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ECO 450 Week 2 Quiz – Strayer NEW
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Individuals and Government
True/False Questions
1. On average, persons in the United States devote more of their annual budgets to taxes than they do to food.
2. A universally observed function of government is the establishment of property rights.
3. The total share of GDP accounted for by government spending in the United States has declined significantly since 1980.
4. In 1929, the federal government spent more than was spent by state and local governments.
5. Since 1930, the percent of GDP devoted to government expenditures has more than tripled.
6. The costs imposed by government regulations on business firms are included in budget data on government expenditures.
7. Government consumption does not require resources to be reallocated from private to government use.
8. Since 1959, the percent of federal government expenditures devoted to transfers has increased by more than 50 percent.
9. Transfer payments, including Social Security and welfare and medical assistance, account for nearly 60 percent of federal government expenditures.
10. Interest on the federal government’s debt accounts for about 20 percent of federal government expenditure.
11. Federal grants-in-aid to state and local governments finance about 20 percent of annual spending by these governments.
12. The federal government allocates about 10 percent of its budget to Social Security.
13. State and local governments in the United States spend a bit more than one-third of their budgets on education.
14. Sales taxes account for about 22 percent of state and local government revenue in the United States.
15. The federal government obtains about half of its revenue annually from retail sales taxes.
16. State governments do not fund any part of Medicaid.
17. The social compact is an 18th century idea by political theorists.
18. The proportion of revenue received by the federal government from payroll taxes is higher than the proportion of revenue received by state and local governments from payroll taxes.
Multiple Choice Questions
1. The real cost of government goods and services is:
a. money.
b. taxes.
c. the private goods and services foregone.
d. inflation.
2. If the economy is currently operating on a point on the production possibility curve for government goods and services versus private goods and services,
a. an annual increase in government goods and services can be obtained without any sacrifice of annual private goods and services.
b. it will be impossible to increase annual output of government goods and services.
c. a decrease in the annual output of government goods and services will have no effect on the annual output of private goods and services.
d. a decrease in the annual output of government goods and services will allow an increase in annual output of private goods and services.
3. Government goods and services are usually:
a. not rationed by prices.
b. sold in markets.
c. made available to persons according to their willingness and ability to pay.
d. financed by revenue obtained from sales.
4. Taxes:
a. are prices paid for the right to consume government goods and services.
b. are compulsory payments not directly related to the benefits received from government goods and services.
c. never affect economic incentives.
d. are used by private firms to raise revenue.
5. A mixed economy is one in which:
a. there are no markets.
b. government activity accounts for a significant proportion of the value of goods and services produced.
c. there is no government.
d. all goods and services are sold in markets.
6. Government purchases for consumption and investment:
a. are made to acquire resources necessary to producegovernment goods and services.
b. are designed to redistribute purchasing power among citizens.
c. have increased in importance as a percent of federal spending since 1959.
d. do not withdraw resources from private use.
7. Transfer payments by the federal government in the United States account for about:
a. 25 percent of federal government expenditures.
b. 10 percent of federal government expenditures.
c. 40 percent of GDP.
d. 60 percent of federal government expenditures.
8. Total annual expenditures by federal, state, and local governments in the United States in the 1990s accounted for roughly:
a. 20 percent of annual GDP.
b. 30 percentof annual GDP.
c. 50 percentof annual GDP.
d. 75 percent of annual GDP.
9. Federal government expenditures in the United States account for about:
a. 23 percent of annual GDP.
b. 33 percent of annual GDP.
c. 43 percent of annual GDP.
d. 53 percent of annual GDP.
10. About 80 percent of federal receipts are accounted for by:
a. corporate profits taxes.
b. sales taxes.
c. excise taxes.
d. payroll and personal income taxes.
11. If the economy is operating at full employment and using resources efficiently, then an increase in spending for homeland security this year will:
a. require that resources be reallocated to homeland security services without sacrificing any alternative goods and services.
b. be possible if resources are reallocated to homeland security services, but it will also mean that the output of some other goods and services will have to fall.
c. be impossible.
d. be possible only if there is an improvement in technology or more resources made available.
12. Which of the following is an example of a political institution?
a. a market
b. elections with winners determined by majority rule
c. representative government
d. both (b) and (c)
13. Nonmarket rationing means that:
a. those willing to pay can buy as much of a product as they choose.
b. prices are used to sell products.
c. goods and services are not rationed by prices.
d. willingness to pay is not a factor in determining who can enjoy a good or service.
e. both (c) and (d)
14. The U.S. economy is best characterized as a:
a. pure market economy.
b. socialist economy.
c. pure capitalistic, free-enterprise system.
d. mixed economy.
15. State and local government expenditure in the United States accounts for about:
a. 32 percent of GDP.
b. 22 percent of GDP.
c. 12 percent of GDP.
d. 7 percent of GDP.
16. Following the circular flow of a mixed economy, firms receive a flow of dollars from and send goods and services to:
a. Output Markets.
b. Input Markets.
c. Households.
d. Government.
17. Following the circular flow of a mixed economy, which entity or entities distribute resources?
a. Firms only.
b. Input Markets only.
c. Government and Households.
d. Households and Input Markets.
18. When has the U.S. experienced government expenditures in the range of 40% to 50% of GDP?
a. 2000 to 2009.
b. 1950 to 1959.
c. 1940 to 1949.
d. It has never happened.
19. In 2008, which country listed below has the highest percentage of government spending relative to GDP?
a. France.
b. Ireland.
c. Japan.
d. Canada.
20. The old-age dependency ratio is:
a. the proportion of the population that is 60 years or older over the proportion of the population that is less than 60 years of age.
b. the proportion of the population that is 65 years or older over the proportion of the population that is 15 to 64 years of age.
c. the proportion of the population that is 70 years or older over the proportion of the population that is 20 to 69 years of age.
d. the total government expenditure on programs for the elderly over the number of citizens that are 65 years or older.
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ECO 410 Week 2 Quiz – Strayer NEW
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Chapter 1
Current Multinational Challenges and the Global Economy
True/False
1) BRICs is a term used in international finance to represent assets that are considered to be inexpensive and sturdy, but fundamentally unsound and and incapable of coping with the upheavals now apparent in international financial markets.
2) Multinational enterprises (MNEs) are firms, both for profit companies and not-for-profit organizations, that have operations in more than one country, and conduct their business through foreign subsidiaries,
branches, or joint ventures with host country firms.
3) Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization—the privately held or family-owned business is the prevalent structure—and their goals and measures of performance differ dramatically.
Multiple Choice
1) A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value?
A) an open market place
B) high quality strategic management
C) access to capital
D) none of the above
2) A well-established, large China-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
3) A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value?
A) an open marketplace
B) high-quality strategic management
C) access to capital
D) access to qualified labor pool
True/False
1) Comparative advantage is one of the underlying principles driving the growth of global business.
2) Your authors suggest that one way to characterize the global financial marketplace is through its assets, institutions, and linkages.
3) Eurocurrencies are domestic currencies of one country on deposit in a second country.
4) A eurodollar deposit is a demand deposit.
5) Eurocurrency markets serve two valuable purposes: 1) Eurocurrency deposits are an efficient and convenient money market device for holding excess corporate liquidity; and 2) the Eurocurrency market is a major source of short-term bank loans to finance corporate working capital needs, including the financing of imports and exports.
6) The key factor attracting both depositors and borrowers to the Eurocurrency loan market is the narrow interest rate spread within that market.
7) The Eurocurrency market continues to thrive because it is a large international money market relatively free from governmental regulation and interference. Recent events may lead to greater regulation.
Essay
1) List and explain three strategic motives why firms become multinationals and give an example of each.
Multiple Choice
1) The theory that suggests specialization by country can increase worldwide production is:
A) the theory of comparative advantage.
B) the theory of foreign direct investment.
C) the international Fisher effect.
D) the theory of working capital management.
2) Which of the following is NOT a reason governments interfere with comparative advantage?
A) Governments attempt to achieve full employment.
B) Governments promote economic development.
C) national self-sufficiency in defense-related industries
D) All are reasons governments interfere with comparative advantage.
3) Which of the following factors of production DO NOT flow freely between countries?
A) raw materials
B) financial capital
C) (non-military) technology
D) All of the above factors of production flow freely among countries.
4) Which of the following would NOT be a way to implement comparative advantage?
A) IBM exports computers to Egypt.
B) Computer hardware is designed in the United States but manufactured and assembled in Korea.
C) Water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide.
D) All of the above are examples of ways to implement comparative advantage.
5) Of the following, which would NOT be considered a way that government interferes with comparative advantage?
A) tariffs
B) managerial skills
C) quotas
D) other non-tariff restrictions
True/False
1) The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers.
2) International trade might have approached the comparative advantage model in the 19th century, and it does so even more today.
3) Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities.
4) Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.
5) Comparative advantage was once the cornerstone of international trade theory, but today it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs.
6) When discussing comparative advantage, it is apparent that today at least two of the factors of production, capital and technology, now flow directly and easily between countries, rather than only indirectly through traded goods and services.
7) It would be safe to make the statement that modern telecommunications now take business activities to labor rather than moving labor to the places of business.
Multiple Choice
1) Which of the following domestic financial instruments have NOT been modified for use in international financial management?
A) currency options and futures
B) interest rate and currency swaps
C) letters of credit
D) All of the above are domestic financial instruments that have also been modified for use in international financial markets.
True/False
1) MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities.
2) Relative to MNEs, purely domestic firms tend to have GREATER political risk.
3) Domestic firms tend to make GREATER use of financial derivatives than MNEs because they can bear the greater risk presented by these financial instruments.
4) Because countries have different financial regulations and customs, it is common for MNEs to apply their domestic rules and regulations when doing financial business in a foreign country.
5) A number of financial instruments that are used in domestic financial management have been modified for use in international financial management. Examples are foreign currency options and futures, interest rate and currency swaps, and letters of credit.
Multiple Choice
1) In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market-seeking firms produce in foreign countries?
A) satisfaction of local demand in the foreign country
B) satisfaction of local demand in the domestic markets
C) political safety and small likelihood of government expropriation of assets
D) All of the above are market-seeking activities.
2) ________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors.
A) Conservative; Aggressive
B) Defensive; Proactive
C) Proactive; Defensive
D) Aggressive; Proactive
True/False
1) For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments.
2) Defensive measures are designed to enhance growth and profitability of the firm itself.
Multiple Choice
1) The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the:
A) domestic phase.
B) multinational phase.
C) international trade phase.
D) import-export banking phase.
2) The authors describe the multinational phase of globalization for a firm as one characterized by the:
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.
3) A firm in the International Trade Phase of Globalization:
A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units.
B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units.
C) bears direct foreign exchange risk.
D) none of the above
4) Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk
5) Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm?
A) evaluation of the credit quality of foreign buyers and sellers
B) foreign consumer method of payment preferences
C) credit risk management
D) evaluation of foreign exchange risk
6) The authors describe the multinational phase of globalization for a firm as one characterized by the:
A) ownership of assets and enterprises in foreign countries.
B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars.
C) imports from foreign suppliers and exports to foreign buyers.
D) requirement that all employees be multilingual.
7) The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm.
A) rulers of sovereign states and unsavory customs officials
B) corporate insiders and attorneys
C) corporate insiders and rulers of sovereign states
D) attorneys and unsavory customs officials
True/False
1) Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.
2) Typically, a "greenfield" investment abroad is considered a greater foreign investment having a greater foreign presence than a joint venture with a foreign firm.
3) The authors argue that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance.
4) The authors describe a process for development of a MNE that begins with a purely domestic phase, followed by the multinational phase, and topping out with the international trade phase.
5) Today it is widely assumed that there are NO LIMITS to financial globalization.
6) The growth in the influence and self-enrichment of organizational insiders is seen as an impediment to the growth of financial globalization in general.
7) The actions of corporate insiders and the actions of rulers of sovereign states are both agency costs that act as an impediment to the growth of globalization.
Chapter 2 Corporate Ownership, Goals, and Governance
Multiple Choice
1) Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the following is NOT identified by the authors as typical controlling shareholders?
A) the government (for example, privatized utilities)
B) institutions (such as banks in Germany)
C) family (such as in France)
D) All of the above were identified by the authors as controlling shareholders.
2) Which of the following is NOT typically associated with the public ownership of business organizations?
A) the state
B) the government
C) families
D) civil society
3) Which of the following is NOT typically associated with the private ownership of business organizations?
A) the government
B) families
C) individuals
D) publicly traded, widely-held organizations
4) State Owned Enterprises (SOEs):
A) are a form of public ownership.
B) are created for commercial activities rather than civil or social activities.
C) are the dominant form of business organization in some countries.
D) are all of the above.
5) The problems that may arise due to the separation of ownership and management in large business organizations is know as:
A) separation anxiety.
B) the agency problem.
C) corporate disconnect theory.
D) none of the above
6) Privatization is a term used to describe:
A) firms that are purchased by the government.
B) government operations that are purchased by corporations and other investors.
C) firms that do not use publicly available debt.
D) non-public meetings held by members of interlocking directorates.
True/False
1) In the U.S. and U.K. stock markets are characterized by ownership of firms concentrated in the hands of a few controlling shareholders. In contrast, the rest of the world tends to have more widespread ownership of shares.
2) State Owned Enterprises (SOEs) by their very name cannot be traded on stock exchanges because they are government owned.
3) In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.
4) Non-Anglo-American markets are dominated by the "one-vote-one-share" rule.
5) According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.
Essay/Short Answer
1) What are the most important distinctions that make state owned enterprises (SOEs) different from other forms of government organizations?
Multiple Choice
1) "Maximize corporate wealth":
A) is the primary objective of the non-Anglo-American model of management.
B) as a management objective treats shareholders on a par with other corporate stakeholders such as creditors, labor, and local community.
C) has a broader definition than just financial wealth.
D) all of the above
2) The Shareholder Wealth Maximization Model (SWM):
A) combines the interests and inputs of shareholders, creditors, management, employees, and society.
B) is being usurped by the Stakeholder Capitalism Model as those types of MNEs dominate their global industry segments.
