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Following the war-time prosperity for capital and the rich during World War I
(1914"18), income distribution trended towards greater equality when peace came and
market forces replaced the economy's wartime concerns in determining income
distribution.
The National Industrial Recovery Act of 1933 increased competition among firms.
Mass adoption of technology, like the steam engine, was not influenced greatly by the
relative benefits and costs of the new technology compared to existing technology.
Labor unions create a rent when they succeed. This rent forces employers or
management to return some of their profits to unionized workers in the form of
improved working conditions, health benefits or increased wages.
Albro Martin (1971) argues that the Interstate Commerce Commission (1887"1995)
was captured by its customers, not the railroad industrialists. Other researchers like
Gabriel Kolko (1965) highlight the involvement of railroad industrialists in capturing
this government agency to serve a cartel role, too.
Industrial entrepreneurs like J.P. Morgan, Henry Ford and Andrew Carnegie were
driven by desires to earn profits. In the process of pursuing these profits, American
consumers were made better off.
As cities grew and markets developed, life, fire and death insurance companies emerged
to manage risks and help groups of individuals during disasters.
Alan Kulikoff (2000) maintains that the opportunity to own land privately provided
many individuals with incentive to relocate to colonial America and accept the
associated risks.
According to Habakkuk (1962), the high price of western lands before the Homestead
Act (1862) kept workmen in the eastern manufacturing cities and thus slowed down the
rate of adoption of labor-saving technology.
After 1926, a decline in total building construction occurred even though building costs
remained fairly stable.
Americans fell behind Europeans on the technology front.
The rapid adoption of Basic Oxygen Furnaces by "Big Steel" (the top six firms) kept
the American basic steel industry from falling behind changes in world technology
during the 1960s.
The three acts that form the basic machinery behind the U.S. anti-trust laws are the
Sherman Act of 1890, the Federal Trade Commission Act of 1914, and the Robinson
Patman Act of 1836.
Commercialization, market growth and factories emerged in rural areas.
Skilled labor commanded a higher wage than unskilled labor in both the U.S. and
Europe between 1789 and 1860. However, skilled wages in the U.S. were higher, on
average. A higher land to labor ratio in the U.S. can explain the higher wage rates of
skilled workers in the U.S.
The nominal money supply fell faster in 1929"32 than did prices.
Advances in chemical and biological applications before World War I (1914"1918)
increased agricultural output per acre.
Both indentured servants and slaves had rights in courts of law.
According to Hughes and Cain (2011), today's growth in white-collar jobs is fueled by
investments in education and does not depend on apprentice-style training or land
holdings.
Eisenhower's conservative policies were characterized by budget surpluses that
produced further declines in price levels.
The Great Northern railroad was privately managed well by James J. Hill (1889) and
never went bankrupt.
The American colonies have a rich and deep history in international trade and
immigration.
The Fourteenth Amendment was applied to the railroads in the Santa Clara County v
Southern Pacific Railroad (1886) decision even though the original intent of that
amendment had been to protect the property of former slaves.
The Federal Reserve Bank of 1914 permitted the Fed to compete with banks for profits.
The overall productivity crisis of the 1970s can be attributed, in part, to insufficient
investment in research and development.
Schumpeter maintains that recessions provide businesspeople with incentives to
advance technologically.
The founders of the U.S. Constitution clearly understood how to write a document
capable of producing the amount of wealth presently accumulated in the U.S.
Keynesian economists link the start of the Great Depression to the drop in construction
spending and the downturn in consumption following the stock market crashes of 1929.
Some economists argue that unemployment compensation increases the natural rate of
unemployment because it increases the amount of time people spending finding new
work while without work. Additionally, it makes unemployment more visible with the
steady growth in urbanization.
As indicated by real GDP, real GDP per capita and nominal GDP figures, the Great
Depression was unmoved by the social reconstruction efforts of President Franklin D.
Roosevelt and his supporters.
Fogel and Engerman (1974) find evidence to suggest that young slave children were
often sold by profit-maximizing slave owners.
Like Franklin D. Roosevelt (1933"45), William J. Clinton's (1993"2001)
deficit-reducing tax hikes pushed the economy into a recession.
The region of the U.S. that benefited least from and fought hardest against raising tariffs
in the first half of the nineteenth century was
(a) New England.
(b) the Middle Atlantic states.
(c) the South.
(d) the West.
What does the demand for labor depend on, directly or indirectly?
(a) The wage rate
(b) Productivity of labor
(c) Demand for the goods and services produced by the labor
(d) All of the above
In answer to the question "How did Britain affect American economic growth?" Hughes
and Cain (2011) reach what conclusion?
