Question 1

One country can have a higher level of output per worker because of:

Accepted Answer

A) an increase in the unemployment rate. 
B) a reduction in its labour force. 
C) improvement in its available production technologies. 
D) a reduction in population. 
A) an increase in the unemployment rate. 
B) a reduction in its labour force. 
C) improvement in its available production technologies. 
D) a reduction in population.

Question 2

According to the Solow model,with constant technology,an increase in capital per worker will lead to a smaller increase in GDP per capita.This is explained by:

Accepted Answer

A) constant returns to scale. 
B) the law of diminishing marginal returns. 
C) the law of diminishing marginal utility. 
D) decreasing returns to scale. 
A) constant returns to scale. 
B) the law of diminishing marginal returns. 
C) the law of diminishing marginal utility. 
D) decreasing returns to scale.

Question 3

The GDP gap measures:

Accepted Answer

A) the value of non-market goods. 
B) the cost of additional labour. 
C) total value of final goods and services. 
D) the value of all goods and services. 
E) the cost of cyclical unemployment. 
A) the value of non-market goods. 
B) the cost of additional labour. 
C) total value of final goods and services. 
D) the value of all goods and services. 
E) the cost of cyclical unemployment.

Question 4

If an increase in labour and capital of 10 per cent leads to output increasing by 20 per cent then,ceteris paribus,the economy is operating with:

Accepted Answer

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

Question 5

It is important to increase inflation fast during expansion.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is correct regarding the Solow growth model?

Accepted Answer

A) Increases in living standards will be achieved automatically in the long run. 
B) An increase in the saving rate will always result in a higher level of output per person. 
C) An increase in the saving rate will always result in a higher level of consumption per person. 
D) The optimal saving rate will be achieved as the community is no better off by additional saving. 
A) Increases in living standards will be achieved automatically in the long run. 
B) An increase in the saving rate will always result in a higher level of output per person. 
C) An increase in the saving rate will always result in a higher level of consumption per person. 
D) The optimal saving rate will be achieved as the community is no better off by additional saving.

Question 7

A temporary monopoly right through the patent:

Accepted Answer

A) is a waste of resources. 
B) should not be granted. 
C) can be in society's longer term interest. 
D) is a luxury that only advantageous people enjoy. 
A) is a waste of resources. 
B) should not be granted. 
C) can be in society's longer term interest. 
D) is a luxury that only advantageous people enjoy.

Question 8

Total spending influences the business cycle because:

Accepted Answer

A) increases in spending flow through to higher output, employment and income. 
B) it allows GDP to increase well beyond the full-employment level of output. 
C) decreases in spending will increase inflation, which then reduces real GDP. 
D) increases in spending will decrease inflation, which then increases real GDP. 
A) increases in spending flow through to higher output, employment and income. 
B) it allows GDP to increase well beyond the full-employment level of output. 
C) decreases in spending will increase inflation, which then reduces real GDP. 
D) increases in spending will decrease inflation, which then increases real GDP.

Question 9

A recession is a decline in real GDP lasting at least:

Accepted Answer

A) one year. 
B) six months. 
C) three months. 
D) one month. 
A) one year. 
B) six months. 
C) three months. 
D) one month.

Question 10

The GDP gap is the difference between:

Accepted Answer

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

Question 11

A business cycle is the period of time in which:

Accepted Answer

A) a business is established and ceases operations. 
B) there are three phases, which are: peak, depression and recovery. 
C) real GDP declines. 
D) expansion and contraction of economic activity are alternated. 
A) a business is established and ceases operations. 
B) there are three phases, which are: peak, depression and recovery. 
C) real GDP declines. 
D) expansion and contraction of economic activity are alternated.

Question 12

If real GDP is currently $500 billion,there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion,we can conclude with certainty that:

Accepted Answer

A) the GDP gap is $100 billion. 
B) there is no GDP gap. 
C) there is a GDP gap. 
D) the economy is operating above full employment. 
A) the GDP gap is $100 billion. 
B) there is no GDP gap. 
C) there is a GDP gap. 
D) the economy is operating above full employment.

Question 13

Over time,real GDP tends to:

Accepted Answer

A) fluctuate. 
B) trend upward. 
C) slow down. 
D) trend downward. 
A) fluctuate. 
B) trend upward. 
C) slow down. 
D) trend downward.

Question 14

If technological progress involves positive externalities,then private sector spending on research and development may be:

Accepted Answer

A) too high. 
B) wasted. 
C) too low. 
D) less than public sector spending on research and development. 
E) greater than public sector spending on research and development. 
A) too high. 
B) wasted. 
C) too low. 
D) less than public sector spending on research and development. 
E) greater than public sector spending on research and development.