C) clearly places shareholders as the primary stakeholder.
D) is the dominant form of corporate management in the European-Japanese governance system.
3) The Stakeholder Capitalism Model (SCM):
A) clearly places shareholders as the primary stakeholder.
B) combines the interests and inputs of shareholders, creditors, management, employees, and society.
C) has financial profit as its goal and is often termed impatient capital.
D) is the Anglo-American model of corporate governance.
4) In the Anglo-American model of corporate governance, the primary goal of management is to:
A) maximize the wealth of all stakeholders.
B) maximize shareholder wealth.
C) minimize costs.
D) minimize risk.
5) In finance, an efficient market is one in which:
A) prices are assumed to be correct.
B) prices adjust quickly and accurately to new information.
C) prices are the best allocators of capital in the macro economy.
D) all of the above
6) Systematic risk can be defined as:
A) the total risk to the firm.
B) the risk of the individual security.
C) the risk of the market in general.
D) the risk that can be systematically diversified away.
7) Unsystematic risk can be defined as:
A) the total risk to the firm.
B) the risk of the individual security.
C) the added risk that a firm's shares bring to a diversified portfolio.
D) the risk of the market in general.
8) The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is called:
A) market efficiency.
B) the SWM model.
C) agency theory.
D) the SCM model.
9) Under the Shareholder Wealth Maximization Model (SWM) of corporate governance, poor firm performance is likely to be faced with all but which of the following?
A) sale of shares by disgruntled current shareholders
B) shareholder activism to attempt a change in current management
C) as a maximum threat, initiation of a corporate takeover
D) prison time for executive management
10) Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?
A) the use of stock options to align the goals of shareholders and managers
B) the market for corporate control that allows for outside takeover of the firm
C) performance based compensation for executive management
D) all of the above
11) Which of the following is NOT true regarding the stakeholder capitalism model?
A) Banks and other financial institutions are less important creditors than securities markets.
B) Labor unions are more powerful than in the Anglo-American markets.
C) Governments interfere more in the marketplace to protect important stakeholder groups.
D) All of the above are TRUE.
12) The stakeholder capitalism model:
A) typically avoids the flaw of impatient capital.
B) tries to meet the desires of multiple stakeholders.
C) may leave management without a clear signal about tradeoffs among the several stakeholders.
D) all of the above
13) Which of the following is generally NOT considered to be a viable operational goal for a firm?
A) maintaining a strong local currency
B) maximization of after-tax income
C) minimization of the firm's effective global tax burden
D) correct positioning of the firm's income, cash flows and available funds as to country and currency
14) Which of the following operational goals for the international firm may be incompatible with the others?
A) maintaining a strong local currency
B) maximization of after-tax income
C) minimization of the firm's effective global tax burden
D) Each of these goals may be incompatible with one or more of the others.
15) The primary operational goal for the firm is to:
A) maximize after-tax profits in each country where the firm is operating.
B) minimize the total financial risk to the firm.
C) maximize the consolidated after-tax profits of the firm.
D) maximize the total risk to the firm.
16) Which of the following broad topics is NOT identified as an area to be established as good corporate governance practice by the Organization for Economic Cooperation and Development (OECD)?
A) protect the rights of shareholders
B) disclosure and transparency
C) the proper role of stakeholders in the governance of the firm
D) All of the above should be a concern of good corporate governance.
17) The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed:
A) corporate governance.
B) Anglo-American activism.
C) capital structure.
D) working capital management.
18) When discussing the structure of corporate governance, the authors distinguish between internal and external factors. ________ is an example of an internal factor, and ________ is an example of an external factor.
A) Equity markets; executive management
B) Debt markets; board of directors
C) Executive management; auditors
D) Auditors; regulators
19) Which of the following is NOT commonly associated with a government affiliated form of corporate governance regime?
A) no minority influence
B) lack of transparency
C) state ownership of enterprise
D) All are associated with this type of corporate governance regime.
20) Generally speaking, which of the following is NOT considered an important factor in the composition and control of corporate boards of directors?
A) the number of insider vs outside directors
B) the total number of directors on the board
C) the composition of the compensation committee
D) All of the above are important factors of board composition.
21) Signed into law on July 30, 2002, the ________ Act requires CEOs of publicly traded companies to vouch for the veracity of the firm's published financial statements.
A) Smoot-Hawley
B) Humphrey-Hawkins
C) McCain-Merrill
D) Sarbanes-Oxley
22) The Sarbanes-Oxley Act, passed by the U.S. Congress in July 2002, was designed to:
A) reinstitute heavy tariffs on international trade.
B) reform corporate governance.
C) limit the Federal Reserve Board's ability to engage in the buying and selling of gold.
D) limit trade with countries deemed lenient on terrorism.
23) Anglo-American markets is a term used to describe business markets in:
A) North, Central, and South America.
B) the United States, Canada, and Western Europe.
C) the United States, United Kingdom, Canada, Australia and New Zealand.
D) the United States, France, Britain, and Germany.
24) The deliberation of the of the process demonstrated in the European-Japanese system of corporate governance has sometimes been termed:
A) socialism.
B) impatient capital.
C) patient capital.
D) communism.
25) With shareholder wealth maximization as the manager's goal, capital may be termed:
A) impatient.
B) patient.
C) borrowed.
D) bought.
26) Which of the following is NOT an important concept when distinguishing between international and domestic financial management?
A) corporate governance
B) culture, history, and institutions
C) political risk
D) All of the above are important distinguishing concepts.
27) The Board of Directors:
A) consists exclusively of the officers of the corporation.
B) is the legal body which is accountable for the governance of the corporation.
C) are not subject to the external forces of the marketplace.
D) is appointed by the Securities and Exchange Commission (SEC).
28) If share price rises from $12 to $15 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?
A) 26.67%
B) -13.33%
C) 33.33%
D) 16.67%
29) PolyProduction Inc. has two classes of common stock. Class A has 5 million shares with 10 votes per share. Class B has 5 million shares with 1 vote per share. If the dividends per share are equal for both class A and B stock, then Class A shareholders have ________ of the votes and ________ of the dividends.
A) 90.91%; 90.91%
B) 90.91%; 50.00%
C) 50.00%; 50.00%
D) 83.33%; 33.33%
30) The number of publicly traded firms:
A) peaked in the U.S. in 1996.
B) peaked worldwide in 1996.
C) increased significantly in 2009 as a result of the international financial crisis.
D) all of the above
31) Which of the following is NOT a possible and appropriate response by shareholders dissatisfied with existing firm management of a publicly traded firm?
A) Shareholders could sell their shares of stock.
B) Shareholders could remain quietly disgruntled.
C) Shareholders, perhaps with the help of others, could attempt to initiate a takeover.
D) All of these responses may be possible and appropriate.
True/False
1) The stakeholder capitalism model (SCM) holds that total risk (operational and financial) is more important than just systematic risk.
2) In recent years the trend has been for markets to increasing focus on the shareholder wealth form of wealth maximization.
3) Patient Capitalism is characterized by short-term focus by both management and investors.
4) Agency theory states that unsystematic risk can be eliminated through diversification.
5) The stakeholder capitalism model does not assume that equity markets are either efficient or inefficient.
6) The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.
7) Dividend yield is the change in the share price of stock as traded in the public equity markets.
8) Regarding comparative corporate governance regimes: Bank-based regimes characterized by government influence in bank lending and a lack of transparency is often found in countries such as Korea and Germany.
9) Investor protection is typically better in countries with codified civil law (the Code Napoleon) than in countries with a legal system based in English common law.
10) The relatively low cost of compliance with the Sarbanes-Oxley Act (SOX) has been a surprising benefit of the act.
11) According to recent research, family-owned firms in some highly-developed economies typically outperform publicly-owned firms.
12) The goal of all international corporations is to maximize shareholder wealth.
13) Systematic risk can be eliminated through portfolio diversification.
14) According to the authors, dual classes of voting stock are the norm in non-Anglo-American markets.
15) A recent study shows that privately held firms use less financial leverage and enjoy lower costs of debt than publicly traded firms.
16) U.S. listings of publicly traded firms as a percentage of worldwide listings of such firms INCREASED from 11% in 1996 to approximately 33% in 2010.
17) Having Anglo-Americans as members of the board of directors of a non-Anglo-American firm signals poor corporate governance in the firm.
18) In the stakeholder capitalism model (SCM) the assumption of market efficiency is absolutely critical.
Short Answer/ Essay
1) Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executive management.
2) Define patient and impatient capitalism and discuss how each may lead to different decision-making in the shareholder wealth maximization model.
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ECO 405 Week 2 Quiz – Strayer NEW
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Chapter 01
Alleviating Human Misery: The Role Of Economic Reasoning
Multiple Choice Questions
1. The Fundamental Economic Problem Is A. Inflation B. That Resources Are Scarce Relative To Wants C. Supply And Demand D. How To Make More Money E. Unemployment
2. Which Of The Follow Best Describes Human Wants And Desires? They A. Are Unlimited In The Aggregate B. Stop After A Person Attains The Things Necessary For Life C. Do Not Include "Extras" Like Variety D. Are Not Affected By What Others Have E. Do Not Change Once We Attain Our Desired Set Of Goods
3. The Means For Satisfying Wants Are A. Insatiable B. Unlimited C. Infinite D. Scarce E. Unavailable
4. Economic Reasoning Would Not Be Necessary If A. Our Wants Were Limited B. Resources Were Expansive C. Scarcity Were Decreased D. We Could Have Everything We Wanted E. Politicians Were Better At Running The Economy
5. A Three-Year-Old Learns About The Fundamental Economic Problem When She A. Gets Presents For Her Birthday B. Is Punished For Drawing On The Walls C. Has To Eat Green Beans For Dinner D. Is Told She Can't Have A Toy At The Store E. Watches Her Favorite Cartoon
6. Which Of The Following Is The Primary Goal Of An Economy? A. Maximizing Economic Growth B. Minimizing Unemployment C. Minimizing The Effects Of Scarcity D. Minimizing The National Debt E. Maximizing Gdp
7. The Fundamental Economic Problem Involves A. Overpopulation B. Inflation And Unemployment C. Scarce Resources And Unlimited Wants D. Cheap Foreign Labor E. Supply And Demand
8. Labor Resources Include A. The Equipment Workers Use To Complete Their Work B. Only Non-Management Personnel C. Any Efforts Of A Person To Produce Goods D. Only The Physical Efforts Of An Economy's People E. All Of The Above
9. Which Of The Following Is An Example Of A Capital Resource? A. A Firm's Employee B. Money In A Firm's Bank Account C. Agricultural Land D. A Worker's Productivity E. All Of The Above
10. Which Of The Following Is Not An Example Of A Capital Resource? A. Forests B. A Printing Press C. Semi-Finished Materials D. A Computer Technician E. Inventories
11. The Know-How And The Means And Methods Of Production Available In An Economy Are Known As A. Technology B. Capital C. Human Capital D. Labor E. Management
12. Which Of The Following Is Not A Capital Resource? A. Land B. Stocks And Bonds C. Buildings D. Tools E. Mineral Deposits
Questions 13 - 17 Refer To The Graph Below.
13. Given Production Possibilities Curve (A), Point N Suggests That A. The Economy Is Attaining Full Employment, But Not Full Production B. The Economy Is Attaining Full Production, But Not Full Employment C. The Economy Is Using Its Available Resources Inefficiently D. The Economy Is Attaining Both Full Employment And Full Production E. Point N Is Unattainable
14. The Movement From Curve (A) To Curve (B) Suggests A. A Movement From Unemployment To Full Employment B. An Improvement In Capital Good Technology, But Not In Consumer Good Technology C. An Improvement In Consumer Good Technology, But Not In Capital Good Technology D. A Decline In The Total Output Of Society E. The Society Becomes Worse Off
15. At Which Of The Following Points Is The Economy Producing Efficiently? A. Q B. G C. N D. B E. E
16. If The Economy Were Producing Combination G Initially, The Cost Of Producing Additional Bd Units Of Capital Goods Is The Value Of A. The Resources Used In Producing Od Of Capital Goods B. The Resources Used In Producing Ef Of Consumer Goods C. The Resources Used In Producing Oe Of Consumer Goods D. Bd Units Of Capital Goods E. Bd Units Of Consumer Goods
17. Given Production Possibilities Curve (B), Point Q A. Can Be Reached Through An Improvement In Technology B. Represents Some Degree Of Inefficiency In The Use Of Resources C. Can Be Reached If The Birth Rate Is Reduced D. Can Be Reached If The Output Of Consumer Goods Is Increased While The Output Of Capital Goods Is Reduced E. Is Undesirable
18. The Bow Shape Of The Production Possibilities Curve Reflects A. The Opportunity Cost Concept B. The Concept Of Increasing Opportunity Costs C. The Concept Of Diminishing Marginal Returns D. The Marginal Social Cost/Marginal Social Benefit Principle E. None Of The Above
19. A Production Possibilities Curve Represents All Of An Economy's Combinations For Production That Are A. Possible B. Efficient C. Attainable D. Inefficient E. Desirable
20. If An Economy Is Experiencing Unemployment, It Is Operating At A Point A. On Its Ppc B. Below Its Ppc C. Beyond Its Ppc D. At The Horizontal Intercept Of Its Ppc E. At The Vertical Intercept Of Its Ppc
21. A Point On A Country's Ppc That Can Not Be Reached, Given The Current Situation, Is A. On Its Ppc B. Below Its Ppc C. Beyond Its Ppc D. At The Horizontal Intercept Of Its Ppc E. At The Vertical Intercept Of Its Ppc
22. The Negative Slope Of A Ppc Illustrates A. Limited Wants B. Unlimited Wants C. The Law Of Increasing Opportunity Cost D. Scarcity E. Unlimited Resources
Questions 23 - 27 Refer To The Graph Below.