(a) The colonies were launched with English institutions, and they were allowed to
modify them to meet local needs. In exchange for their investment in the colonies, the
British expected the American colonies to produce and grow rapidly.
(b) British policies were adverse to the colonies because they interfered with efforts to
recruit a labor force and maintain employment at something close to full employment.
(c) British policies prevented the colonies from going through an Industrial Revolution,
as was occurring in England.
(d) British policies significantly held down income growth in the colonies because they
aimed at increasing the proportion of "primary" output at the expense of commercial
and manufacturing output.
Naturally born members of the U.S. population resisted immigration in the antebellum
period for all of the following reasons except
(a) Immigrants were prisoners and outcasts from other countries.
(b) Immigrants could gain political power and possess political influence.
(c) Immigrants displaced U.S. born laborers.
(d) Immigrants brought their own religions and spiritual beliefs.
Laborers of which sector work in the tertiary or service sector?
(a) Teachers, doctors, lawyers, nanotechnologists, musicians and athletes
(b) Farmers, fisher people and foresters
(c) Manufacturers and processors of raw materials
(d) All of the above
The National Banking Acts of 1863 and 1864 attempted to make the national banking
system seem stronger than the state banking system by all of the following EXCEPT:
(a) Imposing legal reserve requirements on national banks
(b) Providing depository insurance
(c) Linking the capital requirements of national banks to the size of the cities in which
they were located
(d) Making national bank notes legal tender
Economic institutions like the Federal Reserve System of 1914 created by legislation
are designed to:
(a) Only achieve economic goals
(b) Garner votes
(c) Satisfy the well organized interests of special groups
(d) All of the above
Imports into the U.S. increased when
(a) deflation in the U.S. occurred.
(b) real wages and incomes rose in the U.S.
(c) the International Trade Commission was established.
(d) all of the above occurred.
Which of the following was NOT a function of the First and Second Banks of the
United States?
(a) Handling government finances
(b) Promoting growth of state banks
(c) Helping establish uniform paper currency in the U.S.
(d) Keeping state banks in line by presenting their notes
The U.S. demand for foreign cars has increased dramatically since the early 1900s
because
(a) Americans perceive foreign cars as lower quality cars than U.S.-produced cars.
(b) foreign producers are manufacturing relatively fuel-efficient cars.
(c) U.S. consumer demand for large, fuel inefficient cars has increased.
(d) of all of the above reasons.
Slaves were
(a) unprofitable substitutes for wage labor on plantations.
(b) profitable complements to capital equipment.
(c) denied the use of shovels, hoes and axes.
(d) all of the above.
Technological advancements in the antebellum period were
(a) constant and stable.
(b) almost non-existent.
(c) concentrated in manufacturing.
(d) slow in coming but labor-savingespecially in agriculturewhen they emerged.
In answering the question "Did the Civil War help promote economic growth and
industrialization?" Hughes and Cain (2011) conclude that
(a) the war, rather than being a major stimulus to industry, was actually a great drain
that slowed U.S. economic development for a time.
(b) the war was indeed a major stimulus to industry because it promoted the building of
wartime factories and new technology, which then provided a basis for rapidly growing
production levels when peace came.
(c) the war was a setback for the South but a great stimulus for the North.
(d) the war seemed to have had no overall impact on the economic growth of the nation.
New England possessed a comparative advantage in producing cotton. Producers in this
region produced cotton at the lowest possible opportunity cost in colonial America.
What was the World Bank designed to do?
(a) Serve as a long-term lender
(b) Serve as a short-term lender
(c) Make both short and long-term loans
(d) Make grants-in-aid, but not to be a lending institution
Between 1945 and 1950, the U.S. price level rose by one-third. This increase was
complemented by which of the following?
(a) An increase in nominal and real GDP
(b) An increase in nominal GDP but a decrease in real GDP
(c) An increase in real GDP but a decrease in nominal GDP
(d) Stable nominal and real GDP
Which of the following was illustrated by the majority voting decisions witnessed
during the Great Depression?
(a) If the U.S. wants to get the most from its resources, the pricing of goods and
allocation of investment should be decided by majority voting.
(b) In a representative democracy, majority voting will assure that approved projects are
productive.
(c) There are good reasons to expect that majority voting will sometimes result in the
approval of projects that are inefficient.
(d) Private firms can force their customers to pay for products they produce, but the
government cannot do so.
Which of the following best describes the policy of the New Deal to combat the Great
Depression?
(a) Taxation should be increased so as to eliminate the deficit in the federal budget.
(b) Government spending should be reduced so as to give businesses confidence that
the free enterprise system was not being replaced by big government.
