Question 1

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

Accepted Answer

A) True 
 B)False

Question 2

The business cycle occurs from:

Accepted Answer

A) changes in industry demand. 
B) changes in local supply and taxes. 
C) changes in weather. 
D) changes in the costs of production and in total spending. 
A) changes in industry demand. 
B) changes in local supply and taxes. 
C) changes in weather. 
D) changes in the costs of production and in total spending.

Question 3

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

Accepted Answer

A) current generations may not want to sacrifice investment for the benefit of future generations. 
B) current generations may not want to sacrifice consumption for the benefit of future generations. 
C) current generations may not want to sacrifice savings for the benefit of future generations. 
D) future generations may not want to have to sacrifice consumption for the benefit of current generations. 
E) future generations may not want to have to to sacrifice investment for the benefit of current generations. 
A) current generations may not want to sacrifice investment for the benefit of future generations. 
B) current generations may not want to sacrifice consumption for the benefit of future generations. 
C) current generations may not want to sacrifice savings for the benefit of future generations. 
D) future generations may not want to have to sacrifice consumption for the benefit of current generations. 
E) future generations may not want to have to to sacrifice investment for the benefit of current generations.

Question 4

The endogenous growth model suggests:

Accepted Answer

A) that technology has significant positive externalities. 
B) the private sector, on its own, may spend too little on research and development. 
C) the government can play a role in stimulating research and development. 
D) none of factors. 
E) all of these factors. 
A) that technology has significant positive externalities. 
B) the private sector, on its own, may spend too little on research and development. 
C) the government can play a role in stimulating research and development. 
D) none of factors. 
E) all of these factors.

Question 5

The economic cost of unemployment is the loss of potential output which can never be realised.

Accepted Answer

A) True 
 B)False

Question 6

The cost of cyclical unemployment is also called:

Accepted Answer

A) real GDP. 
B) the GDP surplus. 
C) the inflation gap. 
D) potential output minus actual output. 
A) real GDP. 
B) the GDP surplus. 
C) the inflation gap. 
D) potential output minus actual output.

Question 7

Economic growth is measured by the annual percentage increase in a nation's level of:

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) real GDP deflator. 
D) economic indicators. 
A) nominal GDP. 
B) real GDP. 
C) real GDP deflator. 
D) economic indicators.

Question 8

In the Solow model,technological change:

Accepted Answer

A) is not included in the model. 
B) is assumed to be endogenous. 
C) is assumed not to exist. 
D) is assumed to be exogenous. 
A) is not included in the model. 
B) is assumed to be endogenous. 
C) is assumed not to exist. 
D) is assumed to be exogenous.

Question 9

Which of the following is a lagging indicator?

Accepted Answer

A) Material prices. 
B) Changes in inventories. 
C) Industrial production. 
D) Retail sales. 
A) Material prices. 
B) Changes in inventories. 
C) Industrial production. 
D) Retail sales.

Question 10

The 'golden rule',steady-state in the Solow growth model occurs when:

Accepted Answer

A) the level at which the economy will be made no better off by additional saving. 
B) the level of output per person is maximised. 
C) the level of savings per person is minimised. 
D) the level of consumption per person is maximised. 
A) the level at which the economy will be made no better off by additional saving. 
B) the level of output per person is maximised. 
C) the level of savings per person is minimised. 
D) the level of consumption per person is maximised.

Question 11

In the Solow growth model,investment is only possible if:

Accepted Answer

A) consumption equals output. 
B) consumption is greater than output. 
C) output is greater than consumption. 
D) firms borrow from overseas. 
E) savings are greater than consumption. 
A) consumption equals output. 
B) consumption is greater than output. 
C) output is greater than consumption. 
D) firms borrow from overseas. 
E) savings are greater than consumption.

Question 12

The 'golden rule',steady-state level of capital per worker in the Solow model is where:

Accepted Answer

A) the savings rate equals zero. 
B) the savings rate equals the consumption rate. 
C) the savings rate results in the maximum level of output per worker. 
D) the savings rate results in the maximum level of consumption per worker. 
A) the savings rate equals zero. 
B) the savings rate equals the consumption rate. 
C) the savings rate results in the maximum level of output per worker. 
D) the savings rate results in the maximum level of consumption per worker.

Question 13

The Solow growth model attempts to explain:

Accepted Answer

A) how consumption, saving, capital, labour and technology combine to determine long-term economic growth. 
B) how technology is endogenous to economic growth. 
C) how government spending, saving, capital, labour and technology combine to determine long-term economic growth. 
D) how capital and labour combine to determine short-term economic growth. 
A) how consumption, saving, capital, labour and technology combine to determine long-term economic growth. 
B) how technology is endogenous to economic growth. 
C) how government spending, saving, capital, labour and technology combine to determine long-term economic growth. 
D) how capital and labour combine to determine short-term economic growth.

