

communicate with people outside the country.

move from one place to another.

move from one place to another.

Which of the following is a true statement regarding the dualistic system?

The system was relaxed after 1978 but survived until after the turn of the twenty-first century.

The system was relaxed early under the socialist system and was completely dismantled shortly after 1978.

The system was partially dismantled after the collapse of the Soviet Union 1978 but survived in various forms after the turn of the twenty-first century.

The system was completely dismantled at the outset of market reform in 1978 but remnants remained in rural areas until 1989.

The system was relaxed after 1978 but survived until after the turn of the twenty-first century.

Below are two statements regarding the urban-rural divide in China:I) During the 1990s, the restrictions placed on urban dwellers was relaxed. II) Although, it was not completely abolished it resulted in mass rural-to-urban migration which has since reshaped Chinese society and economic growth.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 urban-rural divide in China:I) Land is an important resource from the standpoint of the "collective".II) Unfortunately, despite the growth in the overall economy, its value has remained relatively stagnant over the years.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.

Which of the following was NOT a benefit of the urban danwei system?

Pensions

Health care

Low-cost housing

University education

University education

Below are two statements regarding the urban-rural divide in China:I) Many policies in China restrict the development of the largest cities, such as Shanghai and Beijing and, in fact, it is more difficult to get permanent residence in these cities.II) Such, policies do not constrain their physical expansion and evidence shows that very large cities, in contrast to popular perceptions, do not play an efficiency-enhancing role in market economies.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 urban-rural divide in China:I) During the year 2003, the government rolled out a "Sunshine Policy".II) It was designed to provide prospective migrants with rudimentary job training and information about conditions in destination cities.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.

A variable that is essential to economic growth is:

Digital currency.

Access to the Internet.

Labour intensive manufacturing.

Technology.

Technology.

Using a standard aggregate production function, which of the following statements is true about China during the miracle growth period (1978-2010):

Labour force growth was the main growth driver.

Total factor productivity (TFP) growth was positive, but growth of factor inputs was the biggest contributor to growth.

Because of the high investment rate, capital inputs grew rapidly, more than enough to overcome the slight decline in total factor productivity (TFP).

Total factor productivity (TFP) measures are only residuals, so they don't really tell us anything useful about growth.

Land inputs grew surprisingly rapidly under the Western Development Policy.

Total factor productivity (TFP) growth was positive, but growth of factor inputs was the biggest contributor to growth.

The following two statements relate to "Growth Miracles":I) Growth creates a virtuous cycle in which rapid growth supports further rapid input growth. II) The process begins with the "demographic dividend" resulting in a rapid decrease in the working age population and with this deacceleration, incentives and opportunities for households to invest in physical and human capital plummet.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.

Growth in Total Factor Productivity (TFP) is often calculated as the:

growth in output per worker not explained by growth in other production factors.

The change in output per unit of labour and capital.

The difference between potential and actual economic growth.

growth in output per worker explained by growth in other production factors.

growth in output per worker not explained by growth in other production factors.

Real GDP was $3,560 billion in Year 1 and $3,880 billion in Year 2. The population rose from 450 million in Year 1 to 480 million in Year 2. What was the approximate increase in real GDP per capita rate from Year 1 to Year 2?

6.6 percent

8.9 percent

1.3 percent

2.2 percent

2.2 percent

Which of the following is NOT true regarding China's official statistics?

Measuring the fast expanding service sector is difficult.

China uses the expenditure approach, while western economies generally use the production approach.

Many argue that the official GDP deflator is too small for some periods.

Local GDP growth estimates have upward bias.

China uses the expenditure approach, while western economies generally use the production approach.

Assume in the Harrod-Domar model you have that the capital/output ratio k, is equal to 10. Assume there is no depreciation. If investment is increased by 30% what is the corresponding increase in the growth rate of the economy (i.e. ΔY/Y )?

6%

3.0%

6.0%

1.6%

In the 1980s the demographic trend in China was best characterized by a(n)

rapidly rising crude birth rate

decreasing general fertility rate

increased total fertility rate

surge in refugees emigrating from China

falling life expectancy

decreasing general fertility rate

Which of the following is NOT an issue concerning the working age population facing China in the future?

An aging population will lead to substantial strains on China's social system because it will lead to a higher dependency ratio.

The working-age population has not yet peaked, but the decline in available workers will fall rapidly over the next decade.

The rapid growth of the working-age population is already over, and in the future, the working-age population will shrink.

An aging population will create substantial strains on China's social system, requiring an effective policy response.

