Question 1

When a recession ends

Accepted Answer

A)  interest rates decrease. 
B)  households decrease spending on durable goods. 
C)  the household sector decreases spending substantially. 
D)  firms increase the amount of borrowing. 
A)  interest rates decrease. 
B)  households decrease spending on durable goods. 
C)  the household sector decreases spending substantially. 
D)  firms increase the amount of borrowing.

Question 2

The rule of 70 states that

Accepted Answer

A)  it takes an economy 70 years to double its real GDP. 
B)  the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C)  the number of years it takes an economy to double in size is the growth rate times 70. 
D)  the number of years it takes an economy to double in size is the growth rate divided by 70. 
A)  it takes an economy 70 years to double its real GDP. 
B)  the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C)  the number of years it takes an economy to double in size is the growth rate times 70. 
D)  the number of years it takes an economy to double in size is the growth rate divided by 70.

Question 3

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 4

If real GDP grows by 3% in 2014, 3.2% in 2017, and 2.5% in 2018, what is the average annual growth rate of real GDP?

Accepted Answer

A)  2.6% 
B)  2.9% 
C)  3.1% 
D)  4.2% 
A)  2.6% 
B)  2.9% 
C)  3.1% 
D)  4.2%

Question 5

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

Accepted Answer

A)  an increase in the demand for loanable funds 
B)  an increase in the quantity of loanable funds demanded 
C)  an increase in the supply of loanable funds 
D)  an increase in the quantity of loanable funds supplied 
A)  an increase in the demand for loanable funds 
B)  an increase in the quantity of loanable funds demanded 
C)  an increase in the supply of loanable funds 
D)  an increase in the quantity of loanable funds supplied

Question 6

Public saving in the economy can be increased by

Accepted Answer

A)  lowering taxes. 
B)  raising government spending. 
C)  raising taxes. 
D)  raising transfer payments. 
A)  lowering taxes. 
B)  raising government spending. 
C)  raising taxes. 
D)  raising transfer payments.

Question 7

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $26 trillion?

Accepted Answer

A)  about 15 years 
B)  about 17 years 
C)  about 25 years 
D)  about 30 years 
A)  about 15 years 
B)  about 17 years 
C)  about 25 years 
D)  about 30 years

Question 8

Explain and show graphically how government deficits can "crowd out" private investment.

Accepted Answer

When the government runs a deficit, publ

Question 9

If government saving is negative, then

Accepted Answer

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

Question 10

An increase in government purchases will

Accepted Answer

A)  increase public saving. 
B)  increase the supply of loanable funds. 
C)  reduce investment. 
D)  reduce real GDP. 
A)  increase public saving. 
B)  increase the supply of loanable funds. 
C)  reduce investment. 
D)  reduce real GDP.

Question 11

Private saving is defined as

Accepted Answer

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

Question 12

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Accepted Answer

A)  supply; right; fall 
B)  supply; left; rise 
C)  demand; right; rise 
D)  demand; left; fall 
A)  supply; right; fall 
B)  supply; left; rise 
C)  demand; right; rise 
D)  demand; left; fall

Question 13

Financial markets and financial intermediaries comprise the financial system.

Accepted Answer

A) True 
 B)False

Question 14

An increase in public saving has what impact on the market for loanable funds?

Accepted Answer

A)  The supply of loanable funds increases. 
B)  The demand for loanable funds increases. 
C)  The supply of loanable funds decreases. 
D)  The demand for loanable funds decreases. 
A)  The supply of loanable funds increases. 
B)  The demand for loanable funds increases. 
C)  The supply of loanable funds decreases. 
D)  The demand for loanable funds decreases.

Question 15

Which of the following increases labor productivity?

Accepted Answer

A)  an increase in the aggregate hours of work 
B)  decreases in the availability of computers and factory buildings 
C)  inventions of new machinery, equipment, or software 
D)  a decline in the health of the population 
A)  an increase in the aggregate hours of work 
B)  decreases in the availability of computers and factory buildings 
C)  inventions of new machinery, equipment, or software 
D)  a decline in the health of the population

Question 16

Figure 21-6  
-Refer to Figure 21-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?

Accepted Answer

A)  The loanable funds market is in equilibrium. 
B)  There is a surplus of loanable funds in the market. 
C)  There is a shortage of loanable funds in the market. 
D)  The quantity of loanable funds being demanded in the market is less than $90 million. 
A)  The loanable funds market is in equilibrium. 
B)  There is a surplus of loanable funds in the market. 
C)  There is a shortage of loanable funds in the market. 
D)  The quantity of loanable funds being demanded in the market is less than $90 million.

Question 17

The total amount of physical capital available in a country is know as the country's

Accepted Answer

A)  labor productivity. 
B)  savings. 
C)  investment. 
D)  capital stock. 
A)  labor productivity. 
B)  savings. 
C)  investment. 
D)  capital stock.

Question 18

The economic effects of a recession are likely to have the smallest impact on the sales of which of the following businesses?

Accepted Answer

A)  an automobile manufacturer 
B)  a furniture store 
C)  a fast-food restaurant 
D)  a home builder 
A)  an automobile manufacturer 
B)  a furniture store 
C)  a fast-food restaurant 
D)  a home builder

Question 19

Explain why increasing the government budget deficit can decrease investment spending.

Accepted Answer

Saving must equal investment in the econ

Question 20

In a closed economy, what is the relationship between saving and investment?

Accepted Answer

A)  Saving is greater than investment. 
B)  Investment is greater than saving. 
C)  Investment is equal to saving. 
D)  Investment may be greater or smaller than saving. 
A)  Saving is greater than investment. 
B)  Investment is greater than saving. 
C)  Investment is equal to saving. 
D)  Investment may be greater or smaller than saving.

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

When a recession ends

The rule of 70 states that

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

If real GDP grows by 3% in 2014, 3.2% in 2017, and 2.5% in 2018, what is the average annual growth rate of real GDP?

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

Public saving in the economy can be increased by

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $26 trillion?

Explain and show graphically how government deficits can "crowd out" private investment.

If government saving is negative, then

An increase in government purchases will

Private saving is defined as

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Financial markets and financial intermediaries comprise the financial system.

An increase in public saving has what impact on the market for loanable funds?

Which of the following increases labor productivity?

Figure 21-6 -Refer to Figure 21-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?

The total amount of physical capital available in a country is know as the country's

The economic effects of a recession are likely to have the smallest impact on the sales of which of the following businesses?

Explain why increasing the government budget deficit can decrease investment spending.

In a closed economy, what is the relationship between saving and investment?

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

An increase in the government budget surplus will shift the curve for loanable funds to the and the equilibrium real interest rate will .