ECON 330

Question 1

Japanese Economic System - Strengths

Answer 1

Major capitalist country combining capitalism and tradition, high savings rate (25% GDP), benefit from indicative planning, work-centric culture

Question 2

Japanese Economic System - Weaknesses

Answer 2

Based on innovations, not inventions, poor natural resources, a stock market bubble, high real estate prices

Question 3

Zibatsu

Answer 3

Large conglomerate firms in Japan before 1945, operated in many different economic sectors, broke up at the end of WW2

Question 4

Keiretsu

Answer 4

Group of allied companies in Japan, usually linked through a bank, central structure of Japanese industrial organization, horizontal (different industries) and vertical (supply chain in a single sector)

Question 5

New Protectionism

Answer 5

Government policies restricting international trade to help domestic industries. US and Japan relations would have been better if Trump had not pulled the US from the Transpacific Partnership in 2017. Usually tariffs and quotas, very visible, TWO monitors. If unfair, warnings occur, many countries try to do protection without tariff and quota, name is non-tariff non quota, brings unrealistic things to limit production. EG: said Chile can send all the apples but we need 1 month to inspect them.

Question 6

Oscar Lange’s Model

Answer 6

Factory manager produces each product up to the point where the marginal cost of production equals the price of the product. Model of market socialism

Question 7

Workers Managed Socialism

Answer 7

System in Yugoslavia from 1950 to 1990, involved workers managing state-owned enterprises. Active in managing or hiring managers. Muslims and Christians ruined country. Michael Titor.

Question 8

Input Output Model

Answer 8

Macroeconomic analysis based on the interdependencies between different economic sectors or industries, estimating quantities of inputs needed to produce outputs. Developed by Wassily Leontief. Interdependency of sectors.

Question 9

Material Balancing Method

Answer 9

Central planning based on keeping track of quantities of materials used in the economy and ensuring suppliers balance with demands. Russian method, consistency between input and outputs, arithmetic balancing, not sophisticated but consistent. Stalin didn’t like mathematicians.

Question 10

Shoguns

Answer 10

Military dictators of Japan who ruled in the name of the emperor, lost power with the Meiji Restoration in 1868, leading to the Westernization and modernization of Japan

Question 11

Shinto

Answer 11

Traditional religion native to Japan, involving emperor worship until the end of WW2

Question 12

Moral Hazard

Answer 12

Problem arising from asymmetric information in insurance markets when those who are insured behave recklessly because they are insured

Question 13

Corporatism

Answer 13

Society with centralized wage bargaining. Authoritarian form involves outcomes ordered by a non-democratic government, while democratic form involves less state influence and more consensus

Question 14

Wage Solidarism

Answer 14

Idea of equalizing wages across firms and skill and seniority levels. The Gini coefficient declined after Sweden adopted this policy in 1982

Question 15

Arab Spring

Answer 15

Series of anti-government protests, uprisings, and armed rebellions spread across the Arab world in the early 2010s, began in response to corruption and economic stagnation, influenced by the Tunisian Revolution. Supposed to bring democracy but didnt.

Question 16

Bretton Woods Conference

Answer 16

Held in 1944, led to the establishment of the International Monetary Fund (IMF), The WTO and the World Bank, led to mostly fixed exchange rates among the world’s leading economies, makes sure countries are fine.

Question 17

Externalities

Answer 17

Effect one party generates on other parties but does not experience directly. Negative when it generates net costs (supply curve shifts left), positive when it generates net benefits. Solutions: Pigouvian Tax, Uniform Emission Standards, Coase Theorem, Tradeable Emission Permits, Subsidies. EG: nice neighborhood, lemon trees that smell nice make it nice.

Question 18

Old Traditional Economy

Answer 18

Derived from Karl Polanyi, embedded with a traditional social structure using nonmodern technologies. Household, Reciprocal, and Redistributive forms

Question 19

Special Enterprise Zones

Answer 19

Areas in coastal cities in South China where foreign capitalists can invest and operate freely, market capitalist within the broader socialist market economy

Question 20

Basic Characteristics of Swedish Economy System

Answer 20

Classified as a “Social Market Economy” (Welfare economy), income redistribution and social support system, high taxation (Cradle to Grave Security), practiced Corporatism and Wage Solidarism

Question 21

Town and Village Enterprises

Answer 21

Important form of firms in the Chinese economy, owned by local government units but operating in a free market context. Some are cooperatives, others resemble standard capitalist firms

Question 22

World Trade Organization

Answer 22

Established in the mid-1990s as the successor to GATT, designed to implement and enforce global free trade agreements

Question 23

War Communism

Answer 23

Period in Soviet history from 1918 to 1921, post-Bolshevik Revolution. Commanded economic policy without planning, led to severe famine in 1921-22. Right after 1980 to repair damage from Bolshevik Revolution.

