Midterm Exam 2 - Practice with Answers

Topics: Price elasticity of demand, Supply and demand, Economics Pages: 6 (1076 words) Published: November 24, 2011
Economics 111A
Economic History
Midterm Exam 2

In general, the highest grades will be given to clear and precise answers. Use your time wisely, and good luck. You will be given one hour and twenty minutes to complete the exam.

1. Land acquisition in the U.S. was incredibly important for the extensive economic growth of the country in the 19th century. a. Why did the US want the territory gained from the Louisiana Purchase? What was the controversy regarding the purchase? (6 points)

They wanted transit rights to New Orleans so that they could access their western territory using the Mississippi and Missouri Rivers.

Monroe spent $15 million on the whole territory instead of $2 million on transit rights without Congressional Approval.

b. What events ultimately led to the Mexican Cession? Why do we believe the US was able to win the land from the Mexican government? (6 points)

The Mexican War or Manifest Destiny

The Mexican people had won independence from Spain was left with a government that was fractured and volatile

Settlement was a political agenda not inspired by individual families.

c. Does Easterlin believe that U.S. land acquisition was a release valve for the Malthusian Trap? What is his reasoning? (6 points)


Population growth rates fell once there was no more land to be settled. We didn’t have famine and disease killing people off once we settled all Western Territory and there was no additional land.

2. Once the 1.2 billion acres were acquired there was a debate and a process by which the land was distributed. Please define the “Federalists” and the “Anti-Federalists” point of view regarding land policy. What did each side believe could be gained from the type of land policy that they advocated? (8 points) d. Federalists


Sell land for full value (or high prices and big lots)

Strengthen Federal Government by adding to the public treasury Discourage settlement because need to encourage manufacturing Good for current landowners

e. Anti-Federalists


Small lots sold on credit for low prices or given away

National of small handed farmers promotes democracy
Right to labor the earth

3. What was the Homestead Act? What is one argument presented in lecture and discussion in favor of the Homestead Act and one argument presented in lecture and discussion against the Homestead Act? (9 points) f. Definition

160 acres free if you lived on it for 5 years or after 6 months paid $1.25 per acre

g. For

Fogel and Rutner show that because of the increase in the marginal product of western labor as a result of settling western territory there is an increase in national income and wages in both east and west.

h. Against

It moved people west that should have stayed east given that the cost of farming was misrepresented

4. Canals and Steamboats were important innovations that led to a reduction in transportation costs in the pre-Civil War era. i. Why are reductions in transportation costs important for economic growth? (describe in detail) (6 points)

Transportation Costs define land values

Transportation Costs define areas of commercial and subsistence farming. Land Values


Distance from City

j. What was the Erie Canal? Name and explain four overall contributions of the Erie Canal and the Canal Period (these could be contributions to economic growth or contributions to future transportation projects). (15 points)


The canal linking New York Harbor and the Midwest

i. Proved that canals were technologically feasible

ii. Proved that canals were financially viable

iii. Set precedent for the federal government to give land grants to large transportation projects

iv. Established structure by which loans were made from foreigners to fund large transportation projects....
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