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Comparative Economic System

Economics 3500
Final Examination
Fall 2009

Name (print): _________________________________

This is a take-home final examination. It is an open book test. You must answer these questions
independently and do not work with other people on the answers. Otherwise it can be considered as an
academic misconduct.
Answer the questions in this provided MS Word file. Save it in the MS Word XP or 2003 file version (with
the extension of .doc rather than .docx). You should submit to both my email addresses: and, before the deadline:
11:59pm of Dec. 16th. Passing the deadline can be regarded as missing the final exam. Try to
submit earlier, and not wait until the last minute.
Upon receiving your email, I will reply an acknowledgement by Dec. 17th. If you do not receive my
confirmation the second day, email me again and call and leave a voice message on my home phone number

I. MULTIPLE CHOICE (choose the best answer for each question):

1. In Marxs dialectical materialism, superstructure refers to
a. the special structure of buildings
b. the pillar of an economy
c. ideology, legal system, government and so on.
d. labor force, capital and land.
2. Marx used the dialectical materialism
a. to prove that societies must evolve from higher- to lower-order economic systems
b. to prove that a dialectic between work and capitalist was necessary
c. to demonstrate why capitalism would replace socialism
d. to demonstrate why societies inevitably evolve from one economic system to another
e. all are correct except b.
3. According to Marx,
a. Production relations determine productive forces
b. Productive forces determine productive relations
c. Superstructure determines productive relations
d. Productive relations determine instruments used.
4. Market may not be efficient in the case of
a. producing computers
b. providing national defense and health care
c. supplying cigarettes and alcohol.
d. monopoly
e. all are correct except a
5. The classical economists believed in the laissez-faire approach because
a. they thought that unemployment was impossible.
b. they saw a universal tendency for the percentage of family
income devoted to food to decline as income rose.
c. of the paradox of thrift.
d. they thought wages and prices would adjust quickly to eliminate unemployment.
e. none of the above.
6. Marx viewed communism as
a. a final stage in the evolution of societies.
b. the system that will replace capitalism.
c. an economic system with abundant supply that can satisfy all peoples needs.
d. all of the above are correct.
e. answers a and b are correct
7. According to Marx, surplus value is created whenever
a. fixed costs exceed variable costs.
b. there is a rise in the organic composition of capital.
c. use value exceeds capital costs.
d. workers create value above their subsistence wage.
e. none of the above.
8. Using the notation of the lecture, the value of a commodity in

Marxian theory would be the sum of

a. c + v + s
c. s
b. c + v.
d. none of these.
9. In the former Soviet Union, P.R.China and other socialist planned economies, national economic
priorities are first set by
a. the retail stores.
b. the consumer
c. the manager
d. the top leaders of the communist party
e. None of the above
10. In the former Soviet Union, China and other socialist planned economies in 1950s-60s, who sets the
operative plan targets?
a. the Central Bank
b. the Council of Ministers
c. the Politburo.
d. the Planning Board
e. the Central Committee of the Party
11. The reform strategy China adopts is ____ and that Poland adopts is _____
a. gradualism, gradualism
b. gradualism, shock therapy
c. shock therapy, gradualism
d. shock therapy, shock therapy


1. List in order the five evolution stages of a society defined by Marx.
(a) _____________________________________________________
(b) _____________________________________________________
(c) _____________________________________________________
(d) _____________________________________________________
(e) _____________________________________________________
2. List three greatest famines that occurred since 1900 in command economies. Given the estimates of the
loss of lives in each famine.
(a) _____________________________________________________
(b) _____________________________________________________
(c) _____________________________________________________

III. SSAY QUESTIONS (carrying 55% of the total scores):

[You need answer both questions 1 and 2. You may go to the following web-link to find some
references for the answers: You are encouraged to search on line
and library for additional information and relevant references. You may use additional pages for
each of the questions.]

1. What are the main reasons causing the Chinese famine during the period of Great Leap
Forward? What is the uniqueness of this famine, in terms of the cause, as compared with other
famines in the history? States the reasons given by Chang and Wen (1997 Economic Development
and Cultural Change), and using the theories we discussed in the class to explain how a system
failure would cause such a human catastrophe.

2. What is the "Shock Therapy" approach suggested by Jeffrey Sachs? Which country(ies) adopted
the Shorck Therapy approach? What was the immediate consequence of the implementation of the
"Shock Therapy" approach? Why the inflation and recession last much longer than initially