Week 15 Quiz

A commentator says, "Every country is either capitalist or socialist, and the only question is which box it is in." Which response best reflects this week's account of political economy?

Select one.

• Agreed, because political economy is a sixth subfield that sorts countries into those two boxes
• Every real economy mixes markets and the state, so the question is the mix and its institutions
• Agreed, because a country with any public schools has become a socialist economy
• Every real economy is run by markets alone, so the state plays no part in the comparison

Moravell is a made-up economy (illustrative). Employer associations and unions bargain over wages for a whole industry, firms keep long-term ties with their banks, and firms and unions run apprenticeships together. How does the varieties-of-capitalism model sort Moravell?

Select one.

• As a liberal market economy, because its firms still sell their goods in markets
• As the better of the two types, because coordination always beats competition
• As a coordinated market economy, because its firms coordinate outside markets
• As a planned economy, because its unions set wages instead of the market

Bellmoor and Talvik are made-up countries (illustrative). Bellmoor makes a bolt of cloth in 2 hours and a crate of grain in 4 hours; Talvik needs 6 hours for either. Bellmoor is faster at both goods. Why should Talvik be the one to make grain?

Select one.

• Because Talvik gives up less cloth for each crate of grain than Bellmoor does
• Because Talvik is faster at making grain than Bellmoor is
• Because the slower country should always make the good that takes longer
• Because Bellmoor gains nothing at all from trade once it is faster at making both goods

After cheaper cloth arrives by ship, a weaving mill in a made-up town closes, while the economy as a whole gains from the trade. A local group says, "The closed mill proves that comparative advantage is wrong." What is the best reply?

Select one.

• The group is right, because a theory of gains is refuted by any single loss
• The mill did not really lose anything, because every single worker gains from trade in the end
• The mill's loss is an aggregate gain, so the group has the two terms reversed
• The mill is a distributional cost, and gains in total can coexist with losses in particular

True or false: proponents of managed trade deny that trade brings aggregate gains to an economy as a whole.

True or false.

• True
• False

In Saltmere, a made-up town (illustrative), the share of households below the town's line falls from 25 percent to 12.5 percent, while the top household goes from earning 5 times the bottom household's income to 8 times. Which statement is the most accurate reading?

Select one.

• Poverty and inequality both fell, because they are two words for the same measure
• The town became worse off, because inequality rose and the numbers prove it unfair
• Poverty fell while inequality rose, and whether that spread is fair is a normative question
• Inequality fell as well, because fewer of the town's households now sit below the town's line

What is the World Bank's current International Poverty Line?

Select one.

• 3.00 dollars a day in 2021 international prices
• 2.15 dollars a day in 2017 international prices
• 1.90 dollars a day in 2011 international prices
• 3.00 dollars a day in 2017 international prices

The World Bank counts around 831 million people in extreme poverty in 2025, down from around 2.3 billion in 1990. Select every statement this count, read with the data scaffold, supports.

Select every option that applies.

• Extreme poverty, measured against a chosen line, fell over the long run
• The count is measured against a line, so it changes if the line is redefined
• Trade caused the fall, because the decline happened while trade grew
• The world grew poorer in 2025, because raising the line raised the count

Five made-up countries share one sky (illustrative). A country that cuts its emissions pays 6 units and gives 2 units of benefit to each of the 5 countries, including itself. Why do the countries tend to wait for one another?

Select one.

• Because one country's cut is worth less to the whole group of five countries than it costs that country
• Because each gains more by letting others pay, though all would gain by cutting together
• Because the physical basics of climate change are still unsettled
• Because a world government forbids any country from cutting alone

Which of these statements is a normative claim?

Select one.

• The International Poverty Line is 3.00 dollars a day in 2021 international prices
• Around 831 million people lived below the line in 2025
• About 44 percent of the world's population lived below the line in 1990
• The International Poverty Line ought to be set higher than it is now