Question 1

For the recessions in the United States since the 1950s

Accepted Answer

A)  cyclical unemployment has been non-existent. 
B)  unemployment rises on average by about 1.2 percentage points during the 12 months after a recession begins. 
C)  unemployment falls on average by 2 percentage points during the 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points during the 12 months after a recession begins. 
A)  cyclical unemployment has been non-existent. 
B)  unemployment rises on average by about 1.2 percentage points during the 12 months after a recession begins. 
C)  unemployment falls on average by 2 percentage points during the 12 months after a recession begins. 
D)  unemployment rises on average about 5 percentage points during the 12 months after a recession begins.

Question 2

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

Accepted Answer

A)  4.7% 
B)  10.5% 
C)  15% 
D)  21% 
A)  4.7% 
B)  10.5% 
C)  15% 
D)  21%

Question 3

In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Accepted Answer

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

Question 4

Which of the following will not occur as the result of a decrease in net taxes?

Accepted Answer

A)  decreased household saving 
B)  decreased government saving 
C)  a shift to the left of the supply curve for loanable funds 
D)  all of the above 
A)  decreased household saving 
B)  decreased government saving 
C)  a shift to the left of the supply curve for loanable funds 
D)  all of the above

Question 5

A government budget surplus from reduced government spending (no change in net taxes) will ________ the level of investment in the economy and ________ the level of total saving (private plus public) in the economy.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease

Question 6

A period of expansion in the business cycle ends when

Accepted Answer

A)  real GDP is equal to potential GDP. 
B)  the business cycle reaches its peak. 
C)  the business cycle reaches its trough. 
D)  real GDP is less than potential GDP. 
A)  real GDP is equal to potential GDP. 
B)  the business cycle reaches its peak. 
C)  the business cycle reaches its trough. 
D)  real GDP is less than potential GDP.

Question 7

Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides

Accepted Answer

A)  services. 
B)  durable goods. 
C)  nondurable goods. 
D)  goods and services for export. 
A)  services. 
B)  durable goods. 
C)  nondurable goods. 
D)  goods and services for export.

Question 8

Since 1900, real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

Accepted Answer

A)  increased; understates 
B)  increased; overstates 
C)  decreased; understates 
D)  decreased; overstates 
A)  increased; understates 
B)  increased; overstates 
C)  decreased; understates 
D)  decreased; overstates

Question 9

Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because

Accepted Answer

A)  Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. 
B)  Scrooge was happiest when he was saving money, and happiness is the key to economic growth. 
C)  saving has to be greater than consumption for the economy to grow. 
D)  Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits. 
A)  Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. 
B)  Scrooge was happiest when he was saving money, and happiness is the key to economic growth. 
C)  saving has to be greater than consumption for the economy to grow. 
D)  Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits.

Question 10

Inflation is measured

Accepted Answer

A)  using the level of the consumer price index. 
B)  as the percentage change in the consumer price index. 
C)  using the level of real GDP. 
D)  as the percentage change in real GDP. 
A)  using the level of the consumer price index. 
B)  as the percentage change in the consumer price index. 
C)  using the level of real GDP. 
D)  as the percentage change in real GDP.

Question 11

Figure 21-4  
-Refer to Figure 21-4. Which of the following is consistent with the graph depicted?

Accepted Answer

A)  an increase in household income 
B)  an increase in transfer payments to households 
C)  an increase in the proportion of income after net taxes used for consumption 
D)  an increase in tax revenues collected by the government 
A)  an increase in household income 
B)  an increase in transfer payments to households 
C)  an increase in the proportion of income after net taxes used for consumption 
D)  an increase in tax revenues collected by the government

Question 12

Since 1900, real GDP in the United States has grown

Accepted Answer

A)  more rapidly than the population. 
B)  more slowly than the population. 
C)  as rapidly as the population. 
D)  in a random unpredictable manner relative to the population. 
A)  more rapidly than the population. 
B)  more slowly than the population. 
C)  as rapidly as the population. 
D)  in a random unpredictable manner relative to the population.