The working-age population has not yet peaked, but the decline in available workers will fall rapidly over the next decade.

Which of the following correctly defines the total fertility rate (TFR)?

It expresses the number of children a woman would have during the course of her life if her fertility in each year of her life were greater than the average fertility of older cohorts of women in the population.

It expresses the number of children a woman would have during a particular year multiplied by the average fertility of all the women in the population of that age during a particular reference year.

It expresses the annual number of children a woman would have during a particular reference year.

It expresses the number of children a woman would have during the course of her life if her fertility in each year of her life were equal to the average fertility of all the women in the population of that age during a particular reference year.

It expresses the number of children a woman would have during the course of her life if her fertility in each year of her life were equal to the average fertility of all the women in the population of that age during a particular reference year.

Which of the following is NOT TRUE regarding the impact of China's "One-Child Policy"?

It was successful with the population reaching 1.15 billion in 2000 which is below the original target of 1.2 billion.

More than 24 million Chinese men of marrying age could find themselves without spouses by 2020.

An unbalanced sex ratio due to the Chinese preference for sons.

The sex ratio was somewhat normal in 1953 and 1964, but since the early 1980s, the sex ratio has risen steadily and steeply and is clearly outside the normal range.

It was successful with the population reaching 1.15 billion in 2000 which is below the original target of 1.2 billion.

Suppose a population of chipmunks has a birth rate of 25% and a death rate of 5%. Assume that immigration and emigration rates are insignificant compared with birth and death rates. What is the rate of change in the population of chipmunks over time?

20%

-20%

30%

-30%

0.2%

20%

Suppose you just completed some research on the population dynamics of penguins, you estimate that the population size is 5,000. And, over the course of a month, you record 500 births and 400 deaths in the population. Assume that immigration and emigration rates are insignificant compared with birth and death rates. Which of the following is a correct estimate of R (i.e. the rate of change of the population over time)?

-2%

-18%

2%

18%

0.8%

2%

Consider the figure below which shows changes in a population of tigers over time.What does the letter X in the figure represent?

Mortality

The Minimum sustainable population size

The maximum logistic growth rate

Carrying capacity

Carrying Capacity

The following two statements relate to China's labour force of migrant workers:I) As the urban economy grew and restructured, demand for migrant labor grew as well.II) Today, young rural-to-urban migrants in China are universally literate, almost all have lower-middle-school education, and a substantial proportion have high-school and even some college education.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.

The following two statements from the Meng (2012) article relate to China's labour force:I) China's single most important labor market change over the past two decades is probably the rapid growth in rural-to-urban migration. II) From the late 1990s up to the present, the number of rural migrants increased by more than 100 million to 145 million.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.

The following two statements relate to China's labour force:I) Under the Maoist system the state decided a worker's job, and a job was for life as workers could not be fired, but they couldn't quit either.II) When economic transition began after 1978, the extreme rigidity of the Chinese system was seen as positive as it improved the progress of gradualist reforms and enhanced the introduction of market forces.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.

The following two statements relate to China's labour force of migrant workers:I) Rural migrants began to stream out of cities in the 1990s at a slower pace up to the twenty-first century. II) At first, migrant workers filled a few niches in the urban economy, working on construction gangs and as peddlers and food sellers.

Among these statements:

Both are correct.

Both are false.

I is true but II is false.

II is true but I is false.

II is true but I is false.

Which of the following is TRUE regarding the labour-force participation of females in China?

Urban female labor-force participation was substantially lower in the socialist period, women suffered disproportionately from layoffs from the state sector and now are increasing their labor-force participation to take on new opportunities in the technology sector.

Rural female labor-force participation was substantially lower in the socialist period, women suffered disproportionately from bad crops and many are now upgrading their agricultural skills and managing their own small farms.

Urban female labor-force participation was substantially higher in the socialist period, but women suffered disproportionately from layoffs from the state sector and now are reducing labor-force participation to take on new roles in the household.

Rural female labor-force participation was substantially higher in the socialist period.

Urban female labor-force participation was substantially higher in the socialist period, but women suffered disproportionately from layoffs from the state sector and now are reducing labor-force participation to take on new roles in the household.

Which of the following is NOT a change that occurred during the reform era that gave rise to the possibility of unemployment?

Economic reforms encouraged labour mobility

Economic reforms changed incentive systems

Economic reforms allowed workers to choose where and whether they wanted to work

Economic reforms often lead to situation of excess supply

Economic reforms often lead to situation of excess supply

Human capital is

any investment in a worker's skills.

a small portion of all capital in existence.

capital used for training workers.

any machinery owned by individuals.

any investment in a worker's skills.