(c) The government should offset deficiencies in private spending with increased
government spending in order to create jobsany jobs.
(d) Private enterprise should be replaced by government planning because the market
system had failed to provide prosperity and economic growth.
According to Kuznets (1954), competition will
(a) unfairly destroy leading industries and impede overall economic growth across
industries.
(b) require government intervention.
(c) push efficient industries into leadership roles and pull the backward and forward
industrial links to these leaders with them.
(d) contract consumer market opportunities.
Which sector consists of services traded for food, shelter, housing or other services?
(a) tertiary
(b) secondary
(c) primary
(d) international
In the period 1960"95, the cycles of upturns and downturns in the economy (booms and
recessions)
(a) were eliminated as knowledge of how the economy operated grew.
(b) continued to occur, although not nearly as severely as prior to World War II.
(c) grew even worse than prior to World War II.
(d) were equally as bad as the period prior to World War II.
Between 1921 and 1929, general prices as measured by wholesale or consumer prices
(a) were stable overall.
(b) fell dramatically.
(c) increased moderately.
(d) increased significantly.
"External economies" derive from all of the following except
(a) the joint use of transportation facilities.
(b) labor force concentrations in urban areas.
(c) social overhead facilities such as police and fire protection.
(d) economies of management associated with large firms.
According to Chandler (1977), the major event in business development in 1895"1904
was
(a) the Granger cases.
(b) Munn v Illinois (1877).
(c) the rise of vertically integrated firms.
(d) the merger wave.
In the first years of the new nation, American producers
(a) found it difficult to compete with the British in manufactured goods.
(b) quickly developed agricultural technology that was more efficient than that in
England.
(c) did not use British manufacturing technology because England had forbidden the
export of its technology.
(d) began to specialize in the production of manufacturing goods, selling them to
England and Europe.
What was the Federal Trade Commission (FTC), established in 1914, created to
enforce?
(a) U.S. foreign trade
(b) The maritime code
(c) The Interstate Commerce Act
(d) The antitrust laws
Some researchers argue that the American Revolution was probably inevitable. The
most important factor, of those listed below, was/were
(a) prohibitions against trade with nations other than England and severe exploitation of
the colonists under the Navigation Acts, which kept the standard of living low in the
colonies.
(b) excessive taxation which for generations kept the after-tax incomes of the colonists
below those in England.
(c) a series of revenue-raising measures imposed on the colonists at the end of the
French and Indian War for the purpose of making the colonies more self-supporting.
(d) British prohibitions against the use of slaves in the lands west of the original thirteen
colonies.
The Great Depression and the New Deal transformed the U.S. into which type of
economy?
(a) Laissez-faire
(b) Socialist
(c) Mixed
(d) Communist
Which of the following was NOT a reason given for opposing the renewal of the
charters of the Banks of the United States?
(a) The Banks of the United States made too many bad loans.
(b) The Banks of the United States were unconstitutional.
(c) The Banks of the United States hindered the development of private banks.
(d) The Banks of the United States were owned, in part, by foreign investors.
The type of commercial policy followed by England under the navigation laws
(a) was followed throughout the 17th and 18th centuries but not by any governments
today.
(b) was followed throughout the 17th and 18th centuries and is still pursued, in one way
or another, by all governments in the world today.
(c) was followed throughout the 17th, 18th, and 19th centuries but not by most
governments today.
(d) was followed throughout the 17th and 18th centuries and by European governments
today, but not by the United States since the founding of the nation.
In the period 1960"95, the federal government
(a) played, in general, a much larger role in the economy during this period than prior to
World War II.
(b) played a small role in the economy, similar to the 1920s.
(c) eliminated most of the major programs for the federal government that were
established by the New Deal in the 1930s, while state and local governments began to
play a larger role in the economy.
(d) played a large role in defense spending but followed basically a laissez-faire policy
toward the rest of the economy.
In absolute terms and relative to other countries, what happened to U.S. growth rates in
productivity as measured by output per paid hour in the late 1960s and 1970s?
(a) They increased.
(b) They stayed the same.
(c) They fell.
(d) They fell early on and then increased past their previous levels.
Historically, price discrimination was aggressive behavior exhibited by whom? The
(a) monopolist
(b) mom and pop business person
(c) manager of a large group of industrial workers
(d) corporation
Fogel's work (1964) on the economic impact of railroads is mostly written in response
to
(a) Rostow's takeoff theory.
(b) Schumpeter's theory of railroads building ahead of demand.
(c) David's theory of path dependency.
(d) Engerman's theory of multiroute analysis.