23. Which Point Does Not Represent Efficient Production For Sharpland In 2007? A. A B. B C. C D. D E. E
24. Which Of The Following Points Is Unattainable For Sharpland In 2012? A. A B. G C. F D. D E. H
25. In 2007, Sharpland Can Increase Its Production Of Food Without Decreasing Its Production Of Education By Moving From Point A. C To D B. C To E C. D To A D. E To B E. E To G
26. Which Of The Following Best Explains The Shift Of Sharpland's Ppc Between 2007 And 2012? An Increase In A. The Number Of Tractors B. General Technology C. Agricultural Land Resources D. The Quality And Quantity Of Teachers E. The Demand For Schooling
27. A Movement From Point G To Point E In 2012 Is Optimal Only If A. People In Sharpland Like Education More Than Food B. People In Sharpland Like Food More Than Education C. The Msc > Msb D. The Msc < Msb E. Point C Is Not An Option
Questions 28 - 31 Refer To The Graph Below.
28. For Mary Ann, The Opportunity Cost Of 100 Coconut Cream Pies Is Equal To How Many Grass Huts? A. 5 B. 10 C. 20 D. 100 E. 120
29. Mary Ann's Straight Line Ppc Indicates That The Opportunity Cost Of Coconut Cream Pies Is A. Increasing B. Decreasing C. Constant D. 100 E. 0
30. Which Of The Following Would Allow Mary Ann To Produce 110 Coconut Cream Pies? A. Decrease In Production Of Grass Huts B. An Improvement In Her Means And Methods Of Pie Production C. A Decrease In The Resources Used For Making Grass Huts D. Putting All Of Her Resources Into Producing Coconut Cream Pies E. Finding A Better Way To Produce Grass Huts
31. If Mary Ann Decides To Swim In The Lagoon In The Afternoon, Instead Of Working, She Will Move To A Point A. Beyond Her Ppc B. Below Her Ppc C. Higher On Her Ppc D. Lower On Her Ppc E. Off The Ppc Graph
32. If Education And Food Are The Two Goods That Society Can Produce, An Increase In The Production Technology For Food Will Result In A. An Increase In General Economic Growth B. A Decrease In The Production Of Education C. An Increase In Specific Economic Growth D. A Decrease In The Production Of Education E. A Decrease In The Opportunity Cost Of Education
33. Why Is There "No Such Thing As A Free Lunch"? A. You End Up Buying The Next Time B. You Often Get Stuck With The Check C. The Time You Spend Eating Lunch Could Be Spent Some Other Way D. "Free" Lunches Often Aren't Good And Make You Sick Later On E. You Don't Always Get What You Want To Eat
34. If A Country's Gdp Increases From $1,000 To $2,000 At The Same Time Prices Double, Real Gdp Will A. Rise B. Fall C. Stay The Same D. Fluctuate E. Be Unable To Be Determined
35. If A Country's Gdp Increases From $1m To $2m At The Same Time Prices Increase By Half (50%), Real Gdp Will A. Rise B. Fall C. Stay The Same D. Fluctuate E. Be Unable To Be Determined
36. If A Country's Gdp Increases From $1m To $2m At The Same Time Prices Remain The Same, Real Gdp Will A. Rise B. Fall C. Stay The Same D. Fluctuate E. Be Unable To Be Determined
37. Gross Domestic Product (Gdp) Is Defined As A. The Total Volume Of Goods And Services Produced In The Economy In A Year's Time B. The Value Of All Goods Produced In The Economy In A Year's Time, Minus Production Of Capital Goods C. The Value Of All Goods And Services Produced In Final Form In The Economy In A Year's Time Using Domestically Owned Resources D. The Value Of All Goods And Services That Could Possibly Be Produced In The Economy In A Year's Time E. None Of The Above
38. If Population In A Country Falls While Gdp Stays The Same, The Country's A. Real Gdp Falls B. Real Gdp Rises C. Per Capita Gdp Rises D. Per Capita Gdp Falls E. Welfare Falls
39. Which Of The Following Provides The Best Measure Of The Standard Of Living In An Economy In A Single Year? A. The Consumer Price Index B. The Wholesale Price Index C. Gross Domestic Product (Gdp) D. Per Capita Real Gdp E. None Of The Above
40. While Per Capita Gdp Is A Useful Measure Of Economic Well-Being, It Fails To Take Into Account A. The Population Of The Economy B. The Value Of Capital Goods Produced Within The Economy C. The Value Of Goods Produced For Export D. The Distribution Of Gdp Within The Economy E. Whether Goods Were Produced Within The Country
41. Which Of The Following Would Not Be Counted As Part Of U.S. Gdp? A. A Mazda Mx6 Produced In Detroit B. An Apple Computer Produced In California C. A Dodge Intrepid Produced In Canada D. A Six-Pack Of Sam Adams Brewed In Pittsburgh E. A Haircut Given In Washington D.C.
42. If Ford Motors Shifts All Production Outside Of The U.S., Which Of The Following Is ? A. Gnp Would Remain Unchanged And Gdp Would Decline B. Gdp Would Remain Unchanged C. Both Gnp And Gdp Would Remain Unchanged D. Gdp Would Remain Unchanged And Gnp Would Decline E. Gnp Would Increase
43. Suppose That Gross Domestic Product For 2012 Is $600 Million And The Price Index For That Year (2005 = 100) Is 300. Gdp For 2012 In Constant (2005) Dollars Is A. Impossible To Determine With This Information B. $200,000,000 C. $20,000 D. $200,000 E. $2,000,000
44. In 2011, A Country Produces 2 Bushels Of Wheat, Each Selling For $5. In 2012, The Country Also Produces 2 Bushels Of Wheat, But Each Bushel Sells For $10. Which Of The Following Is ? A. Real Gdp Did Not Change Between 2011 And 2012 B. Real Gdp Doubled Between 2011 And 2012 C. Gdp Did Not Change Between 2011 And 2012 D. Gdp Increased By 50% Between 2011 And 2012 E. None Of The Above Is
45. Given The Amounts Of Resources Available For An Economy, Gdp A. Will Be Determined Solely By The Amounts Of Labor And Capital Present B. Will Be Larger The Better The Techniques Of Production Used C. Can Increase Only If There Is An Increase In The Quantities Of These Resources D. Will Usually Be Equitably Divided Among The Population E. Will Not Change Over Time
46. In Year 1, An Economy Produces 10m Cars At A Price Of $15,000 Each. In Year 2, The Economy Produces 10m Cars, But The Price Of Each Car Is $20,000. Which Of The Following Is ? A. Real Gdp Has Increased B. Real Gdp Has Decreased C. Current Dollar Gdp Has Increased D. Current Dollar Gdp Has Decreased E. Productivity Has Increased
47. To Correct For Inflation, Gdp Numbers Must Be Converted Using The Price Level In A Given Year Known As The A. Base Year B. Real Year C. Current Year D. Constant Year E. Inflation Year
48. When Analyzing The Performance Of A Single Economy Over Time, Which Measure Is Most Appropriate? A. Real Gdp B. Gdp C. Real Gdp Per Capita D. Gdp Per Capita E. Base Year Gdp
49. When Comparing The Performance Of Economies In Terms Of The Average Well-Being Of Their Inhabitants, Which Measure Is Most Appropriate? A. Real Gdp B. Gdp C. Real Gdp Per Capita D. Gdp Per Capita E. Base Year Gdp
50. Real Per Capita Gdp Is Defined As A. Population/Real Gdp B. Gdp/Population C. Real Gdp/Price Index D. Real Gdp/Population
E. Price Index/Gdp
51. The Well-Being Of Ldcs, As Measured By Per Capita Real Gdp, Is Probably Overstated Due To A. Inflation B. Population Increases C. Unemployment D. Income Distribution E. Life Expectancy
52. In A Lesser-Developed Country, A High Rate Of Population Growth A. Stimulates Demand For Products And Accelerates The Development Process B. Seldom Occurs C. Is Not A Serious Problem, Since The Rate Of Growth In Gdp Always Exceeds The Rate Of Population Increase D. May Be A Problem Since, As Development Begins, The Higher Rate Of Population Growth Impedes The Growth Of Per Capita Income E. Is Beneficial For Economic Development
53. The Efficiency Of Resource Usage In Ldcs Can Be Improved By All Of The Following Except: A. The Adaptation Of New Technology
B. Increased Capital Investment C. Adopting More Flexible Wage Structures D. Maintaining The Existing Land Ownership, Or Tenure, System E. Upgrading Transportation Networks
54. Increases In A Country's Population Will Always Have Which Of The Following Effects? A. The Ppc Will Shift Out B. Welfare Will Decline C. Economic Development Will Be Slowed D. Death Rates Will Increase E. None Of The Above
55. The Most Important Key To Improvement In The Quality Of A Country's Labor Force Is A. Health Care B. Nutrition C. Mobility D. Education E. Population Growth
56. Developing Countries Can Shift Their Production Possibility Curves Out Through A. Improvements Of Labor Force Quality B. Capital Accumulation C. Technological Development D. Discovery Of New Natural Resources E. All Of The Above
57. Which Of The Following Are Potential Obstacles To Economic Development In Ldcs? A. Lack Of Resources B. Lack Of An Education C. War And Political Instability D. Traditional Methods Of Production And Ownership Of Resources E. All Of The Above
58. A Movement Along A Production Possibilities Curve Will Lead To An Increase In Social Well-Being, As Long As A. There Is Enough Labor And Capital Available To Make The Move B. The Msb Of The Move Is Greater Than The Msc C. The Msb Of The Move Is Equal To The Msc D. The Msb Of The Move Is Less Than The Msc E. No One In The Economy Is Left Worse Off By The Move
59. Marginal Social Cost Refers To The A. Cost Incurred Due To An Action Undertaken By Society B. Total Expenditures By Society On A Good Like A Public Park C. Cost Borne By Society When 1 More Unit Of A Good Is Produced D. Cost To Society Of Sub-Standard Production E. Cost To Society When An Additional Unit Of A Social Good Is Produced
60. The Opportunity Cost Borne By Society When An Additional Unit Of A Good Is Produced Is A. Marginal Social Cost B. Marginal Social Benefit C. Cost/Benefit Analysis D. Scarcity Rent E. Gdp
61. If 10 Units Of Food Must Be Given Up To Produce An Additional Unit Of Education, Which Of The Following Is ? A. The Msc Of The Unit Of Education Is 10 B. The Msb Of The Unit Of Education Is 10 C. The Msc Of The Food Is 10 D. The Msb Of The Food Is 10 E. None Of The Above
62. What Is The Msb Of A Shift From The Production Of 20 Units Of Food And 2 Units Of Education To 10 Units Of Food And 3 Units Of Education? A. 20 Units Of Food B. 10 Units Of Food C. 1 Unit Of Education D. 2 Units Of Education E. 3 Units Of Education
63. Which Of The Following Is A Technique Used To Determine The Optimal Level Of An Economic Activity? A. Cost/Benefit Analysis B. Production Possibilities Curve Analysis C. Gdp Analysis D. Opportunity Cost Analysis E. None Of The Above
64. Any Change For Which Msb>Msc Will A. Increase Social Well-Being B. Decrease Social Well-Being C. Not Change Social Well-Being D. Cost More Than It Is Worth To Society E. Increase Gdp
65. If The Msc Of An Additional Hour Of An Activity Is Greater Than The Msb, You Should A. Do More Of The Activity B. Do Less Of The Activity C. Not Change Your Level Of The Activity D. Do Less Of Another Activity E. Do More Of The Activity If You Like Doing It
66. Cost-Benefit Analysis A. Is Only Useful When Making Economic Choices B. Applies Best To Financial Decisions C. Suggests That An Activity Should Be Expanded If It Yields Greater Marginal Benefits Than Costs D. Is Useful In Correcting Gdp Numbers For Inflation E. Suggests An Activity Should Be Expended If Msc > Msb
67. Which Of The Following Is Not A Cause Of Poverty In Ldcs? The A. Quality Of Labor B. Stock Of Capital C. Level Of Technology D. Population Density E. Capital Accumulation Rates
68. The Quality Of The Labor Force Is Often Measured By A. Illiteracy Rates B. Gdp Per Capita C. Capital-To-Labor Ratios D. Life Expectancy E. Infant Mortality Rates
69. Which Of The Following Is Related To Poverty In Ldcs? A. Low Capital-To-Labor Ratios B. Few Available Capital Resources C. Poor Transportation Networks D. Limited Mineral Deposits E. All Of The Above
70. Which Of The Following Is An Example Of Social Infrastructure? A. The Transportation Network B. The Communication Network C. A Power System D. An Airport E. All Of The Above
71. With Private Property Rights, The Decision About How To Use Resources Are Made By A. The Government B. Private Firms C. Individual Resource Owners D. Resource Committees E. All Of The Above
72. To Promote Development, The Governments Of Ldcs Should Pursue Policies That A. Improve The Quality Of Labor B. Enhance Capital Accumulation C. Raise Technology Levels D. Increase Efficiency E. Do All Of The Above
73. Which Of The Following Policies Will Not Contribute To Economic Development In An Ldc? A. Pursue Economic Stability B. Promote Capital Accumulation Through Tax Incentives C. Provide Social Infrastructure D. Promote Efficiency E. Pursue Policies Designed To Increase Birth Rates
74. To Help Ldcs Develop, Governments Of Dcs Provide A. Loans B. Grants C. Humanitarian Aid D. Technical Assistance E. All Of The Above
75. Which Of The Following Is An Organization Through Which Dcs Jointly Assist Ldcs? A. The World Bank B. Nato C. The Federal Reserve D. Nafta E. The Wto
76. A Country Can Shift Out Its Production Possibilities Curve By A. Improving Its Technology B. Shifting Its Production From One Good To Another C. Experiencing A Population Drop D. Using Its Farmland More Productively E. All Of The Above
77. The Purpose Of A Base Year When Constructing A Price Index Is: A. Showing How The Output Values Rise From Year To Year B. Encourage Inflation C. Providing A Means To Compare The Economy's Output Across Different Time Periods D. To Show Why Expenditures On Government Goods And Services Need To Increase E. Indicate The Progress In Keeping Prices Low
True / False Questions
78. Approximately Two Thirds Of The World's Population Goes To Sleep Hungry At Night.
79. Approximately One Fifth Of The World Survives On Less Than $1 Per Day.
80. Nowhere In The World Today Experiences Famine.
81. The Developed Countries Are Approaching The Point At Which The Wants Of Their Population Are Fully Satisfied.
82. The Fundamental Economic Problem Is How To Make Money.
83. Economic Problems Arise Because Human Wants Are Unlimited And The Means Available For Satisfying Them Are Limited.
84. If Everyone Could Have Everything He Or She Wanted, There Would Be No Need For Economics.
85. The Quantity Of Goods And Services Per Year That An Economic System Can Produce Is Limited.
86. If Expanding An Activity Leads To Greater Msb Than Msc, Social Well-Being Is Increased By The Expansion.
87. Cost/Benefit Analysis Compares The Msc And Msb Of An Activity To Determine If The Level Of An Activity Should Be Changed.
88. Gdp Measures The Market Value Of All Final Goods And Services Produced Within An Economy During A Time Period, Regardless Of Who Owns The Resources Used In Production.
89. Gnp Would Include The Value Of Value Of Honda Accords Built In Ohio.
90. Per Capita Gdp Is A Near-Perfect Measure Of An Economy's Standard Of Living Because It Takes Into Account The Distribution Of The Economy's Income Among The Population.
91. If Data For A Series Of Years Shows Increases In Current Dollar Gdp, We Can Assume The Economy's Output Is Increasing.
92. Price Index Numbers Are Used To Correct Data Series For Inflation.
93. Current Dollar Gdp Can Increase While Real Gdp Decreases.
94. If Current Dollar Gdp Remains The Same While The Population Declines, Per Capita Gdp Will Decrease.
95. When Comparing Welfare In Two Different Countries, Per Capita Gdp Is A Better Measure Than Current Dollar Gdp.
96. Given That Two Countries, Alpha And Beta, Have The Same Per Capita Gdp, We Can Be Sure That The People Of The Two Countries Are Equally Well-Off.
97. The Expression, "There Ain't No Such Thing As A Free Lunch," Only Applies To Goods, Such As Cars, Not To Services, Such As Health Care And Education.
98. Inefficiency Exists Whenever The Economy's Output Combination Lies Inside Its Production Possibilities Curve.
99. Countries Will Always Produce Outside Their Production Possibilities Curves.
100. Education Is An Example Of A Good That Is "Free," Since An Improvement In Education Leads To An Outward Shift In The Production Possibilities Curve.
101. Unemployment Will Move An Economy To A Point Below Its Production Possibilities Curve.
102. A Production Possibilities Curve Shows The Possible Trade-Off Of One Good For Another In Production Under Conditions Of Full Employment.
103. An Increase In The Labor Force Will Bring About An Outward Shift In An Economy's Production Possibilities Curve.
104. An Improvement In Education Leads To An Outward Shift In The Production Possibilities Curve.
105. If A Movement Along The Production Possibilities Curve Yields Greater Benefits To Society Than Costs, The Movement Will Increase Social Well-Being.
106. The Marginal Social Cost Of A Movement Along A Production Possibilities Curve Is The Same As The Opportunity Cost Of The Move.
107. The Fact That Resources Are Rarely Perfectly Substitutable Gives The Production Possibilities Curve Its Bow Shape.
108. Without Increasing Opportunity Costs, A Production Possibilities Curve Will Be A Straight Line.
109. The Term Capital As Used By An Economist Refers To The Money Or The Stocks And Bonds That Are Used To Finance A Business Enterprise.
110. Technology Refers To The Known Means And Methods Available For Combining Resources To Produce Goods And Services.
111. Labor Resources Consist Of All Efforts Of Mind And Muscle That Are Available For Use In Production Processes.
112. Mineral Deposits Found In The Ground Are Not Considered Resources.
113. Population Growth Appears To Be The Major Problem Of Less Developed Countries.
114. The Available Data On Various Countries Of The World Show That There Is An Inverse Relationship Between Population Densities And Per Capita Gdp.
115. The Major Function Of The Federal Reserve Bank Is To Provide Low Interest Loans To Ldcs.
116. In Developing Countries, Reductions In The Death Rate Usually Lag Behind Reductions In The Birth Rate.
117. For Economic Development To Occur In Less-Developed Countries, It Is Important That Their Governments Establish An Economic Climate In Which Education Is Stressed And Capital Accumulation Is Encouraged.
118. A Broad-Based Education Is Generally Ineffective In Improving The Quality Of A Country's Labor Force.
119. Technological Development Goes Hand In Hand With Advancing Educational Levels And Capital Accumulation.
120. Roads And Bridges Are Examples Of Social Infrastructure.
121. When A Private Firm Builds A New Plant In An Ldc, The Country's Social Infrastructure Is Increased.
122. Income Inequality Is A Problem Faced By The Developed Countries, As Well As The Developing Countries, Of The World.
123. A Significant Problem Faced By Developing Countries Is The Tendency For Their Relatively Well-Educated Citizens To Leave Their Homes To Work And Live In The Developed World Where Compensation For Their Skills Is High.
124. Capital Flight From Less Developed To Developed Countries Tends To Offset Capital Infusions From Developed Countries.
125. The Governments Of Developed Countries Will Not Help Ldcs Develop By Providing Them With Capital And Technical Assistance Because Ldcs Must Learn To Develop On Their Own.
126. The "Brain Drain" Refers To The Deterioration Of Educational Attainment In Less Developed Countries Due To Poor Nutrition And Sanitation.
127. Poverty Is Primarily A Result Of Rapid Population Growth In Much Of The Underdeveloped World.
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ECO 305 Week 2 Quiz – Strayer NEW
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CHAPTER 1
THE INTERNATIONAL ECONOMY AND GLOBALIZATION
MULTIPLE CHOICE
1. A primary reason why nations conduct international trade is because:
a. Some nations prefer to produce one thing while others produce other things
b. Resources are not equally distributed among all trading nations
c. Trade enhances opportunities to accumulate profits
d. Interest rates are not identical in all trading nations
2. A main advantage of specialization results from:
a. Economies of large-scale production
b. The specializing country behaving as a monopoly
c. Smaller production runs resulting in lower unit costs
d. High wages paid to foreign workers
3. International trade in goods and services is sometimes used as a substitute for all of the following except:
a. International movements of capital
b. International movements of labor
c. Domestic production of the same goods and services
d. Domestic production of different goods and services
4. If a nation has an open economy, it means that the nation:
a. Allows private ownership of capital
b. Has flexible exchange rates
c. Has fixed exchange rates
d. Conducts trade with other countries
5. International trade forces domestic firms to become more competitive in terms of:
a. The introduction of new products
b. Product design and quality
c. Product price
d. All of the above
6. The movement to free international trade is most likely to generate short-term unemployment in which industries?
a. Industries in which there are neither imports nor exports
b. Import-competing industries
c. Industries that sell to domestic and foreign buyers
d. Industries that sell to only foreign buyers
7. International trade is based on the idea that:
a. Exports should exceed imports
b. Imports should exceed exports
c. Resources are more mobile internationally than are goods
d. Resources are less mobile internationally than are goods
8. Arguments for free trade are sometimes disregarded by politicians because:
a. Maximizing domestic efficiency is not considered important
b. Maximizing consumer welfare may not be a chief priority
c. There exist sound economic reasons for keeping one's economy isolated from other economies
d. Economists tend to favor highly protected domestic markets
9. How much physical output a worker producers in an hour's work depends on:
a. The worker's motivation and skill
b. The technology, plant, and equipment in use
c. How easy the product is to manufacture
d. All of the above
10. The largest amount of trade with the United States in recent years has been conducted by:
a. Canada
b. Germany
c. Chile
d. United Kingdom
11. Increased foreign competition tends to:
a. Intensify inflationary pressures at home
b. Induce falling output per worker-hour for domestic workers
c. Place constraints on the wages of domestic workers
d. Increase profits of domestic import-competing industries
12. ____ is the ability of a firm/industry, under free and fair market conditions, to design, produce, and market goods and services that are better and/or cheaper than those of other firms/industries.
a. Competitiveness
b. Protectionism
c. Comparative advantage
d. Absolute advantage
13. A firm's ____, relative to that of other firms, is generally regarded as the most important determinant of competitiveness.
a. Income level
b. Tastes and preferences
c. Governmental regulation
d. Productivity
14. Free traders maintain that an open economy is advantageous in that it provides all of the following except:
a. Increased competition for world producers
b. A wider selection of products for consumers
c. The utilization of the most efficient production methods
d. Relatively high wage levels for all domestic workers
15. Recent pressures for protectionism in the United States have been motivated by all of the following except:
a. U.S. firms shipping component production overseas
b. High profit levels for American corporations
c. Sluggish rates of productivity growth in the United States
d. High unemployment rates among American workers
16. International trade tends to cause welfare losses to at least some groups in a country:
a. The less mobile the country's resources
b. The more mobile the country's resources
c. The lower the country's initial living standard
d. The higher the country's initial living standard
17. For a nation to maximize its productivity in a global economy:
a. Only imports are necessary
b. Only exports are necessary
c. Both imports and exports are necessary
d. Neither imports nor exports are necessary
18. A feasible effect of international trade is that:
a. A monopoly in the home market becomes an oligopoly in the world market
b. An oligopoly in the home market becomes a monopoly in the world market
c. A purely competitive firm becomes an oligopolist
d. A purely competitive firm becomes a monopolist
19. International trade in goods and services tends to:
a. Increase all domestic costs and prices
b. Keep all domestic costs and prices at the same level
c. Lessen the amount of competition facing home manufacturers
d. Increase the amount of competition facing home manufacturers
20. The real income of domestic producers and consumers can be increased by:
a. Technological progress, but not international trade
b. International trade, but not technological progress
c. Technological progress and international trade
d. Neither technological progress nor international trade
21. In the United States, automobiles are
a. Imported, but not exported
b. Exported, but not imported
c. Imported and exported
d. Neither exported nor imported
22. Technological improvements are similar to international trade since they both:
a. Provide benefits for all producers and consumers
b. Increase the nation's aggregate income
c. Reduce unemployment for all domestic workers
d. Ensure that industries can operate at less than full capacity
23. A sudden shift from import tariffs to free trade may induce short-term unemployment in:
a. Import-competing industries
b. Industries that are only exporters
c. Industries that sell domestically as well as export
d. Industries that neither import nor export
24. Recent empirical studies indicate that productivity performance in industries is:
a. Directly related to globalization of industries
b. Inversely related to globalization of industries
c. Not related to globalization of industries
d. Any of the above
25. Empirical research indicates that ____ best enhances productivity gains for firms and industries.
a. Local competition
b. Regional competition
c. Global competition
d. No competition
26. Increased globalization is fostered by:
a. Increased tariffs and quotas
b. Restrictions on the migration of labor
c. Reduced transportation costs
d. Restrictions on investment flows
27. A reduced share of the world export market for the United States would be attributed to:
a. Decreased productivity in U.S. manufacturing
b. High incomes of American households
c. Relatively low interest rates in the United States
d. High levels of investment by American corporations
28. The dominant trading nation in the world market following World War II was:
a. United Kingdom
b. Germany
c. South Korea
d. United States
29. A closed economy is one in which:
a. Imports exactly equal exports, so that trade is balanced
b. Domestic firms invest in industries overseas
c. The home economy is isolated from foreign trade
d. Saving exactly equals investment at full employment
30. Relative to countries with low ratios of exports to gross domestic product, countries having high export to gross domestic product ratios are ____ vulnerable to changes in the world market.
a. Less
b. More
c. Equally
d. Any of the above
31. Which of the following is a fallacy of international trade?
a. Trade is a zero-sum activity
b. Exports increase employment in exporting industries
c. Import restrictions increase employment in import-competing industries
d. Tariffs and quotas reduce trade volume
32. Foreign ownership of U.S. financial assets
a. Has decreased since the 1960's
b. Has increased since the 1960's
c. Has made the U.S. a net borrower since the late 1980's
d. Both a and c
33. The first wave of globalization was brought to an end by
a. The Great Depression
b. The Second World War
c. The First World War
d. The Smoot-Hawley Act
34. Multilateral trade negotiations have led to
a. Continued trade liberalization
b. Financial liberalization
c. Increased investment
d. All of the above
TRUE/FALSE
1. Important trading partners of the United States include Canada, Mexico, Japan, and China.
2. The United States exports a larger percentage of its gross domestic product than Japan, Germany, and Canada.
3. Opening the economy to international trade tends to lessen inflationary pressures at home.
4. The benefits of international trade accrue in the forms of lower domestic prices, development of more efficient methods and new products, and a greater range of consumption choices.
5. In an open trading system, a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost.
6. Although free trade provides benefits for consumers, it is often argued that import protection should be provided to domestic producers of strategic goods and materials vital to the nation's security.
7. In the long run, competitiveness depends on an industry's natural resources, its stock of machinery and equipment, and the skill of its workers in creating goods that people want to buy.
8. If a nation has an open economy, it means that the nation allows private ownership of capital.
9. Increased foreign competition tends to increase profits of domestic import-competing companies.
10. Restrictive trade policies have resulted in U.S. producers of minerals and metals supplying all of the U.S. consumers' needs.