Question 15

One of the goals of macroeconomic policy should be:

Accepted Answer

A) to keep inflation at zero per cent. 
B) to reduce the unemployment rate to zero. 
C) to increase the productive potential of the economy. 
D) to continually increase the saving rate. 
A) to keep inflation at zero per cent. 
B) to reduce the unemployment rate to zero. 
C) to increase the productive potential of the economy. 
D) to continually increase the saving rate.

Question 16

The phase of the business cycle that follows a recession is known as the:

Accepted Answer

A) peak. 
B) recession. 
C) recovery. 
D) trough. 
A) peak. 
B) recession. 
C) recovery. 
D) trough.

Question 17

If you look for a job for 18 months after graduation,but fail to generate an offer,even after lowering your expectations,the economy is probably in the business cycle phase called:

Accepted Answer

A) recession. 
B) peak. 
C) boom. 
D) recovery. 
E) trough. 
A) recession. 
B) peak. 
C) boom. 
D) recovery. 
E) trough.

Question 18

The 'golden rule' level of output per worker in the Solow growth model occurs when the saving rate is maximised.

Accepted Answer

A) True 
 B)False

Question 19

The 1987 the Nobel Laureate,awarded for his contribution to growth theory,was:

Accepted Answer

A) John Maynard Keynes. 
B) Milton Friedman. 
C) Robert Solow. 
D) Gregory Mankiw. 
E) Adam Smith. 
A) John Maynard Keynes. 
B) Milton Friedman. 
C) Robert Solow. 
D) Gregory Mankiw. 
E) Adam Smith.

Question 20

Exogenous technological progress is the progress that:

Accepted Answer

A) depends on the economic growth process. 
B) is independent of the economic growth process. 
C) is undefinable. 
D) is growing slowly according to spending in the economy. 
A) depends on the economic growth process. 
B) is independent of the economic growth process. 
C) is undefinable. 
D) is growing slowly according to spending in the economy.

One country can have a higher level of output per worker because of:

According to the Solow model,with constant technology,an increase in capital per worker will lead to a smaller increase in GDP per capita.This is explained by:

The GDP gap measures:

If an increase in labour and capital of 10 per cent leads to output increasing by 20 per cent then,ceteris paribus,the economy is operating with:

It is important to increase inflation fast during expansion.

Which of the following statements is correct regarding the Solow growth model?

A temporary monopoly right through the patent:

Total spending influences the business cycle because:

A recession is a decline in real GDP lasting at least:

The GDP gap is the difference between:

A business cycle is the period of time in which:

If real GDP is currently $500 billion,there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion,we can conclude with certainty that:

Over time,real GDP tends to:

If technological progress involves positive externalities,then private sector spending on research and development may be:

One of the goals of macroeconomic policy should be:

The phase of the business cycle that follows a recession is known as the:

If you look for a job for 18 months after graduation,but fail to generate an offer,even after lowering your expectations,the economy is probably in the business cycle phase called:

The 'golden rule' level of output per worker in the Solow growth model occurs when the saving rate is maximised.

The 1987 the Nobel Laureate,awarded for his contribution to growth theory,was:

Exogenous technological progress is the progress that:

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

Exam 12: Business cycles and economic growth

One country can have a higher level of output per worker because of:

According to the Solow model,with constant technology,an increase in capital per worker will lead to a smaller increase in GDP per capita.This is explained by:

The GDP gap measures:

If an increase in labour and capital of 10 per cent leads to output increasing by 20 per cent then,ceteris paribus,the economy is operating with:

It is important to increase inflation fast during expansion.

Which of the following statements is correct regarding the Solow growth model?

A temporary monopoly right through the patent:

Total spending influences the business cycle because:

A recession is a decline in real GDP lasting at least:

The GDP gap is the difference between:

A business cycle is the period of time in which:

If real GDP is currently $500 billion,there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion,we can conclude with certainty that:

Over time,real GDP tends to:

If technological progress involves positive externalities,then private sector spending on research and development may be:

One of the goals of macroeconomic policy should be:

The phase of the business cycle that follows a recession is known as the:

If you look for a job for 18 months after graduation,but fail to generate an offer,even after lowering your expectations,the economy is probably in the business cycle phase called:

The 'golden rule' level of output per worker in the Solow growth model occurs when the saving rate is maximised.

The 1987 the Nobel Laureate,awarded for his contribution to growth theory,was:

Exogenous technological progress is the progress that:

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