Question 1

One of the problems in a country achieving its steady-state level in the Solow model is that:

Accepted Answer

A) short-term saving must be sacrificed in order to increase living standards in the long term. 
B) short-term consumption must be sacrificed in order to increase living standards in the long term. 
C) short-term investment must be sacrificed in order to increase living standards in the long term. 
D) future generations will need to cut back on consumption in the long term. 
E) future generations will need to decrease savings in the long term. 
A) short-term saving must be sacrificed in order to increase living standards in the long term. 
B) short-term consumption must be sacrificed in order to increase living standards in the long term. 
C) short-term investment must be sacrificed in order to increase living standards in the long term. 
D) future generations will need to cut back on consumption in the long term. 
E) future generations will need to decrease savings in the long term.

Question 2

Exhibit 12-2
  
-According to Exhibit 12-2,the level of consumption per person when capital per person is 120 units will be:

Accepted Answer

A) 32. 
B) 34. 
C) 36. 
D) 38. 
E) 40. 
A) 32. 
B) 34. 
C) 36. 
D) 38. 
E) 40.

Question 3

Exhibit 12-2
  
-According to Exhibit 12-2,the 'golden rule' steady-state occurs when the level of capital per worker is:

Accepted Answer

A) 100. 
B) 120. 
C) between 144 and 172.8. 
D) 172.8. 
E) between 120 and 144. 
A) 100. 
B) 120. 
C) between 144 and 172.8. 
D) 172.8. 
E) between 120 and 144.

Question 4

Which of the following is a coincident indicator?

Accepted Answer

A) CPI data. 
B) Industrial production. 
C) Building approvals. 
D) Retail sales. 
A) CPI data. 
B) Industrial production. 
C) Building approvals. 
D) Retail sales.

Question 5

Which of the following is an example of a government policy aimed at increasing the long-term living standards of Australians?

Accepted Answer

A) Increases in government spending. 
B) Decreases in taxes. 
C) Decreases in interest rates. 
D) Compulsory superannuation. 
E) Increases in interest rates. 
A) Increases in government spending. 
B) Decreases in taxes. 
C) Decreases in interest rates. 
D) Compulsory superannuation. 
E) Increases in interest rates.

Question 6

A trough is the turning point in national output between recession and peak.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true?

Accepted Answer

A) The GDP gap is the difference between nominal GDP and real GDP. 
B) Economic growth is a difference between last year's CPI and this year's CPI. 
C) Economic growth is measured by the annual amount increase in a nation's real GDP. 
D) Discouraged workers are not fully accounted for in the unemployment rate. 
A) The GDP gap is the difference between nominal GDP and real GDP. 
B) Economic growth is a difference between last year's CPI and this year's CPI. 
C) Economic growth is measured by the annual amount increase in a nation's real GDP. 
D) Discouraged workers are not fully accounted for in the unemployment rate.

Question 8

According to the endogenous growth model,public sector spending on basic research may:

Accepted Answer

A) be better spent on the private sector. 
B) have long-term benefits to society. 
C) have short-term benefits to society, but will be money wasted in the long term. 
D) have a higher return than private sector research and development. 
A) be better spent on the private sector. 
B) have long-term benefits to society. 
C) have short-term benefits to society, but will be money wasted in the long term. 
D) have a higher return than private sector research and development.

Question 9

The term 'trough' refers to the maximum point of the business cycle.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a coincident indicator?

Accepted Answer

A) Average work week. 
B) New building approvals. 
C) Stock prices. 
D) Household income. 
A) Average work week. 
B) New building approvals. 
C) Stock prices. 
D) Household income.

Question 11

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then,ceteris paribus,the economy is operating with:

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) economies of scale. 
E) diseconomies of scale. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) economies of scale. 
E) diseconomies of scale.

Question 12

Exhibit 12-2
  
-According to Exhibit 12-2,output per worker is increasing at a decreasing rate.This is due to:

Accepted Answer

A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing marginal productivity. 
D) increasing marginal productivity. 
E) increasing saving rate. 
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) diminishing marginal productivity. 
D) increasing marginal productivity. 
E) increasing saving rate.

Question 13

The 'golden rule' of saving is:

Accepted Answer

A) the rate of saving that produces the minimum level of consumption per capita in the long-steady state. 
B) the rate of saving that produces the maximum level of production per capita in the long-steady state. 
C) the rate of saving that produces the maximum level of consumption per capita in the long-steady state. 
D) The rate of saving that produces the minimum level of investment per capita in the long-steady state. 
A) the rate of saving that produces the minimum level of consumption per capita in the long-steady state. 
B) the rate of saving that produces the maximum level of production per capita in the long-steady state. 
C) the rate of saving that produces the maximum level of consumption per capita in the long-steady state. 
D) The rate of saving that produces the minimum level of investment per capita in the long-steady state.

Question 14

Without technological progress a country can never enjoy sustained increases in living standards because:

Accepted Answer

A) of diminishing marginal productivity. 
B) of decreasing returns to scale. 
C) an economy can never exceed its optimal rate of saving in the long run. 
D) of increasing marginal productivity. 
A) of diminishing marginal productivity. 
B) of decreasing returns to scale. 
C) an economy can never exceed its optimal rate of saving in the long run. 
D) of increasing marginal productivity.