Question 24

New Economic Policy

Answer 24

Market-oriented policy for agriculture and small enterprises in the Soviet Union from 1921 to 1928, established after famines during War Communism, displaced by Stalinist command central planning

Question 25

Kolkhoz

Answer 25

Russian word for collective farm, income shared among members, common type of agricultural production unit in the former Soviet Union

Question 26

Sovkhoz

Answer 26

Russian word for state farm, farmers paid a set wage by the state

Question 27

Dacha

Answer 27

Country or cottage in Russia, used as a summer or vacation home

Question 28

Perestroika

Answer 28

Russian for “restructuring,” economic reform policy by Mikhail Gorbachev to move from command socialism to a market economy

Question 29

Glasnost

Answer 29

Russian word meaning openness, policy by Mikhail Gorbachev in the mid to late 1980s to allow free discussion of economic, social, and political problems, and past Soviet history

Question 30

Taoism

Answer 30

Religion founded in China around 600 BCE by Lao-Tzu, more anti-hierarchical and freewheeling than Confucianism, seen in economic terms as pro-market and advocating for natural flow

Question 31

Nomenklatura

Answer 31

Russian term for nomenclature, consisted of communist party members, state planning org or managers. Appointed to government jobs, loyalists of the Communist regime. Received perks not recorded as income. At one point all three emerged, new privledged class, later it was mainly oligarchs and mafia.

Question 32

Gosplan

Answer 32

Central planning agency of the Soviet Union, disbanded in 1991. Gos = state, Gos-Planning

Question 33

Asiatic Mode of Production

Answer 33

Social economic political system in agricultural Asian countries with strong government control over hydraulic systems and little private ownership of land. Marx viewed these economies as stagnant

Question 34

Storming

Answer 34

Practice in command-planned economies where enterprises engage in last-minute efforts to meet production quotas, often resulting in poor quality

Question 35

Ratchet Effect

Answer 35

Phenomenon in command-planned economies where an enterprise’s production quota rises with its production, discouraging firms from exceeding quotas. Produce more bc next time thats the base.

Question 36

Flying Geese Theory

Answer 36

Idea that East Asian economies advance in formation like flying geese. Developed in the 1930s by Japanese economist Akamatsu. Follow the leader, Koreans thought there a leader Like Japan and they follow. Japan producing lower end and everything in 70s now Korea took that over and is leading too.

Question 37

Differences Between Maoism and Stalinism

Answer 37

Mao did not exterminate the opposition, believed in rehabilitation. Stalin was an administrator with an eye for detail. Mao allowed former landlords to receive land, Stalin moved resistant kulaks. Mao had equal distribution, Stalin not, Mao anti beauacratic, Stalin was state. Mao peasants were dominant class responsible for revolution, Stalin did industrial workers and hated peasants.

Question 38

Super-Industrialization Period

Answer 38

Occurred in the Soviet Union from 1928-1940, collectivization and industrialization to catch up with the West, resulted in regional and industrial distortions, over-investment, and neglected costs

Question 39

Basic Issues in USA and China Conflict

Answer 39

Patents, exchange rate manipulations, Trump’s mercantilism policy of high tariffs on Chinese exports

Question 40

Geneticists vs. Teleologists - Geneticists

Answer 40

Soviet planners in the 1920s led by Nikolai Bukharin, advocating use of markets and balance between industry and agriculture. Slow

Question 41

Geneticists vs. Teleologists - Teleologists

Answer 41

Opponents of geneticists, led by E.V. Preobrazhensky, argued planning should direct the economy towards rapid industrialization. Faster.

Question 42

Consequences of US-China Trade War

Answer 42

Retaliation leads to losses for local producers, higher production costs, higher prices, and overall economic losses for both countries. Political issue that can create a war is Taiwan

Question 43

USSR Planning Methodology - Strengths

Answer 43

Mobilized resources for industrialization, standardization of production, provided jobs, healthcare, and housing

Question 44

USSR Planning Methodology - Weaknesses

Answer 44

Bureaucratic production decisions, lack of flexibility and adaptability to economic changes

Question 45

Problems of Transformation from Socialism to Capitalism (Yeltsin and Putin)

Answer 45

Weak institutions, corruption, war with Georgia, Crimea problems, inflation, decline in middle-class income, new rich not paying taxes

Question 46

Asymmetric Information

Answer 46

sign contract and begging to behave in hazardous way. EG homie equity line but go to Vegas instead.