SHORT ANSWER
1. What is the most important factor which contributes to competitiveness?
2. What are the challenges of the international trading system?
ESSAY
1. Does exposure to competition with the world leader in a particular industry improve a firm's productivity?
2. What are the essential arguments in favor of free trade?
CHAPTER 2—FOUNDATIONS OF MODERN TRADE THEORY: COMPARATIVE ADVANTAGE
MULTIPLE CHOICE
1. The mercantilists would have objected to:
a. Export promotion policies initiated by the government
b. The use of tariffs or quotas to restrict imports
c. Trade policies designed to accumulate gold and other precious metals
d. International trade based on open markets
2. Unlike the mercantilists, Adam Smith maintained that:
a. Trade benefits one nation only at the expense of another nation
b. Government control of trade leads to maximum economic welfare
c. All nations can gain from free international trade
d. The world's output of goods must remain constant over time
3. The trading principle formulated by Adam Smith maintained that:
a. International prices are determined from the demand side of the market
b. Differences in resource endowments determine comparative advantage
c. Differences in income levels govern world trade patterns
d. Absolute cost differences determine the immediate basis for trade
4. Unlike Adam Smith, David Ricardo's trading principle emphasizes the:
a. Demand side of the market
b. Supply side of the market
c. Role of comparative costs
d. Role of absolute costs
5. When a nation requires fewer resources than another nation to produce a product, the nation is said to have a:
a. Absolute advantage in the production of the product
b. Comparative advantage in the production of the product
c. Lower marginal rate of transformation for the product
d. Lower opportunity cost of producing the product
6. According to the principle of comparative advantage, specialization and trade increase a nation's total output since:
a. Resources are directed to their highest productivity
b. The output of the nation's trading partner declines
c. The nation can produce outside of its production possibilities curve
d. The problem of unemployment is eliminated
7. In a two-product, two-country world, international trade can lead to increases in:
a. Consumer welfare only if output of both products is increased
b. Output of both products and consumer welfare in both countries
c. Total production of both products, but not consumer welfare in both countries
d. Consumer welfare in both countries, but not total production of both products
8. As a result of international trade, specialization in production tends to be:
a. Complete with constant costs--complete with increasing costs
b. Complete with constant costs--incomplete with increasing costs
c. Incomplete with constant costs--complete with increasing costs
d. Incomplete with constant costs--incomplete with increasing costs
9. A nation that gains from trade will find its consumption point being located:
a. Inside its production possibilities curve
b. Along its production possibilities curve
c. Outside its production possibilities curve
d. None of the above
Table 2.1. Output Possibilities of the U.S. and the U.K.
Output per Worker per day
Country Tons of Steel Televisions
United States 15 45
United Kingdom 10 20
10. Referring to Table 2.1, the United States has the absolute advantage in the production of:
a. Steel
b. Televisions
c. Both steel and televisions
d. Neither steel nor televisions
11. Referring to Table 2.1, the United Kingdom has a comparative advantage in the production of:
a. Steel
b. Televisions
c. Both steel and televisions
d. Neither steel nor televisions
12. Refer to Table 2.1. If trade opens up between the United States and the United Kingdom, American firms should specialize in producing:
a. Steel
b. Televisions
c. Both steel and televisions
d. Neither steel nor televisions
13. Referring to Table 2.1, the opportunity cost of producing one ton of steel in the United States is:
a. 3 televisions
b. 10 televisions
c. 20 televisions
d. 45 televisions
14. Refer to Table 2.1. Mutually advantageous trade will occur between the United States and the United Kingdom so long as one ton of steel trades for:
a. At least 1 television, but no more than 2 televisions
b. At least 2 televisions, but no more than 3 televisions
c. At least 3 televisions, but no more than 4 televisions
d. At least 4 televisions, but no more than 5 televisions
15. Referring to Table 2.1, the United Kingdom gains most from trade if:
a. 1 ton of steel trades for 2 televisions
b. 1 ton of steel trades for 3 televisions
c. 2 tons of steel trade for 4 televisions
d. 2 tons of steel trade for 5 televisions
16. Concerning international trade restrictions, which of the following is false? Trade restrictions:
a. Limit specialization and the division of labor
b. Reduce the volume of trade and the gains from trade
c. Cause nations to produce inside their production possibilities curves
d. May result in a country producing some of the product of its comparative disadvantage
17. If a production possibilities curve is bowed out (i.e., concave) in appearance, production occurs under conditions of:
a. Constant opportunity costs
b. Increasing opportunity costs
c. Decreasing opportunity costs
d. Zero opportunity costs
18. Increasing opportunity costs suggest that:
a. Resources are not perfectly shiftable between the production of two goods
b. Resources are fully shiftable between the production of two goods
c. A country's production possibilities curve appears as a straight line
d. A country's production possibilities curve is bowed inward (i.e., convex) in appearance
19. The trading-triangle concept is used to indicate a nation's:
a. Exports, marginal rate of transformation, terms of trade
b. Imports, terms of trade, marginal rate of transformation
c. Marginal rate of transformation, imports, exports
d. Terms of trade, exports, imports
20. Assuming increasing cost conditions, trade between two countries would not be likely if they have:
a. Identical demand conditions but different supply conditions
b. Identical supply conditions but different demand conditions
c. Different supply conditions and different demand conditions
d. Identical demand conditions and identical supply conditions
Table 2.2. Output possibilities for South Korea and Japan
Output per worker per day
Country Tons of steel VCRs
South Korea 80 40
Japan 20 20
21. Referring to Table 2.2, the opportunity cost of one VCR in Japan is:
a. 1 ton of steel
b. 2 tons of steel
c. 3 tons of steel
d. 4 tons of steel
22. Referring to Table 2.2, the opportunity cost of one VCR in South Korea is:
a. 1/2 ton of steel
b. 1 ton of steel
c. 1 1/2 tons of steel
d. 2 tons of steel
23. Refer to Table 2.2. According to the principle of absolute advantage, Japan should:
a. Export steel
b. Export VCRs
c. Export steel and VCRs
d. None of the above; there is no basis for gainful trade
24. Refer to Table 2.2. According to the principle of comparative advantage:
a. South Korea should export steel
b. South Korea should export steel and VCRs
c. Japan should export steel
d. Japan should export steel and VCRs
25. Refer to Table 2.2. With international trade, what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each VCR?
a. 1/2 ton of steel
b. 1 ton of steel
c. 1-1/2 tons of steel
d. 2 tons of steel
26. Refer to Table 2.2. With international trade, what would be the maximum number of VCRs that Japan would be willing to export to South Korea in exchange for each ton of steel?
a. 1 VCR
b. 2 VCRs
c. 3 VCRs
d. 4 VCRs
27. The earliest statement of the principle of comparative advantage is associated with:
a. Adam Smith
b. David Ricardo
c. Eli Heckscher
d. Bertil Ohlin
28. If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production:
a. Trade would depend on differences in demand conditions
b. Trade would depend on economies of large-scale production
c. Trade would depend on the use of different currencies
d. There would be no basis for gainful trade
29. If the international terms of trade settle at a level that is between each country's opportunity cost:
a. There is no basis for gainful trade for either country
b. Both countries gain from trade
c. Only one country gains from trade
d. One country gains and the other country loses from trade
30. International trade is based on the notion that:
a. Different currencies are an obstacle to international trade
b. Goods are more mobile internationally than are resources
c. Resources are more mobile internationally than are goods
d. A country's exports should always exceed its imports
Figure 2.1. Production Possibilities Schedule
31. Referring to Figure 2.1, the relative cost of steel in terms of aluminum is:
a. 4.0 tons
b. 2.0 tons
c. 0.5 tons
d. 0.25 tons
32. Referring to Figure 2.1, the relative cost of aluminum in terms of steel is:
a. 4.0 tons
b. 2.0 tons
c. 0.5 tons
d. 0.25 tons
33. Refer to Figure 2.1. If the relative cost of steel were to rise, then the production possibilities schedule would:
a. Become steeper
b. Become flatter
c. Shift inward in a parallel manner
d. Shift outward in a parallel manner
34. Refer to Figure 2.1. If the relative cost of aluminum were to rise, then the production possibilities schedule would:
a. Become steeper
b. Become flatter
c. Shift inward in a parallel manner
d. Shift outward in a parallel manner
35. When a nation achieves autarky equilibrium:
a. Input price equals final product price
b. Labor productivity equals the wage rate
c. Imports equal exports
d. Production equals consumption
36. When a nation is in autarky and maximizes its living standard, its consumption and production points are:
a. Along the production possibilities schedule
b. Above the production possibilities schedule
c. Beneath the production possibilities schedule
d. Any of the above
37. If Canada experiences increasing opportunity costs, its supply schedule of steel will be:
a. Downward-sloping
b. Upward-sloping
c. Horizontal
d. Vertical
38. If Canada experiences constant opportunity costs, its supply schedule of steel will be:
a. Downward-sloping
b. Upward-sloping
c. Horizontal
d. Vertical
39. The gains from international trade increase as:
a. A nation consumes inside of its production possibilities schedule
b. A nation consumes along its production possibilities schedule
c. The international terms of trade rises above the nation's autarky price
d. The international terms of trade approaches the nation's autarky price
40. In a two-country, two-product world, the statement "Japan enjoys a comparative advantage over France in steel relative to bicycles" is equivalent to:
a. France having a comparative advantage over Japan in bicycles relative to steel
b. France having a comparative disadvantage against Japan in bicycles and steel
c. Japan having a comparative advantage over France in steel and bicycles
d. Japan having a comparative disadvantage against Japan in bicycles and steel
41. Ricardo's theory of comparative advantage was of limited real-world validity because it was founded on the:
a. Labor theory of value
b. Capital theory of value
c. Land theory of value
d. Entrepreneur theory of value
42. Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages in the United Kingdom equal $10 per hour. Production costs would be lower in the United States than the United Kingdom if:
a. U.S. labor productivity equaled 40 units per hour while U.K. labor productivity equaled 15 units per hour
b. U.S. labor productivity equaled 30 units per hour while U.K. labor productivity equaled 20 units per hour
c. U.S. labor productivity equaled 20 units per hour while U.K. labor productivity equaled 30 units per hour
d. U.S. labor productivity equaled 15 units per hour while U.K. labor productivity equaled 25 units per hour
43. According to Ricardo, a country will have a comparative advantage in the product in which its:
a. Labor productivity is relatively low
b. Labor productivity is relatively high
c. Labor mobility is relatively low
d. Labor mobility is relatively high
44. The Ricardian model of comparative advantage is based on all of the following assumptions except:
a. Only two nations and two products
b. Product quality varies among nations
c. Labor is the only factor of production
d. Labor can move freely within a nation
45. The writings of G. MacDougall emphasized which of the following as an explanation of a country's competitive position?
a. National income levels
b. Relative endowments of natural resources
c. Domestic tastes and preferences
d. Labor compensation and productivity levels
46. The introduction of community indifference curves into our trading example focuses attention on the nation's:
a. Income level
b. Resource prices
c. Tastes and preferences
d. Productivity level
47. Introducing indifference curves into our trade model permits us to determine:
a. Where a nation chooses to locate along its production possibilities curve in autarky
b. The precise location of a nation's production possibilities curve
c. Whether absolute cost or comparative cost conditions exist
d. The currency price of one product in terms of another product
48. In the absence of trade, a nation is in equilibrium where a community indifference curve:
a. Lies above its production possibilities curve
b. Is tangent to its production possibilities curve
c. Intersects its production possibilities curve
d. Lies below its production possibilities curve
49. The use of indifference curves helps us determine the point:
a. Along the terms-of-trade line a country will choose
b. Where a country maximizes its resource productivity
c. At which a country ceases to become competitive
d. Where the marginal rate of transformation approaches zero
50. With trade, a country will maximize its satisfaction when it:
a. Moves to the highest possible indifference curve
b. Forces the marginal rate of substitution to its lowest possible value
c. Consumes more of both goods than it does in autarky
d. Finds its marginal rate of substitution exceeding its marginal rate of transformation
51. Trade between two nations would not be possible if they have:
a. Identical community indifference curves but different production possibilities curves
b. Identical production possibilities curves but different community indifference curves
c. Different production possibilities curves and different community indifference curves
d. Identical production possibilities curves and identical community indifference curves
52. Given a two-country and two-product world, the United States would enjoy all the attainable gains from free trade with Canada if it:
a. Trades at the U.S. rate of transformation
b. Trades at the Canadian rate of transformation
c. Specializes completely in the production of both goods
d. Specializes partially in the production of both goods
53. John Stuart Mill's theory of reciprocal demand best applies when trading partners:
a. Are of equal size and importance in the market
b. Produce under increasing cost conditions
c. Partially specialize in the production of commodities
d. Have similar taste and preference levels
54. The equilibrium prices and quantities established after trade are fully determinate if we know:
a. The location of all countries' indifference curves
b. The shape of each country's production possibilities curve
c. The comparative costs of each trading partner
d. The strength of world supply and demand for each good
55. "The equilibrium relative commodity price at which trade takes place is determined by the conditions of demand and supply for each commodity in both nations. Other things being equal, the nation with the more intense demand for the other nation's exported good will gain less from trade than the nation with the less intense demand." This statement was first proposed by:
a. Alfred Marshall with offer curve analysis
b. John Stuart Mill with the theory of reciprocal demand
c. Adam Smith with the theory of absolute advantage
d. David Ricardo with the theory of comparative advantage
56. Which of the following terms-of-trade concepts is calculated by dividing the change in a country's export price index by the change in its import price index between two points in time, multiplied by 100 to express the terms of trade in percentages?
