Question 1

Table 21-2
  
-Refer to Table 21-2. Using the table above, what is the approximate average annual growth rate from 2015 to 2018?

Accepted Answer

A)  -1% 
B)  1% 
C)  2% 
D)  4% 
A)  -1% 
B)  1% 
C)  2% 
D)  4%

Question 2

When the government runs a deficit, which of the following is true?

Accepted Answer

A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR

Question 3

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Accepted Answer

A)  After 1950, the length of expansions equaled the length of recessions. 
B)  After 1950, the length of expansions were much less than the length of recessions. 
C)  After 1950, the length of expansions were much longer than the length of recessions. 
D)  After 1950, the length of expansions were brief and almost nonexistent. 
A)  After 1950, the length of expansions equaled the length of recessions. 
B)  After 1950, the length of expansions were much less than the length of recessions. 
C)  After 1950, the length of expansions were much longer than the length of recessions. 
D)  After 1950, the length of expansions were brief and almost nonexistent.

Question 4

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds.

Accepted Answer

A)  lower; greater; greater 
B)  lower; smaller; greater 
C)  greater; greater; greater 
D)  greater; smaller; greater 
A)  lower; greater; greater 
B)  lower; smaller; greater 
C)  greater; greater; greater 
D)  greater; smaller; greater

Question 5

During the recession phase of the business cycle

Accepted Answer

A)  production is usually rising. 
B)  interest rates are usually falling. 
C)  unemployment is usually falling. 
D)  income is usually rising. 
A)  production is usually rising. 
B)  interest rates are usually falling. 
C)  unemployment is usually falling. 
D)  income is usually rising.

Question 6

Which of the following statements about the budget deficit is true?

Accepted Answer

A)  From 2007-2009, the federal budget was balanced. 
B)  In 2009, the budget deficit was a record $1.4 trillion. 
C)  In 2016, the federal budget was in surplus. 
D)  In 2017, the federal budget was balanced. 
A)  From 2007-2009, the federal budget was balanced. 
B)  In 2009, the budget deficit was a record $1.4 trillion. 
C)  In 2016, the federal budget was in surplus. 
D)  In 2017, the federal budget was balanced.

Question 7

When the government runs a budget deficit, we would expect to see that

Accepted Answer

A)  private saving will fall. 
B)  investment will fall. 
C)  G + TR < T. 
D)  public saving is positive. 
A)  private saving will fall. 
B)  investment will fall. 
C)  G + TR < T. 
D)  public saving is positive.

Question 8

Use the rule of 70 to illustrate how small differences in growth rates can have a large impact on how rapidly the standard of living in a country increases.

Accepted Answer

The rule of 70 refers to a calculation t

Question 9

A decrease in the real interest rate will

Accepted Answer

A)  increase consumption and reduce investment. 
B)  increase saving and investment. 
C)  decrease investment and government spending. 
D)  increase consumption and investment. 
A)  increase consumption and reduce investment. 
B)  increase saving and investment. 
C)  decrease investment and government spending. 
D)  increase consumption and investment.

Question 10

Scenario 21-1

Consider the following data for a closed economy:

Y = $12 trillion
C = $8 trillion
I = $2 trillion
G = $2 trillion
TR = $2 trillion
T = $3 trillion

-Refer to Scenario 21-1. Based on the information above, what is the level of private saving in the economy?

Accepted Answer

A)  $3 trillion 
B)  $4 trillion 
C)  $5 trillion 
D)  $8 trillion 
A)  $3 trillion 
B)  $4 trillion 
C)  $5 trillion 
D)  $8 trillion

Question 11

Figure 21-6  
-Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

Accepted Answer

A)  The quantity of loanable funds demanded by firms will rise above $120 million. 
B)  The quantity of loanable funds demanded by firms will fall below $120 million. 
C)  The budget deficit will have no impact on the quantity of loanable funds demanded by firms. 
D)  The interest rate will fall below 4 percent. 
A)  The quantity of loanable funds demanded by firms will rise above $120 million. 
B)  The quantity of loanable funds demanded by firms will fall below $120 million. 
C)  The budget deficit will have no impact on the quantity of loanable funds demanded by firms. 
D)  The interest rate will fall below 4 percent.

Question 12

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from

Accepted Answer

A)  23.3 years to 17.5 years. 
B)  28.0 years to 21.0 years. 
C)  11.2 years to 10.8 years. 
D)  23.3 years to 20.6 years. 
A)  23.3 years to 17.5 years. 
B)  28.0 years to 21.0 years. 
C)  11.2 years to 10.8 years. 
D)  23.3 years to 20.6 years.

Question 13

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Accepted Answer

Private saving is equal to Y + TR - C -

Question 14

Under which of the following circumstances would private saving be positive in a closed economy?

Accepted Answer

A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion 
A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion

Question 15

Labor productivity will increase if the ________ increases and ________.

Accepted Answer

A)  quantity of capital per hour worked; technology improves 
B)  quantity of labor per unit of capital; technology improves 
C)  quantity of capital per hour worked; immigration increases while capital is fixed 
D)  quantity of labor per unit of capital; immigration increases while capital is fixed 
A)  quantity of capital per hour worked; technology improves 
B)  quantity of labor per unit of capital; technology improves 
C)  quantity of capital per hour worked; immigration increases while capital is fixed 
D)  quantity of labor per unit of capital; immigration increases while capital is fixed

Question 16

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

Accepted Answer

A) True 
 B)False

Question 17

Explain why the demand curve for loanable funds has a negative slope.

Accepted Answer

The demand for loanable funds reflects t

Question 18

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Accepted Answer

A)  Y - C - G 
B)  Y - C - T 
C)  Y - T + TR 
D)  C + G -T 
A)  Y - C - G 
B)  Y - C - T 
C)  Y - T + TR 
D)  C + G -T

Question 19

Suppose you are a famous international economic advisor. You have been asked to asses the possibilities for growth in an African country. It is a country abundant in labor and some natural resources. The capital-to-labor ratio is low. It has a free market economy. You have found that this country does not have a very strong and healthy banking system, however the political system is stable and the government does a good job protecting property rights. Assess this country's prospects for growth. Recommend two things that would enhance the country's growth.

Accepted Answer

The prospects for this country's growth

Question 20

If consumers decide to be more frugal and save more out of their income, then this will cause

Accepted Answer

A)  a shift in the supply curve for loanable funds to the right. 
B)  a shift in the supply curve for loanable funds to the left. 
C)  a movement to the right along the supply curve for loanable funds. 
D)  a movement to the left along the supply curve for loanable funds. 
A)  a shift in the supply curve for loanable funds to the right. 
B)  a shift in the supply curve for loanable funds to the left. 
C)  a movement to the right along the supply curve for loanable funds. 
D)  a movement to the left along the supply curve for loanable funds.

Exam 21: Economic Growth, the Financial System, and Business Cycles

Table 21-2 -Refer to Table 21-2. Using the table above, what is the approximate average annual growth rate from 2015 to 2018?

When the government runs a deficit, which of the following is true?

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds.

During the recession phase of the business cycle

Which of the following statements about the budget deficit is true?

When the government runs a budget deficit, we would expect to see that

Use the rule of 70 to illustrate how small differences in growth rates can have a large impact on how rapidly the standard of living in a country increases.

A decrease in the real interest rate will

Scenario 21-1 Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion -Refer to Scenario 21-1. Based on the information above, what is the level of private saving in the economy?

Figure 21-6 -Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Under which of the following circumstances would private saving be positive in a closed economy?

Labor productivity will increase if the ________ increases and ________.

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

Explain why the demand curve for loanable funds has a negative slope.

In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

If consumers decide to be more frugal and save more out of their income, then this will cause

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The demand for loanable funds is downward sloping because the the interest rate, the the number of profitable investment projects a firm can undertake, and the the quantity demanded of loanable funds.

Labor productivity will increase if the increases and .