Twin studies are helpful in producing an unbiased estimate of the returns to schooling, because twins are likely to:

work in the same industry.

achieve the same amount of education.

earn comparable wages.

work in the same occupation.

have similar abilities.

have similar abilities.

Consider the following wage equation: where wage is the hourly wage, years schooling is the total accumulated years of schooling, and experience denotes the total years of labour market experience. Suppose a researcher estimates the above equation on Census data and obtains the following estimated coefficients:

ln(wage) = 1.63 + 0.081Years Schooling + 0.04Exper - 0.002Exper2

Which of the following correctly states the effect of one year of schooling on wages based on the estimates above?

One year of schooling is estimated to increase wages by 8.1% holding work experience constant.

One year of schooling is estimated to increase wages by 81 cents holding work experience constant.

One year of schooling is estimated to increase wages by 8.1% holding all determinants of wages constant.

One year of schooling is estimated to increase wages by 81 cents holding all determinants of wages constant.

One year of schooling is estimated to increase wages by 8.1% holding work experience constant.

Consider the following wage equation: where wage is the hourly wage, years schooling is the total accumulated years of schooling, and experience denotes the total years of labour market experience. Suppose a researcher estimates the above equation on Census data and obtains the following estimated coefficients:

ln(wage) = 1.8 + 0.095Years Schooling + 0.035Exper - 0.0005Exper2

Which of the following correctly shows the effect of an additional year of work experience on wages for a worker who already has 10 years of work experience?

3%

2.5%

3.45%

3.5%

2.5%

The following two statements relate to education and human capital in China:I) Probably the most fundamental requirement of a well-functioning market economy is that a person can reap the income created by an investment in education. II) However, positive and significant private returns to education is not essential for a more productive market economy. 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.

The following two statements relate to education and human capital in China:I) In the early 1990s, the measured return to education began a sustained rise and converged with the U.S. level around the mid-2000s.II) It is important to note that catch up is not always possible because the returns to education are always higher in developed countries.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.

In the article by Li, Hongbin, et al. (2007). Which of the following is NOT one of the main findings of their analysis?

China moved along the regression line by increasing its human capital level significantly in the years from 1980 to 2014 - this rise of human capital would typically be associated with a rise of 3.8 percent per year during the 34-year period, which is about 40 percent of China's actual growth rate.

China was far above the regression line in 1980 suggesting that China's human capital was not being fully utilized likely due to the fact that China's economy was being operated as a planned economy and that there was considerable labor redundancy in agriculture.

There is a positive correlation between income and education level of the sample countries for all five years of data.

As the economic reforms unfolded during and after the 1980s, China steadily moved closer to the regression line.

China was far above the regression line in 1980 suggesting that China's human capital was not being fully utilized likely due to the fact that China's economy was being operated as a planned economy and that there was considerable labor redundancy in agriculture.

The Lorenz curve:

plots graphically the distribution of income.

plots graphically the poverty rate over time.

is located closer to the diagonal today than it was in 1975.

is located farther from the diagonal when income is defined to include the value of noncash transfers.

plots graphically the distribution of income.

The greater the area between the Lorenz curve and the diagonal in the Lorenz curve diagram, the

smaller is the Gini coefficent and the lesser is the degree of income inequality.

larger is the Gini coefficent and the greater is the degree of income inequality.

smaller is the Gini coefficent and the greater is the degree of income inequality.

larger is the Gini coefficent and the lesser is the degree of income inequality.

larger is the Gini coefficent and the greater is the degree of income inequality.

According to Kuznets, in the process of development inequality in an economy will normally

first fall and then rise.

first rise and then fall.

remain about the same.

show no definite pattern.

first rise and then fall.

Below are two statements regarding inequality indicators in China:I) China is now significantly more unequal than some of the most important Asian developing countries, such as India or Indonesia, or even countries traditionally considered fairly unequal, such as Mexico.II) However, China's Gini coefficient is far below that of the United States.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 inequality indicators in China:I) Since the early 1980s inequality in China has increased steadily and inexorably. II) As well, inequality has climbed steadily within both rural and urban areas.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 poverty in China:I) China first set an official poverty line in 1985 at only 200 RMB per year.II) China raised its poverty line in 2010 to 1000 RMB which resulted in a significant increase in poverty rates.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 poverty in China:I) Growth reduces poverty, and one of the great successes of China's economic reform has been a dramatic reduction in the number of people in poverty. II) Only a tiny share of urban dwellers are currently in poverty - poverty in China is fundamentally a rural phenomenon.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.