a. Commodity terms of trade
b. Marginal rate of transformation
c. Marginal rate of substitution
d. Autarky price ratio
57. The best explanation of the gains from trade that David Ricardo could provide was to describe only the outer limits within which the equilibrium terms of trade would fall. This is because Ricardo's theory did not recognize how market prices are influenced by:
a. Demand conditions
b. Supply conditions
c. Business expectations
d. Profit patterns
58. Under free trade, Sweden enjoys all of the gains from trade with Holland if Sweden:
a. Trades at Holland's rate of transformation
b. Trades at Sweden's rate of transformation
c. Specializes completely in the production of its export good
d. Specializes partially in the production of its export good
59. Because the Ricardian trade theory recognized only how supply conditions influence international prices, it could determine:
a. The equilibrium terms of trade
b. The outer limits for the terms of trade
c. Where a country chooses to locate along its production possibilities curve
d. Where a country chooses to locate along its trade triangle
60. The terms of trade is given by the prices:
a. Paid for all goods imported by the home country
b. Received for all goods exported by the home country
c. Received for exports and paid for imports
d. Of primary products as opposed to manufactured products
Table 2.3. Terms of Trade
Export Price Index Import Price Index
Country 1990 2004 1990 2004
Mexico 100 220 100 200
Sweden 100 160 100 150
Spain 100 155 100 155
France 100 170 100 230
Denmark 100 120 100 125
61. Referring to Table 2.3, which countries' terms of trade improved between 1990 and 2004?
a. Mexico and Denmark
b. Sweden and Denmark
c. Sweden and Spain
d. Mexico and Sweden
62. Referring to Table 2.3, which countries' terms of trade worsened between 1990 and 2004?
a. Spain and Mexico
b. Mexico and France
c. France and Denmark
d. Denmark and Sweden
63. Referring to Table 2.3, which country's terms of trade did not change between 1990 and 2004?
a. Spain
b. Sweden
c. France
d. Denmark
64. Given free trade, small nations tend to benefit the most from trade since they:
a. Are more productive than their large trading partners
b. Are less productive than their large trading partners
c. Have demand preferences and income levels lower than their large trading partners
d. Enjoy terms of trade lying near the opportunity costs of their large trading partners
65. A terms-of-trade index that equals 150 indicates that compared to the base year:
a. It requires a greater output of domestic goods to obtain the same amount of foreign goods
b. It requires a lesser amount of domestic goods to obtain the same amount of foreign goods
c. The price of exports has risen from $100 to $150
d. The price of imports has risen from $100 to $150
66. A term-of-trade index that equals 90 indicates that compared to the base year:
a. It requires a greater output of domestic goods to obtain the same amount of foreign goods
b. It requires a lesser amount of domestic goods to obtain the same amount of foreign goods
c. The price of exports has fallen from $100 to $90
d. The price of imports has fallen from $100 to $90
67. The theory of reciprocal demand does not well apply when one country:
a. Produces under constant cost conditions
b. Produces along its production possibilities curve
c. Is of minor economic importance in the world marketplace
d. Partially specializes the production of its export good
68. The terms of trade is given by:
a. (Price of exports/price of imports) 100
b. (Price of exports/price of imports) + 100
c. (Price of exports/price of imports) 100
d. (Price of exports/price of imports) 100
69. If Japan and France have identical production possibilities curves and identical community indifference curves:
a. Japan will enjoy all the gains from trade
b. France will enjoy all the gains from trade
c. Japan and France share equally in the gains from trade
d. Gainful specialization and trade are not possible
70. A rise in the price of imports or a fall in the price of exports will:
a. Improve the terms of trade
b. Worsen the terms of trade
c. Expand the production possibilities curve
d. Contract the production possibilities curve
71. A fall in the price of imports or a rise in the price of exports will:
a. Improve the terms of trade
b. Worsen the terms of trade
c. Expand the production possibilities curve
d. Contract the production possibilities curve
72. Under free trade, Canada would not enjoy any gains from trade with Sweden if Canada:
a. Trades at the Canadian rate of transformation
b. Trades at Sweden's rate of transformation
c. Specializes completely in the production of its export good
d. Specializes partially in the production of its export good
Figure 2.2 illustrates trade data for Canada. The figure assumes that Canada attains international trade equilibrium at point C.
Figure 2.2. Canadian Trade Possibilities
73. Consider Figure 2.2. In the absence of trade, Canada would produce and consume:
a. 8 televisions and 16 refrigerators
b. 12 televisions and 16 refrigerators
c. 8 televisions and 12 refrigerators
d. 12 televisions and 8 refrigerators
74. Referring to Figure 2.2, Canada has a comparative advantage in:
a. Televisions
b. Refrigerators
c. Televisions and refrigerators
d. Neither televisions nor refrigerators
75. Consider Figure 2.2. With specialization, Canada produces:
a. 16 televisions
b. 12 televisions and 8 refrigerators
c. 8 televisions and 16 refrigerators
d. 24 refrigerators
76. Consider Figure 2.2. With trade, Canada consumes:
a. 12 televisions and 8 refrigerators
b. 12 televisions and 16 refrigerators
c. 8 televisions and 16 refrigerators
d. 24 refrigerators
77. According to Figure 2.2, exports for Canada total:
a. 16 refrigerators
b. 8 refrigerators
c. 12 refrigerators
d. 16 refrigerators
78. According to Figure 2.2, imports for Canada total:
a. 6 televisions
b. 8 televisions
c. 12 televisions
d. 16 televisions
79. Concerning possible determinants of international trade, which are sources of comparative advantage? Differences in:
a. Methods of production
b. Tastes and preferences
c. Technological know-how
d. All of the above
80. Ricardo's model of comparative advantage assumed all of the following except:
a. In each nation, labor is the only input
b. Costs do not vary with the level of production
c. Perfect competition prevails in all markets
d. Transportation costs rise as distance increases between countries
81. Ricardo's model of comparative advantage assumed all of the following except:
a. Trade is balanced, thus ruling out flows of money between nations
b. Firms make production decisions in an attempt to maximize profits
c. Free trade occurs between nations
d. Labor is immobile within a country, but is incapable of moving between countries
82. The dynamic gains from trade include all of the following except:
a. Economies of large-scale production resulting in decreasing unit cost
b. Increased saving and investment resulting in economic growth
c. Increased competition resulting in lower prices and wider range of output
d. Increasing comparative advantage leading to specialization
83. All of the following may be exit barriers except
a. Employee health benefit costs
b. Treatment, storage and disposal costs
c. Penalties for terminating contracts with raw material suppliers
d. Increasing opportunity cost of production
84. Incomplete specialization may be caused by
a. Increasing opportunity cost
b. Unrestricted trade
c. Constant opportunity cost
d. Decreasing opportunity cost
85. Improvements in productivity may lead to decreasing comparative costs if
a. The assumption of fixed technologies under constant costs is relaxed
b. Technologies available to each nation is allowed to differ
c. Resource endowments are allowed to vary
d. All of the above
86. Adam Smith
a. Was a leading advocate of free trade
b. Developed the concept of absolute advantage
c. Maintained that labor costs represent the major determinant of production cost
d. All of the above
87. Modern trade theory contends that the pattern of world trade is governed by
a. Differences in supply conditions and demand conditions
b. Supply conditions only
c. Demand conditions only
d. None of the above
88. When nations are of similar size, and have similar taste patterns, the gains from trade
a. Are shared equally between them
b. Are impossible to determine
c. Are too small, so that trading is not beneficial
d. Are determined by the nation that has comparative advantage in the more essential product
89. The commodity terms of trade measures
a. The rate at which exports exchange for imports
b. The influence trade has on productivity levels
c. The effect on income of the trading nation
d. The improvement in a nation's welfare
TRUE/FALSE
1. According to the mercantilists, a nation's welfare would improve if it maintained a surplus of exports over imports.
2. The mercantilists maintained that a free-trade policy best enhances a nation's welfare.
3. The mercantilists contended that because one nation's gains from trade come the expense of its trading partners, not all nations could simultaneously realize gains from trade.
4. According to the price-specie-flow-doctrine, a trade-surplus nation would experience gold outflows, a decrease in its money supply, and a fall in its price level.
5. The trade theories of Adam Smith and David Ricardo viewed the determination of competitiveness from the demand side of the market.
6. According to the principle of absolute advantage, international trade is beneficial to the world if one nation has an absolute cost advantage in the production of one good while the other nation has an absolute cost advantage in the other good.
7. The principle of absolute advantage asserts that mutually beneficial trade can occur even if one nation is absolutely more efficient in the production of all goods.
8. The basis for trade is explained by the principle of absolute advantage according to David Ricardo and the principle of comparative advantage according to Adam Smith.
9. The principle of comparative advantage contends that a nation should specialize in and export the good in which its absolute advantage is smallest or its absolute disadvantage is greatest.
10. The Ricardian theory of comparative advantage assumes only two nations and two products, labor can move freely within a nation, and perfect competition exists in all markets.
11. Assume that the United States is more efficient than the United Kingdom in the production of all goods. Mutually beneficial trade is possible according to the principle of absolute advantage, but is impossible according to the principle of comparative advantage.
12. It is possible for a nation not to have an absolute advantage in anything; but it is not possible for one nation to have a comparative advantage in everything and the other nation to have a comparative advantage in nothing.
13. Ricardo's theory of comparative advantage was of limited relevance to the real world since it assumed that labor was only one of several factors of production.
14. Compared to Ricardian trade theory, modern trade theory provides a more general view of comparative advantage since it is based on all factors of production rather than just labor.
15. Constant opportunity costs suggest that the relative cost of producing one product in terms of the other will remain the same no matter where a nation chooses to locate on its production-possibilities schedule.
16. There are two explanations of constant opportunity costs: (1) factors of production are imperfect substitutes for each other; (2) all units of a given factor have different qualities.
17. With increasing opportunity costs, a nation totally specializes in the production of the commodity of its comparative advantage; with constant opportunity costs, a nation partially specializes in the production of the commodity of its comparative advantage.
18. A nation's trade triangle denotes its exports, imports, and terms of trade.
19. International trade leads to increased welfare if a nation can achieve a post-trade consumption point lying inside of its production-possibilities schedule.
20. If the U.S. post-trade consumption point lies along its production possibilities schedule, the United States achieves a higher level of welfare with trade than without trade.
21. If productivity in the German computer industry grows faster than it does in the Japanese computer industry, the opportunity cost of each computer produced in Japan increases relative to the opportunity cost of a computer produced in Germany.
22. If Japan loses competitiveness in computers, Japanese computer workers lose jobs to foreign computer workers and the wages of Japanese computer workers tend to fall relative to the wages of foreign computer workers.
23. With constant opportunity costs, a nation will achieve the greatest possible gains from trade if it partially specializes in the production of the commodity of its comparative disadvantage.
24. By reducing the overall volume of trade, import restrictions tend to reduce a nation's gains from trade.
25. With increasing opportunity costs, comparative advantage depends on a nation's supply conditions and demand conditions; with constant opportunity costs, comparative advantage depends only on demand conditions.
26. According to the principle of comparative advantage, an open trading system results in resources being channeled from uses of low productivity to those of high productivity.
27. The existence of exit barriers tends to delay the closing of inefficient firms that face international competitive disadvantages.
28. MacDougall's empirical study of comparative advantage was based on the notion that a product's labor cost is underlaid by labor productivity and the wage rate.
29. The MacDougall study of comparative advantage hypothesized that in those industries in which U.S. labor productivity was relatively high, U.S. exports to the world should be lower than U.K. exports to the world, after adjusting for wage differentials.
30. The basic idea of mercantilism was that wealth consisted of the goods and services produced by a nation.
31. According to Adam Smith, international trade was a "win-win" situation since all nations could enjoy gains from trade.
32. The price-specie-flow mechanism illustrated why one nation's gains from trade were accompanied by another country's losses.
33. Complete specialization usually occurs under the assumption of increasing opportunity costs.
34. Adam Smith contended that gold, silver, and other precious metals constituted the wealth of a nation.
35. The price-specie-flow mechanism illustrated why nations could not maintain trade surpluses or trade deficits over the long run.
36. The marginal rate of transformation equals the absolute slope of a country's production possibilities schedule.
37. Assume that Germany has higher labor productivity and higher wage levels than France. Germany can produce a commodity more cheaply than France if its productivity differential more than offsets its wage differential.
38. Ricardo's theory of comparative advantage does not take into account demand conditions when determining relative commodity prices.
39. If Canada has a higher wage level and higher labor productivity than Mexico, Canada will necessarily produce a good at a higher labor cost than Mexico.
40. If Argentina has a comparative advantage over Brazil in beef relative to coffee, Argentina will specialize in beef production.
41. Modern trade theory recognizes that the pattern of world trade is governed by both demand conditions and supply conditions.
42. A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its production possibilities schedule.
43. In autarky equilibrium, a nation realizes the lowest possible level of satisfaction given the constraint of its production possibilities schedule.
44. A nation benefits from international trade if it can achieve a higher indifference curve than it can in autarky.
45. A nation realizes maximum gains from trade at the point where the international terms-of-trade line is tangent to its community indifference curve.
46. The Ricardian theory of comparative advantage could fully explain the distribution of the gains from trade among trading partners.
47. Because the Ricardian theory of comparative advantage was based only on a nation's demand conditions, it could not fully explain the distribution of the gains from trade among trading partners.
48. Because the Ricardian theory of comparative advantage was based only on a nation's supply conditions, it could only determine the outer limits within which the equilibrium terms of trade would lie.
49. The domestic cost ratios of nations set the outer limits to the equilibrium terms of trade.
50. Mutually beneficial trade for two countries occurs if the equilibrium terms of trade lies between the two countries' domestic cost ratios.
51. Assume that the United States and Canada engage in trade. If the international terms of trade coincides with the U.S. cost ratio, the United States realizes all of the gains from trade with Canada.
52. Assume that the United States and Canada engage in trade. If the international terms of trade coincides with the Canadian cost ratio, the United States realizes all of the gains from trade with Canada.
53. If the international terms of trade lies beneath (inside) the Mexican cost ratio, Mexico is worse off with trade than without trade.
54. Although J. S. Mill recognized that the region of mutually beneficial trade is bounded by the cost ratios of two countries, it was not until David Ricardo developed the theory of reciprocal demand that the equilibrium terms of trade could be determined.
55. According to J. S. Mill, if we know the domestic demand expressed by both trading partners for both products, the equilibrium terms of trade can be defined.
56. The theory of reciprocal demand asserts that as the U.S. demand for Canadian wheat rises, the equilibrium terms of trade improve for the United States.
57. Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos. As the Canadian demand for wheat increases, Canada's equilibrium terms of trade improves.
58. The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.
59. The theory of reciprocal demand best applies when one country has a "large" economy and the other country has a "small" economy.
60. If two nations of approximately the same size and with similar taste patterns participate in international trade, the gains from trade tend to be shared about equally between them.
61. The expression "importance of being unimportant" suggests that if one nation is much larger than the other, the larger nation realizes most of the gains from trade while the smaller nation realizes fewer gains from trade.
62. An improvement in a nation's terms of trade occurs if the prices of its exports rise relative to the prices of its imports over a given time period.