Question 13

The Business Cycle Dating Committee defines a recession as

Accepted Answer

A)  two consecutive quarters of declining real GDP. 
B)  two consecutive quarters of declining nominal GDP. 
C)  a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D)  a significant decline in inflation and unemployment lasting more than a few months. 
A)  two consecutive quarters of declining real GDP. 
B)  two consecutive quarters of declining nominal GDP. 
C)  a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D)  a significant decline in inflation and unemployment lasting more than a few months.

Question 14

A(n) ________ comes to an end with a business cycle ________.

Accepted Answer

A)  recession; peak 
B)  recession; trough 
C)  expansion; trough 
D)  expansion; bubble 
A)  recession; peak 
B)  recession; trough 
C)  expansion; trough 
D)  expansion; bubble

Question 15

Consider the following data for a closed economy:
a. Y = $12 trillion
b. C = $8 trillion
c. I = $3 trillion
d. TR = $2 trillion
e. T = $3 trillion
Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

Accepted Answer

Private saving is equal to Y + TR - C -

Question 16

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Accepted Answer

Government programs like unemployment in

Question 17

Potential GDP refers to

Accepted Answer

A)  the level of GDP attained when all firms are producing at capacity. 
B)  the level of GDP attained by the country with the highest growth in real GDP in a given year. 
C)  the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. 
D)  the extent to which real GDP is above or below nominal GDP. 
A)  the level of GDP attained when all firms are producing at capacity. 
B)  the level of GDP attained by the country with the highest growth in real GDP in a given year. 
C)  the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. 
D)  the extent to which real GDP is above or below nominal GDP.

Question 18

Which of the following is most liquid?

Accepted Answer

A)  a mutual fund share 
B)  a government bond 
C)  a corporate bond 
D)  a dollar bill 
A)  a mutual fund share 
B)  a government bond 
C)  a corporate bond 
D)  a dollar bill

Question 19

Table 21-2
  
-Refer to Table 21-2. Using the table above, what is the approximate growth rate of real GDP from 2016 to 2017?

Accepted Answer

A)  1% 
B)  2% 
C)  3% 
D)  4% 
A)  1% 
B)  2% 
C)  3% 
D)  4%

Question 20

If GDP grew 3% in 1970, 2.2% in 1971 and 2.5% in 1972 then, what is the average annual growth rate over this period?

Accepted Answer

A)  5% 
B)  4% 
C)  2.6% 
D)  -2.2% 
A)  5% 
B)  4% 
C)  2.6% 
D)  -2.2%

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

For the recessions in the United States since the 1950s

If real GDP per capita doubles between 2005 and 2020, what is the average annual growth rate of real GDP per capita?

In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Which of the following will not occur as the result of a decrease in net taxes?

A government budget surplus from reduced government spending (no change in net taxes) will ________ the level of investment in the economy and ________ the level of total saving (private plus public) in the economy.

A period of expansion in the business cycle ends when

Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides

Since 1900, real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because

Inflation is measured

Figure 21-4 -Refer to Figure 21-4. Which of the following is consistent with the graph depicted?

Since 1900, real GDP in the United States has grown

The Business Cycle Dating Committee defines a recession as

A(n) ________ comes to an end with a business cycle ________.

Consider the following data for a closed economy: a. Y = $12 trillion b. C = $8 trillion c. I = $3 trillion d. TR = $2 trillion e. T = $3 trillion Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Potential GDP refers to

Which of the following is most liquid?

Table 21-2 -Refer to Table 21-2. Using the table above, what is the approximate growth rate of real GDP from 2016 to 2017?

If GDP grew 3% in 1970, 2.2% in 1971 and 2.5% in 1972 then, what is the average annual growth rate over this period?

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

A government budget surplus from reduced government spending (no change in net taxes) will the level of investment in the economy and the level of total saving (private plus public) in the economy.

Since 1900, real GDP per capita has and this measure the actual growth in standards of living in the United States over this time.

A(n) comes to an end with a business cycle .