Question 14

Exhibit 12-1 Business cycle
  
-In Exhibit 12-1,the recession phase of the business cycle can be represented by:

Accepted Answer

A) D 
B)  B and D. 
C)  F. 
D)  C. 
E)  A and E. 
A) D 
B)  B and D. 
C)  F. 
D)  C. 
E)  A and E.

Question 15

The business cycle is the periodic but recurrent fluctuations in real GDP.

Accepted Answer

A) True 
 B)False

Question 16

The government's main statistic for forecasting business cycles is the index of coincident indicators.

Accepted Answer

A) True 
 B)False

Question 17

According to the Solow model,with a constant amount of labour and constant technology,increases in the quantity of capital will lead to output per worker:

Accepted Answer

A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) remaining constant. 
D) declining at an increasing rate. 
E) declining at a decreasing rate. 
A) increasing at an increasing rate. 
B) increasing at a decreasing rate. 
C) remaining constant. 
D) declining at an increasing rate. 
E) declining at a decreasing rate.

Question 18

An implication of the Solow growth model is that:

Accepted Answer

A) economies will automatically move from the optimal saving rate. 
B) there may be a role for governments to play in moving the economy to its steady state. 
C) output per worker will be maximised at the steady-state level. 
D) it is impossible for a country to save 'too much'. 
A) economies will automatically move from the optimal saving rate. 
B) there may be a role for governments to play in moving the economy to its steady state. 
C) output per worker will be maximised at the steady-state level. 
D) it is impossible for a country to save 'too much'.

Question 19

Exhibit 12-2
  
-According to Exhibit 12-2,the steady-state level of capital per person occurs when:

Accepted Answer

A) the saving rate is 32.5 per cent. 
B) output per person is 46 units. 
C) gross investment per person is 12 units. 
D) consumption per person is at least 36.2 units. 
A) the saving rate is 32.5 per cent. 
B) output per person is 46 units. 
C) gross investment per person is 12 units. 
D) consumption per person is at least 36.2 units.

Question 20

Which of the following is not a variable in the index of leading indicators?

Accepted Answer

A) Average working week. 
B) Duration of unemployment. 
C) Unemployment claims. 
D) New businesses. 
A) Average working week. 
B) Duration of unemployment. 
C) Unemployment claims. 
D) New businesses.

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

The business cycle occurs from:

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

The endogenous growth model suggests:

The economic cost of unemployment is the loss of potential output which can never be realised.

The cost of cyclical unemployment is also called:

Economic growth is measured by the annual percentage increase in a nation's level of:

In the Solow model,technological change:

Which of the following is a lagging indicator?

The 'golden rule',steady-state in the Solow growth model occurs when:

In the Solow growth model,investment is only possible if:

The 'golden rule',steady-state level of capital per worker in the Solow model is where:

The Solow growth model attempts to explain:

Exhibit 12-1 Business cycle -In Exhibit 12-1,the recession phase of the business cycle can be represented by:

The business cycle is the periodic but recurrent fluctuations in real GDP.

The government's main statistic for forecasting business cycles is the index of coincident indicators.

According to the Solow model,with a constant amount of labour and constant technology,increases in the quantity of capital will lead to output per worker:

An implication of the Solow growth model is that:

Exhibit 12-2 -According to Exhibit 12-2,the steady-state level of capital per person occurs when:

Which of the following is not a variable in the index of leading indicators?

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

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

The business cycle occurs from:

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

The endogenous growth model suggests:

The economic cost of unemployment is the loss of potential output which can never be realised.

The cost of cyclical unemployment is also called:

Economic growth is measured by the annual percentage increase in a nation's level of:

In the Solow model,technological change:

Which of the following is a lagging indicator?

The 'golden rule',steady-state in the Solow growth model occurs when:

In the Solow growth model,investment is only possible if:

The 'golden rule',steady-state level of capital per worker in the Solow model is where:

The Solow growth model attempts to explain:

Exhibit 12-1 Business cycle -In Exhibit 12-1,the recession phase of the business cycle can be represented by:

The business cycle is the periodic but recurrent fluctuations in real GDP.

The government's main statistic for forecasting business cycles is the index of coincident indicators.

According to the Solow model,with a constant amount of labour and constant technology,increases in the quantity of capital will lead to output per worker:

An implication of the Solow growth model is that:

Exhibit 12-2 -According to Exhibit 12-2,the steady-state level of capital per person occurs when:

Which of the following is not a variable in the index of leading indicators?

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