63. If a country's terms of trade worsen, it must exchange fewer exports for a given amount of imports.
64. If a country's terms of trade improve, it must exchange more exports for a given amount of imports.
65. The terms of trade represents the rate of exchange between a country's exports and imports.
66. Assume 1990 to be the base year. If by the end of 2004 a country's export price index rose from 100 to 130 while its import price index rose from 100 to 115, its terms of trade would equal 113.
67. Assume 1990 to be the base year. If by the end of 2004 a country's export price index rose from 100 to 140 while its import price index rose from 100 to 160, its terms of trade would equal 120.
68. Assume 1990 to be the base year. If by the end of 2004 a country's export price index rose from 100 to 125 while its import price index rose from 100 to 125, its terms of trade would equal 100.
69. The commodity terms of trade are found by dividing a country's import price index by its export price index.
70. For the commodity terms of trade to improve, a country's export price index must rise relative to its import price index over a given time period.
71. For the commodity terms of trade to improve, a country's import price index must rise relative to its export price index over a given time period.
SHORT ANSWER
1. Is it possible to add up the preferences of all consumers in an entire nation?
2. Who gains more from trade, when nations are of unequal economic size?
3. Is it possible for comparative advantage to change, thus changing the direction of trade?
4. Do national security concerns lead to incomplete specialization?
ESSAY
1. Will it be impossible to keep low-skilled jobs in the U.S.?
2. Is it possible to estimate the gains from trade?
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ECO 302 Week 2 Quiz – Strayer NEW
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Chapter 1
TRUE/FALSE
1. Macroeconomists study the amount of employment and unemployment.
2. Macroeconomists study the price of individual products like beer.
3. When the gross domestic product is growing, it is called inflation.
4. A recession is when GDP is falling toward a trough.
5. If price is below equilibrium in a market, then quantity supplied will be less than quantity demanded.
6. The annual inflation rate measures the annual percentage growth in the overall price level.
7. The annual inflation rate measures the growth in the prices of oil and food only.
8. Endogenous variables in an economic model are those that the model takes as given and does not try to explain.
9. Exogenous variables in an economic model are those that the model takes as given and does not try to explain.
10. In a model with perfect competition, both buyers and sellers take the price of a good as given.
MULTIPLE CHOICE
1. Macroeconomics deals with:
a. how individual markets work.
b. the overall performance of the economy.
c. relative prices in different markets.
d. substitution of one good for another good.
2. Macroeconomics includes the study of:
a. the general price level. c. the relative price of goods.
b. the price of individual goods. d. all of the above.
3. Macroeconomists study:
a. the determination of the economy’s total production.
b. unemployment
c. the general price level.
d. all of the above.
4. Macroeconomists study:
a. the determination of real GDP.
b. the production of specific goods.
c. the relative production in different markets.
d. all of the above.
5. Among the prices that macroeconomist study are:
a. the price of coffee. c. the interest rate.
b. the price of tea. d. all of the above.
6. Among the prices that macroeconomists study are:
a. the wage rate. c. the exchange rate.
b. the interest rate. d. all of the above.
7. Monetary policy involves:
a. the government’s expenditure. c. determining the quantity of money.
b. taxation. d. the fiscal deficit.
8. The unemployment rate is:
a. the fraction of the population with no job.
b. the fraction of those seeking work with no job.
c. the rate of growth of those with no job.
d. the rate of growth of those seeking work.
9. Fiscal policy involves:
a. determining exchange rates. c. interest rates.
b. government expenditures. d. all of the above.
10. The rate of growth of GDP for period t is:
a. c.
b. d.
11. Variations in real GDP are called:
a. inflation. c. economic fluctuations.
b. deflation. d. all of the above.
12. When GDP is expanding toward a high point it is called a[n]:
a. depression. c. recession.
b. boom. d. inflation.
13. When real GDP falls toward a low point or trough it is called a[n]:
a. boom. c. inflation.
b. recession. d. expansion.
14. During recessions the unemployment rate:
a. declines. c. is stable.
b. increases. d. is unmeasureable.
15. The unemployment rate in the US was highest in the:
a. 1990s c. 1980s
b. 1930s d. 1950s
16. The inflation rate for year t is:
a. c.
b. d.
17. A variable that macroeconomists want to model is a[n]
a. endogenous variable. c. exogenous variable.
b. dummy variable. d. predetermined variable.
18. A variable taken as given in a model is a[n]
a. endogenous variable. c. exogenous variable.
b. dummy variable. d. dichotomous variable.
19. The dollar price paid to use capital is known as:
a. the interest rate. c. the rental price of capital.
b. the exchange rate. d. the general price level.
20. The price of labor is the:
a. exchange rate. c. interest rate.
b. wage rate. d. the rental price.
Figure1.1
Price
21. In Figure1.1 the equilibrium price is:
a. 2 c. 7
b. 5 d. 0
22. In Figure1.1 the equilibrium quantity is
a. 5 c. 7
b. 2 d. 8
23. In Figure1.1 if price is 7, then
a. the market is in equilibrium. c. there is excess quantity demanded.
b. there is excess quantity supplied. d. the market clears.
24. In Figure1.1 if the price is 2, then:
a. the market is in equilibrium. c. there is excess quantity demanded.
b. there is excess quantity supplied. d. the market clears.
25. In Figure1.1, if price is 7, then quantity demanded is:
a. 2. c. 3.
b. 7. d. 8.
26. In Figure1.1, if price is 7, then quantity demanded is:
a. 2. c. 3.
b. 7. d. 8.
27. In Figure1.1, if price is 7, then quantity supplied is:
a. 2. c. 3.
b. 7. d. 8.
28. In Figure1.1, if price is 2, then quantity demanded is:
a. 2. c. 3.
b. 7. d. 8.
29. In Figure1.1, if price is 2, then quantity supplied is:
a. 2. c. 3.
b. 7. d. 8.
30. In Figure1.1, if price is 5, then quantity demanded is:
a. 2. c. 3.
b. 7. d. 5.
31. In Figure1.1, if demand falls, then equilibrium:
a. price and quantity fall. c. price falls and quantity rises.
b. price and quantity rise. d. prices rises and quantity falls.
32. In Figure1.1 if supply increases, then equilibrium:
a. price and quantity fall. c. price rises and quantity falls.
b. price and quantity rise. d. price falls and quantity rises.
33. A possible order of events in an economy over time is:
a. expansion, recession, peak, expansion. c. expansion, peak, trough, recession.
b. recession, trough, expansion, peak. d. recession, trough, peak, expansion.
34. A trough in an economy is when the economy:
a. is growing. c. is contracting.
b. reaches a low point. d. reaches a high point.
35. A peak in an economy is when the economy:
a. is growing. c. is contracting.
b. reaches a low point. d. reaches a high point.
36. A possible order of economic fluctuations is:
a. recession, boom, expansion, trough. c. recession, trough, expansion, peak.
b. expansion, recession, boom, trough. d. expansion, trough, recession, peak.
37. If prices are sticky:
a. the market quickly sticks at equilibrium. c. the market only slowly moves toward equilibrium.
b. the market clears quickly. d. all of the above.
38. In an economic model:
a. endogenous variables feed into a model to affect exogenous variable. c. exogenous and endogenous variables feed into the model.
b. exogenous variables feed into a model to affect endogenous variables. d. none of the above.
39. A price taker:
a. takes the price to the market. c. accepts the market price and decides whether and how much to buy or sell.
b. controls the market price. d. accepts the market quantity and sets price.
40. A macroeconomist would study the:
a. price of cars. c. the sales of beer.
b. the market for shoes. d. none of the above.
41. Since the late 1800s, U.S. GDP has followed
a. a general downward trend. c. a flat trend.
b. a general upward trend. d. no discernable trend.
42. An economic expansion ends when the economy
a. reaches a peak. c. begins a boom.
b. reaches a trough. d. begins a surge.
43. An economic recession ends when
a. the economy reaches a peak. c. unemployment reaches zero percent.
b. the economy reaches a trough. d. unemployment rises at a slow pace.
44. The unemployment rate measures
a. the number of people applying for unemployment insurance. c. the number of people in government welfare programs.
b. the percentage of people working at the minimum wage. d. the percentage of people seeking work who do not have a job.
45. The trend in the U.S. inflation rate since the 1970s has been
a. an increase in the rate. c. a decrease in the rate.
b. a decrease in the rate, followed by an increase in the rate. d. a steady trend, with no major change in the rate.
46. The changing rates of inflation in the U.S. mostly reflects changes in institutions such as
a. the gold standard. c. the U.S. tax code.
b. U.S. Federal Reserve policy. d. both (a) and (b).
47. In the past twenty-five years, the U.S. Federal Reserve mostly has pursued a policy of
a. low income tax rates. c. low and stable inflation.
b. low corporate tax rates. d. high required reserve rates.
48. An example of an exogenous variable in a macroeconomic model most likely would be
a. the level of employment. c. the weather.
b. the level of real GDP. d. the interest rate.
49. An example of an endogenous variable in a macroeconomic model most likely would be
a. the level of employment. c. the level of real GDP.
b. the existence of a war. d. either (a) or (c).
50. An example of an endogenous variable in a macroeconomic model most likely would be
a. the interest rate. c. the development of a new technology.
b. the existence of a war. d. natural disasters.
51. Which is NOT an example of an exogenous variable in a macroeconomic model?
a. the interest rate. c. the development of a new technology.
b. the existence of a war. d. natural disasters.
52. Macroeconomics uses microeconomic models
a. to model the level of real GDP. c. to model the market for coffee.
b. to model the decisions of individual households and businesses. d. in no circumstances.
53. In a macroeconomic model, the term disequilibrium refers to
a. a discrepancy between the quantities of labor supplied and demanded. c. a gap between the wages of unskilled and skilled workers.
b. a discrepancy between the quantities of coffee supplied and demanded. d. a gap between the level of real GDP in two cities.
54. In a macroeconomic model, the term disequilibrium refers to
a. the argument that some prices in the goods market are sticky. c. a gap between the wages of unskilled and skilled workers.
b. a discrepancy between the quantities of coffee supplied and demanded. d. a gap between the unemployment rate in two cities.
55. The new Keynesian approach argues that
a. the economy reflects perfect competion. c. individuals and businesses are mostly price-takers.
b. some prices are sticky and move only slowly. d. supply and demand in the goods market move prices quickly.
56. The new Keynesian approach argues that
a. individuals and businesses are mostly price-takers. c. sectors of the economy may be in disequilibrium for extended periods.
b. most prices are flexible and move quickly. d. supply and demand in the goods market move prices quickly.
57. The economist John Maynard Keynes argued that labor markets
a. are perfectly competitive. c. are usually in disequillibrium.
b. are usually at a point of disengagement. d. reflect rapid adjusment of wages to market conditions.
58. When a country follows a gold standard,
a. the price of gold is mostly constant. c. the price of gold varies quite a bit.
b. the price of silver is mostly constant. d. a central bank cannot also exist.
59. An exchange rate reflects
a. the sum of the values of two currencies. c. the relative levels of labor supply in two countries.
b. the rate at which one currency exchanges for another currency. d. the relative levels of capital in two countries.
60. In a macroeconomic model with perfect competition,
a. no individual buyer can noticeably affect the prices of goods. c. buyers can affect the prices of goods, but sellers cannot.
b. no individual seller can noticeably affect the prices of goods. d. both (a) and (b).
61. In a macroeconomic model with perfect competition,
a. there are many buyers and a few sellers. c. there are many buyers and sellers.
b. there are many sellers and a few buyers. d. there are few buyers and sellers.
62. A macroeconomic model which uses a microeconomic foundation will begin with
a. a microeconomic model, which is then aggregated to form a macroeconomic model. c. a macroeconomic model, which is then aggregated to form a microeconomic model.
b. a macroeconomic model, which is then disaggregated to form a microeconomic model. d. a gold standard model, which is then held exogenous to form a macroeconomic model.
63. An equilibrium price in a microeconomic model
a. shows where the quantity demanded is less than the quantity supplied. c. shows where disequilibrium occurs.
b. is a market-clearing price. d. shows where the quantity demanded is greater than the quantity supplied.
64. An equilibrium price in a microeconomic model
a. shows where the quantity demanded is less than the quantity supplied. c. occurs when there is no pressure for the price to rise or fall.
b. is a market-lowering price. d. shows where the quantity demanded is greater than the quantity supplied.
65. The number for employment refers to the number of
a. employers who have job openings. c. people looking for jobs.
b. adults in the population. d. people with jobs.
SHORT ANSWER
1. What types of economic issues do macroeconomists study?
2. How is the annual inflation rate calculated?
3. What is the rate of growth of real GDP?
4. Describe what happens when demand or supply increase in a market.
5. What are exogenous and endogenous variables?
6. Why are both flexible prices and sticky prices important to macroeconomic models?
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CIS 554 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: Implementing Software Project Management Strategies
Due Week 2 and worth 90 points
Imagine that you are employed by an organization that would like to further invest in the development of internal software applications. The organization finds it very costly to maintain vendor built and maintained software apps. It believes that the strategy of developing internal software could provide cost savings in the long run.
One of your responsibilities at this organization is to advise upper management on the latest trends and methodologies of software project management strategies. Upper management has asked you to identify and analyze the challenges and issues that the software development teams may experience if they transition to this new strategy. In addition, you are asked to provide your suggestions and solutions to mitigate the challenges and issues.
Write a three to five (3-5) page paper in which you:
1. Describe the latest trends of software project management strategies and suggest at least three (3) methodologies of software project management strategies for this project.
2. Select the optimal software project management strategy for this project and provide a rationale.
3. Select three (3) typical constraints that may exist while managing and leading software projects within this organization. Analyze why the determination and clarification of these constraints is essential within the planning phases of the project. Note: Please refer to Table 1.1 in Chapter 1 of the text for information on typical constraints on software projects.
4. Analyze the relationship between the organizational structure and a project manager’s level of authority and responsibility.
5. Suggest how a typical software engineering team could be staffed and describe each team member’s role. Determine the skills that are required for each team member for the success of the software project development.
6. Select two (2) software project management frameworks as options for software development. Discuss how each framework provides an opportunity for efficient project resource management. Use examples to justify your answer.
7. Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Discuss the challenges of leading software projects.
Compare and contrast the frameworks, standards, and guidelines for managing software projects.
Use technology and information resources to research issues in IT Project Leadership Strategies.
Write clearly and concisely about topics related to IT Project Leadership Strategies using proper writing mechanics and technical style conventions.
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CIS 532 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: Request for Proposal – Response
Due Week 2 and worth 50 points
You are a $10 million consulting company responding to a Request for Proposal for a prospective client. The client seeks an analysis of its existing network in anticipation of a large merger. This engagement would be worth over $5 million in revenue to your $10 million company. The client seeks to ensure that your small organization has the technical acumen to prepare, guide, and assess merging the two company networks.
Write a two to three (2-3) page paper in which you:
Prepare an opening statement that specifies your organization’s capabilities to manage a deployment of this size.
Graphically depict and effectively promote your company’s structured development and services using Visio or its open source alternative software. Note: The graphically depicted solution is not included in the required page length.
Explain what the client can expect from your services.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Include charts or diagrams created in Visio or Dia. The completed diagrams / charts must be imported into the Word document before the paper is submitted.
The specific course learning outcomes associated with this assignment are:
Design a systematic network architecture plan in accordance with network design steps.
Summarize among scalability, availability, performance security, manageability, usability, adaptability, and affordability as they relate to internetworking product selection.
Use technology and information resources to research issues in network architecture and analysis.
Write clearly and concisely about network architecture and analysis using proper writing mechanics and technical style conventions.
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CIS 525 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: Agile versus Waterfall
Due Week 2 and worth 80 points
The following resources may be helpful when completing this assignment.
•Agile vs. waterfall methodology (http://agileintro.wordpress.com/2008/01/04/waterfall-vs-agile-methodology/). •Understanding the pros and cons of the waterfall model of software development. Retrieved from TechRepublic Website (http://www.techrepublic.com/article/understanding-the-pros-and-cons-of-the-waterfall-model-of-software-development/6118423). •Transitioning from waterfall to iterative development. Retrieved from IBM DeveloperWorks Website (http://www.ibm.com/developerworks/rational/library/4243.html).
Agile approach to project management has become more and more popular in recent years. Agile framework is different from traditional waterfall model. It has considerable impact on how projects are planned and executed.
Imagine that you have been assigned as a project manager to manage your company’s e-Commerce Website where customers can browse the company’s products, place orders, and interact with the company’s customer service representatives. Your project must be completed in three (3) months and you have about twelve (12) people in the team. There are three (3) offshore developers in Ireland and two QA testers in Dallas, TX. The rest of the project team and the product owner are in San Diego, CA.
Write a five to six (5-6) page paper in which you:
1.Compare and contrast agile and Waterfall models of managing a project in the context of building an e-Commerce Website. Include diagrams or tables through the use of graphical tools in Microsoft Word or Visio, or an open source alternative such as Dia to show the differences and similarities. Note: The graphically depicted solution is not included in the required page length.
2.Evaluate the pros and cons in agile and Waterfall project management in terms of planning and the execution of projects and collaboration among project team members.
3.Decide whether you would use an “Agile” or “Waterfall” model to manage the project for your company. Support your rationale.
4.Identify and analyze the pitfalls and misconceptions inherited in your chosen approach. Analyze how you, as a project manager, could mitigate the risks that are associated with those misconceptions.
5.Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources. You may use the resources above or others of your choosing.
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CIS 524 Week 2 Discussion Questions – Strayer NEW
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Week 2 DQ 1
"Interface Design Guidelines" Please respond to the following:
· Imagine you are leading a team of designers for a new software product. During the kickoff meeting, the team starts to discuss design guidelines. About half of the team complains that guidelines can be too specific, incomplete, hard to apply, and sometimes wrong. The other half feels that building on experience from design leaders contributes to steady improvements. Take a stance on this debate and support your position. Then discuss how you would solve this conflict to get your meeting back on track.
· Of the eight principles of design, called “Golden Rules” (strive for consistency, cater to universal usability, offer informative feedback, design dialogues to yield closure, prevent errors, permit easy reversal of actions, support internal locus of control, and reduce short-term memory load) choose the one that is most important and create an argument supporting your choice. Use specific examples to support your argument.
Week 2 DQ 2
"HCI Theories" Please respond to the following:
· Imagine you are the manager of a medium-sized IT department. While walking through the hall one day, you overhear a senior-level software developer telling a newly hired developer to focus on improving his coding skills rather than learning about theories related to human-computer interaction. Take a position on whether you agree or disagree with the senior software developer. Support your decision.
· From the e-Activity, discuss the idea that all applications have to be visually consistent. Argue whether you agree or disagree with the idea and why.
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CIS 524 Week 2 Case Study 1 – Strayer NEW
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Case Study 1: User Interfaces
Due Week 2 and worth 90 points
Early user interfaces were designed with little or no consideration for the end user. This was largely due to technical and hardware limitations. The poor interface design required a specific skill set for users and limited the mass appeal of computers. Modern interfaces are much more user friendly. Theo Mandel wrote about the five (5) golden rules of interface design. Read Mandel’s article located at http://www.theomandel.com/docs/Mandel-GoldenRules.pdf.
Write a four to five (4-5) page paper in which you:
1. Describe three (3) interfaces you interact with on a daily basis.
2. Analyze each interface you identified in Question one (1) and assess how it adheres to Mandel’s five (5) golden rules.
3. Suggest two (2) changes for each interface to achieve a more user-friendly design and justify your suggestion.
4. Provide three (3) screen shots for each interface. Note: These screen shots should be labeled and appear in the appendix of the case study. These pages are not included in the page requirement for the assignment.
5. Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Describe the usability properties of interactive systems.
Use technology and information resources to research issues in human-computer interaction.
Write clearly and concisely about HCI topics using proper writing mechanics and technical style conventions.
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CIS 521 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: Showcasing the Values of SOA
Write a two to three (2–3) page paper on the following:
Assume that you are a management consultant and you are preparing for an engagement to present the value of Enterprise Architecture/Service-Oriented Architecture to a prospect, which happens to be a large, international, and publically traded company.
Using the SOA Initiative Template in Appendix A:
1. Outline the benefits of SOA for the company.
2. Show how the architecture has positive (or negative) impact to the business objectives.
3. Highlight potential risks.
4. Highlight your mitigation strategies.
The format of the paper is to be as follows:
o Typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides (APA format).
o Use headers for each of the subjects being covered, followed by your response.
o In addition to the two to three (2–3) pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.
NOTE: You will be graded on the quality of your answers, the logic/organization of the report, your language skills, and your writing skills.
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CIS 518 Week 2 Discussion Questions – Strayer NEW
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Week 2 DQ 1
"Software Development, a Manufacturing or Creative Process?" Please respond to the following:
· From the e-Activity, take a position on the idea that software development is either a creation process or a manufacturing process. Describe the characteristics of each process to support your position.
· From the e-Activity, compare and contrast the software development process models in terms of requirement gathering, system design, system construction, and deployment.
Week 2 DQ 2
"Buying vs Building Software" Please respond to the following:
· Identify the factors, other than price, an organization must consider when evaluating whether to build or buy a software package to track inventory. Of the factors you have identified, determine the most critical to consider and justify why they carry more significance than others.
· Software vendors often have scaled levels of support, depending on the purchased software package. Discuss some of the more important support features that would be required for a system that is going to be used 24 hours a day, 7 days a week, by over 500,000 users per day.
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CIS 517 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: The Role of Project Managers
Due Week 2 and worth 80 points Research job boards for project manager positions. Take note of the various industries that hire project managers. Then, research statistics from the project management institute on the rate of success of projects in different industries including IT. Write a two to three (2-3) page paper in which you: Explain project management as a discipline. Describe the industries in which project managers are in high demand. Provide evidence to support your response. Describe the general role of a project manager, and explain the primary ways in which it differs across different industries. Compare the rate of success of projects in IT and other industries. Explain the discrepancy or lack thereof. Use at least two (2) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources. Your assignment must follow these formatting requirements: Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. The specific course learning outcomes associated with this assignment are: Identify how project management improves the success of information technology projects. Use technology and information resources to research issues in IT project management. Write clearly and concisely about issues in IT project management using proper writing mechanics and technical style conventions.
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CIS 515 Week 2 Assignment 2 – Strayer NEW
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Assignment 2: Database Systems and Database Models
Due Week 2 and worth 90 points
The Strayer Oracle Server may be used to test and compile the SQL Queries developed for this assignment. Your instructor will provide you with login credentials to a Strayer University maintained Oracle server.
Imagine that you have been hired as a consultant to assist in streamlining the data processing of an international based organization that sells high-end electronics. The organization has various departments such as payroll, human resources, finance, marketing, sales, and operations. The sales department is the only department where employees are paid a commission in addition to their yearly salary and benefits. All other departments compensate their employees with a yearly salary and benefits only. Commission is paid by multiplying the employee’s commission rate by the total amount of product units sold. You have access to the following data sets:
Employee (EmpNumber, EmpFirstName, EmpLastName, CommissionRate, YrlySalary, DepartmentID, JobID)
Invoice (InvNumber, InvDate, EmpNumber, InvAmount)
InvoiceLine (InvLineNumber, InvNumber, ProductNumber, Quantity)
Product (ProductNumber, ProductDescription, ProductCost)
Department (DepartmentID, DepartmentDescription)
Job (JobID, JobDescription)
Write a two to three (2-3) page paper in which you:
1. Design a query that will allow the finance department to determine the commissions paid to specific employees of the sales department for the month of December. Note: You will need to generate the tables described above (Employee, Invoice, InvoiceLine, Product, Department, and Job) in order to compare and validate your code. Validated query code must be part of your paper.
2. Compare the code of the query you designed in Question one (1) to one that would show how much total compensation is paid to each employee for the same month.
3. Determine and explain the factors necessary to ensure referential integrity.
4. Create an object-oriented model to show how the tables are interrelated through the use of graphical tools such as Microsoft Visio, or an open source alternative such as Dia. Make sure that you are able to show the relationship types such as 1:M, 1:1, or M:1. Additionally, remember to include the determined factors from the previous assignment requirement. Note: The graphically depicted solution is not included in the required page length.
5. Identify which data components are the entities and attributes, and the relationship between each using an object representation diagram through the use of graphical tools such as Microsoft Visio, or an open source alternative such as Dia. Note: The graphically depicted solution is not included in the required page length.
6. Describe how Big Data could be used to assist in the productivity and forecasting of the organization’s products and resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Include charts or diagrams created in Excel, Visio, MS Project, or one of their equivalents such as Open Project, Dia, and OpenOffice. The completed diagrams / charts must be imported into the Word document before the paper is submitted.
The specific course learning outcomes associated with this assignment are:
7. Describe the role of databases and database management systems in managing organizational data and information.
8. Design and implement a database solution to solve a proposed business problem.
9. Use technology and information resources to research issues in the strategic implications and
management of database systems.
10. Write clearly and concisely about topics related to the strategic planning for database systems using proper writing mechanics and technical style conventions.
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CIS 513 Week 2 Assignment 1 – Strayer NEW
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Assignment 1: Wireless Applications, Advances, Advantages, and Disadvantages
Due Week 2 and worth 100 points
The adoption of wireless technologies varies from one industry to another, and is often based on the benefits provided versus the challenges, implementation issues, and security issues associated with wireless technologies. Consider the wireless challenges, opportunities, and advancements in the healthcare industry versus the education industry.
Write a four to five (4-5) page paper on the wireless technology of the education and financial industry in which you:
Analyze wireless applications and the degree of support and adoption of wireless devices for each industry.
Discuss current advancements in wireless technologies in these industries. Analyze the potential areas for advancements in wireless technologies for these industries and determine the driving forces behind those advancements.
Analyze the primary strategic business advantages and disadvantages of wireless technologies in each industry.
Analyze the primary technical advantages and disadvantages of wireless technologies in each industry.
Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
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CIS 512 Week 2 Discussion Question – Strayer New
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Week 2 Discussion
"Data and Images" Please respond to the following:
• Lossless and lossy are the two (2) universally known categories of compression algorithms. Compare the two (2) categories of algorithms, and determine the major advantages and disadvantages of each. Provide one (1) example of a type of data for which each is best suited.
• BitMap and object (i.e., vector) are the two (2) categories of images. Compare the two (2) categories of images, and determine the advantages, and disadvantages of each. Provide one (1) example of type of file for which each is best suited.
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CIS 512 Week 2 Case Study 1 – Strayer NEW
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Case Study 1: The Brazilian Federal Data Processing Service
Due Week 2 and worth 130 points
Read the case study titled, “Brazil to fortify government email system following NSA snooping revelations,” located in the online course shell and at http://www.networkworld.com/news/2013/101413-brazil-to-fortify-government-email-274802.html.
Use the Internet to research the architectures that other government organizations and intelligence agencies use for email privacy, if any.
Write a three to four (3-4) page paper in which you:
1. Examine the proposed business ethical problem that the Brazilian Federal Data Processing Service is presently experiencing. Determine whether you agree or disagree that Brazil’s problem is an ethical one that should be corrected. Provide a rationale for your response.
2. Assess the levels of security deficiencies inherent in the Brazilian Federal Data Processing Service original enterprise architecture. Conclude whether or not Brazil could have previously considered its current problem and built an original architecture that would have prevented the problem in question. Provide a rationale for your response.
3. Evaluate the quality of the Brazilian Federal Data Processing Service’s proposed architecture plan geared toward solving the security problem. Suggest two (2) other possible architecture solutions that the Brazilian Federal Data Processing Service should consider. Justify your response.
4. Determine whether or not one (1) of the governments or intelligence agencies that you researchedhas taken precautions to avoid a security breach similar to the one that the Brazilian Federal Data Processing Service had experienced. If this government organization or intelligence agency has taken precautions to avoid a similar security breach, provide one (1) example of such a precaution. If this government organization or intelligence agency has not taken precautions to avoid a similar security breach, recommend one (1) action that it can take in order to avoid a similar security breach.
Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
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