Question 1

During an expansion, how do inflation and unemployment typically change?

Accepted Answer

A)  Inflation and unemployment both rise. 
B)  Inflation and unemployment both fall. 
C)  Inflation falls and unemployment rises. 
D)  Inflation rises and unemployment falls. 
A)  Inflation and unemployment both rise. 
B)  Inflation and unemployment both fall. 
C)  Inflation falls and unemployment rises. 
D)  Inflation rises and unemployment falls.

Question 2

The period between a business cycle peak and a business cycle trough is called

Accepted Answer

A)  expansion. 
B)  recession. 
C)  diffusion. 
D)  recalculation. 
A)  expansion. 
B)  recession. 
C)  diffusion. 
D)  recalculation.

Question 3

The growth rate of real GDP in the United States rises from 4.2% to 4.4%. Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Accepted Answer

The "Rule of 70" states that the number

Question 4

Liquidity refers to

Accepted Answer

A)  the ease with a stock can be traded for a bond. 
B)  the ease with which a financial security can be traded for cash. 
C)  the number of times a dollar changes hands in the creation of GDP in an economy. 
D)  the number of shares of stock a corporation issues. 
A)  the ease with a stock can be traded for a bond. 
B)  the ease with which a financial security can be traded for cash. 
C)  the number of times a dollar changes hands in the creation of GDP in an economy. 
D)  the number of shares of stock a corporation issues.

Question 5

The effect of a recession on a company like General Motors Corporation is such that

Accepted Answer

A)  sales decline more sharply for General Motors as compared to firms that do not produce durable goods. 
B)  profits fall less sharply as compared to firms that do not produce durable goods. 
C)  the decline in sales is more short-lived as compared to firms that do not produce durable goods. 
D)  there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. 
A)  sales decline more sharply for General Motors as compared to firms that do not produce durable goods. 
B)  profits fall less sharply as compared to firms that do not produce durable goods. 
C)  the decline in sales is more short-lived as compared to firms that do not produce durable goods. 
D)  there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods.

Question 6

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Accepted Answer

A)  savers; borrower 
B)  borrower; savers 
C)  governments; households 
D)  firms; insurance companies 
A)  savers; borrower 
B)  borrower; savers 
C)  governments; households 
D)  firms; insurance companies

Question 7

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

Accepted Answer

A)  growth in capital per hour worked accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change 
A)  growth in capital per hour worked accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change

Question 8

If real GDP in a small country in 2017 is $8 billion and real GDP in the same country in 2018 is $8.3 billion, the growth rate of real GDP between 2017 and 2018

Accepted Answer

A)  is 3.0%. 
B)  is 3.6%. 
C)  is 3.75%. 
D)  cannot be determined from the information given. 
A)  is 3.0%. 
B)  is 3.6%. 
C)  is 3.75%. 
D)  cannot be determined from the information given.

Question 9

The budget deficit is defined as

Accepted Answer

A)  T - (G + TR), and this is negative. 
B)  T - (G + TR), and this is positive. 
C)  T + (G - TR), and this is negative. 
D)  T + (G + TR), and this is negative. 
A)  T - (G + TR), and this is negative. 
B)  T - (G + TR), and this is positive. 
C)  T + (G - TR), and this is negative. 
D)  T + (G + TR), and this is negative.

Question 10

According to the National Bureau of Economic Research, the United States has experienced ________ recessions since 1950.

Accepted Answer

A)  4 
B)  7 
C)  10 
D)  15 
A)  4 
B)  7 
C)  10 
D)  15

Question 11

If technological change increases the profitability of new investment for firms, then the ________ curve for loanable funds will shift 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 12

For the recessions in the United States since the 1950s

Accepted Answer

A)  inflation has been nonexistent. 
B)  the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C)  the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D)  deflation occurs. 
A)  inflation has been nonexistent. 
B)  the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C)  the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D)  deflation occurs.

Question 13

Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?

Accepted Answer

A)  It has decreased. 
B)  It has increased by more than eight times. 
C)  It has doubled. 
D)  It has increased twenty times. 
A)  It has decreased. 
B)  It has increased by more than eight times. 
C)  It has doubled. 
D)  It has increased twenty times.

Question 14

If technological change increases the profitability of new investments for firms, then the ________ curve for loanable funds will shift to the ________.

Accepted Answer

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

Question 15

Labor productivity is

Accepted Answer

A)  the quantity of output produced in one hour by several workers. 
B)  the quantity of capital one worker can produce in one day. 
C)  the quantity of output produced by one worker or by one hour of work. 
D)  the quantity of output produced in one hour by one machine. 
A)  the quantity of output produced in one hour by several workers. 
B)  the quantity of capital one worker can produce in one day. 
C)  the quantity of output produced by one worker or by one hour of work. 
D)  the quantity of output produced in one hour by one machine.

Question 16

If the CPI is currently 202, what does this tell you about inflation between last year and this year?

Accepted Answer

A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next. 
A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next.

Question 17

When the economy enters a recessionary phase of the business cycle, unemployment tends to

Accepted Answer

A)  decrease. 
B)  increase. 
C)  be unchanged. 
D)  change in the same direction as the rate of inflation. 
A)  decrease. 
B)  increase. 
C)  be unchanged. 
D)  change in the same direction as the rate of inflation.

Question 18

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

Accepted Answer

A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system. 
A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system.

Question 19

An increase in the real interest rate does which of the following?

Accepted Answer

A)  reduces the demand for loanable funds 
B)  reduces saving 
C)  reduces consumption spending 
D)  increases the demand for loanable funds 
A)  reduces the demand for loanable funds 
B)  reduces saving 
C)  reduces consumption spending 
D)  increases the demand for loanable funds

Question 20

If government purchases are $400 million, taxes are $700 million, and transfers are $200 million, which of the following is true?

Accepted Answer

A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million. 
A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million.

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

During an expansion, how do inflation and unemployment typically change?

The period between a business cycle peak and a business cycle trough is called

The growth rate of real GDP in the United States rises from 4.2% to 4.4%. Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Liquidity refers to

The effect of a recession on a company like General Motors Corporation is such that

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

If real GDP in a small country in 2017 is $8 billion and real GDP in the same country in 2018 is $8.3 billion, the growth rate of real GDP between 2017 and 2018

The budget deficit is defined as

According to the National Bureau of Economic Research, the United States has experienced ________ recessions since 1950.

If technological change increases the profitability of new investment for firms, then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.

For the recessions in the United States since the 1950s

Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?

If technological change increases the profitability of new investments for firms, then the ________ curve for loanable funds will shift to the ________.

Labor productivity is

If the CPI is currently 202, what does this tell you about inflation between last year and this year?

When the economy enters a recessionary phase of the business cycle, unemployment tends to

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

An increase in the real interest rate does which of the following?

If government purchases are $400 million, taxes are $700 million, and transfers are $200 million, which of the following is true?

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 financial intermediary's main function is to match with excess funds to with a shortage of funds.

If technological change increases the profitability of new investment for firms, then the curve for loanable funds will shift to the and the equilibrium real interest rate will .

If technological change increases the profitability of new investments for firms, then the curve for loanable funds will shift to the .