Question 15

One of the goals of macroeconomists is to:

Accepted Answer

A) reduce the severity of business-cycle fluctuations. 
B) increase short-term output. 
C) keep output at a constant level. 
D) keep consumption at a constant level. 
A) reduce the severity of business-cycle fluctuations. 
B) increase short-term output. 
C) keep output at a constant level. 
D) keep consumption at a constant level.

Question 16

In the Solow model,technological progress is assumed to be:

Accepted Answer

A) zero. 
B) endogenous. 
C) exogenous. 
D) continually increasing. 
E) continually decreasing. 
A) zero. 
B) endogenous. 
C) exogenous. 
D) continually increasing. 
E) continually decreasing.

Question 17

The GDP gap is the difference between:

Accepted Answer

A) seasonal unemployment and actual real GDP. 
B) the unemployment rate and real GDP deflator. 
C) full-employment real GDP and actual real GDP. 
D) full-employment real GDP and real GDP deflator. 
A) seasonal unemployment and actual real GDP. 
B) the unemployment rate and real GDP deflator. 
C) full-employment real GDP and actual real GDP. 
D) full-employment real GDP and real GDP deflator.

Question 18

The GDP gap is the difference between:

Accepted Answer

A) full-employment real GDP and nominal GDP chain price index. 
B) unemployment rate and real GDP chain price index. 
C) full-employment real GDP and actual real GDP. 
D) discouraged workers and actual real GDP. 
A) full-employment real GDP and nominal GDP chain price index. 
B) unemployment rate and real GDP chain price index. 
C) full-employment real GDP and actual real GDP. 
D) discouraged workers and actual real GDP.

Question 19

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur,a country needs to:

Accepted Answer

A) continually increase the quantity of capital. 
B) continually increase the proportion of savings. 
C) continually increase consumption. 
D) have technological progress. 
A) continually increase the quantity of capital. 
B) continually increase the proportion of savings. 
C) continually increase consumption. 
D) have technological progress.

Question 20

Exhibit 12-2
  
-According to Exhibit 12-2,the required saving rate when the capital stock per person is 172.8 units will be:

Accepted Answer

A) 35 per cent. 
B) 40 per cent. 
C) 30 per cent. 
D) 32.5 per cent. 
E) 37.5 per cent. 
A) 35 per cent. 
B) 40 per cent. 
C) 30 per cent. 
D) 32.5 per cent. 
E) 37.5 per cent.

One of the problems in a country achieving its steady-state level in the Solow model is that:

Exhibit 12-2 -According to Exhibit 12-2,the level of consumption per person when capital per person is 120 units will be:

Exhibit 12-2 -According to Exhibit 12-2,the 'golden rule' steady-state occurs when the level of capital per worker is:

Which of the following is a coincident indicator?

Which of the following is an example of a government policy aimed at increasing the long-term living standards of Australians?

A trough is the turning point in national output between recession and peak.

Which of the following is true?

According to the endogenous growth model,public sector spending on basic research may:

The term 'trough' refers to the maximum point of the business cycle.

Which of the following is a coincident indicator?

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then,ceteris paribus,the economy is operating with:

Exhibit 12-2 -According to Exhibit 12-2,output per worker is increasing at a decreasing rate.This is due to:

The 'golden rule' of saving is:

Without technological progress a country can never enjoy sustained increases in living standards because:

One of the goals of macroeconomists is to:

In the Solow model,technological progress is assumed to be:

The GDP gap is the difference between:

The GDP gap is the difference between:

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur,a country needs to:

Exhibit 12-2 -According to Exhibit 12-2,the required saving rate when the capital stock per person is 172.8 units will be:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

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Exam 12: Business cycles and economic growth

One of the problems in a country achieving its steady-state level in the Solow model is that:

Exhibit 12-2 -According to Exhibit 12-2,the level of consumption per person when capital per person is 120 units will be:

Exhibit 12-2 -According to Exhibit 12-2,the 'golden rule' steady-state occurs when the level of capital per worker is:

Which of the following is a coincident indicator?

Which of the following is an example of a government policy aimed at increasing the long-term living standards of Australians?

A trough is the turning point in national output between recession and peak.

Which of the following is true?

According to the endogenous growth model,public sector spending on basic research may:

The term 'trough' refers to the maximum point of the business cycle.

Which of the following is a coincident indicator?

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then,ceteris paribus,the economy is operating with:

Exhibit 12-2 -According to Exhibit 12-2,output per worker is increasing at a decreasing rate.This is due to:

The 'golden rule' of saving is:

Without technological progress a country can never enjoy sustained increases in living standards because:

One of the goals of macroeconomists is to:

In the Solow model,technological progress is assumed to be:

The GDP gap is the difference between:

The GDP gap is the difference between:

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur,a country needs to:

Exhibit 12-2 -According to Exhibit 12-2,the required saving rate when the capital stock per person is 172.8 units will be:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters