Question 1

The period of expansion ends with a ________ and the period of recession ends with a ________.

Accepted Answer

A) business cycle peak; business cycle trough 
B) business cycle trough; business cycle peak 
C) business cycle peak; business cycle peak 
D) business cycle trough; business cycle trough 
A) business cycle peak; business cycle trough 
B) business cycle trough; business cycle peak 
C) business cycle peak; business cycle peak 
D) business cycle trough; business cycle trough

Question 2

Suppose you are a famous international economic advisor.You have been asked to asses the possibilities for growth in an African country.It is a country abundant in labor and some natural resources.The capital to labor ratio is low.It has a free market economy.You have found that this country does not have a very strong and healthy banking system,however the political system is stable and the government does a good job protecting property rights.Assess this country's prospects for growth.Recommend two things that would enhance the country's growth.

Accepted Answer

The prospects for this country's growth

Question 3

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Accepted Answer

A) technology. 
B) labor productivity. 
C) real GDP. 
D) human capital. 
A) technology. 
B) labor productivity. 
C) real GDP. 
D) human capital.

Question 4

Actual real GDP will be above potential GDP if

Accepted Answer

A) firms are producing below capacity. 
B) firms are producing at capacity. 
C) firms are producing above capacity. 
D) inflation is rising. 
A) firms are producing below capacity. 
B) firms are producing at capacity. 
C) firms are producing above capacity. 
D) inflation is rising.

Question 5

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%

Question 6

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

Accepted Answer

A) True 
 B)False

Question 7

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 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 8

Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.

Accepted Answer

When government spending decreases,gover

Question 9

How does a decrease in the tax rate on income earned on saving affect saving,investment,the interest rate,and economic growth?

Accepted Answer

One determinant of the amount of househo

Question 10

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 11

An increase in the government budget deficit will shift the ________ curve for loanable funds 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

When the government runs a deficit,which of the following is true?

Accepted Answer

A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR

Question 13

A country with no trade and no borrowing and lending relationships with other countries is known as a(n)

Accepted Answer

A) planned economy. 
B) market economy. 
C) open economy. 
D) closed economy. 
A) planned economy. 
B) market economy. 
C) open economy. 
D) closed economy.

Question 14

Figure 14-5
  
-Refer to Figure 14-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

Accepted Answer

A) A to B 
B) B to A 
C) B to C 
D) C to A 
A) A to B 
B) B to A 
C) B to C 
D) C to A

Question 15

A decrease in the real interest rate will

Accepted Answer

A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment. 
A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment.

Question 16

Potential GDP in the United States

Accepted Answer

A) does not change over time. 
B) grows as the economy grows. 
C) changes over a given business cycle. 
D) declines over time. 
A) does not change over time. 
B) grows as the economy grows. 
C) changes over a given business cycle. 
D) declines over time.

Question 17

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Accepted Answer

A) After 1950, the length of expansions equaled the length of recessions. 
B) After 1950, the length of expansions were much less than the length of recessions. 
C) After 1950, the length of expansions were much longer than the length of recessions. 
D) After 1950, the length of expansions were brief and almost nonexistent. 
A) After 1950, the length of expansions equaled the length of recessions. 
B) After 1950, the length of expansions were much less than the length of recessions. 
C) After 1950, the length of expansions were much longer than the length of recessions. 
D) After 1950, the length of expansions were brief and almost nonexistent.

Question 18

A period of economic expansion ends with a business cycle trough.

Accepted Answer

A) True 
 B)False

Question 19

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Accepted Answer

A) True 
 B)False

Question 20

Growth in potential GDP in the United States is estimated to be about

Accepted Answer

A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year. 
A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year.

The period of expansion ends with a and the period of recession ends with a .

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Actual real GDP will be above potential GDP if

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?

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

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 saving (private plus public)in the economy.

Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.

How does a decrease in the tax rate on income earned on saving affect saving,investment,the interest rate,and economic growth?

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)

An increase in the government budget deficit will shift the curve for loanable funds to the and the equilibrium real interest rate will .

When the government runs a deficit,which of the following is true?

A country with no trade and no borrowing and lending relationships with other countries is known as a(n)

Figure 14-5 -Refer to Figure 14-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

A decrease in the real interest rate will

Potential GDP in the United States

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

A period of economic expansion ends with a business cycle trough.

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Growth in potential GDP in the United States is estimated to be about

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 14: Economic Growth, the Financial System, and Business Cycles

The period of expansion ends with a ________ and the period of recession ends with a ________.

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Actual real GDP will be above potential GDP if

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?

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

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 saving (private plus public)in the economy.

Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.

How does a decrease in the tax rate on income earned on saving affect saving,investment,the interest rate,and economic growth?

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)

An increase in the government budget deficit will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

When the government runs a deficit,which of the following is true?

A country with no trade and no borrowing and lending relationships with other countries is known as a(n)

Figure 14-5 -Refer to Figure 14-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

A decrease in the real interest rate will

Potential GDP in the United States

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

A period of economic expansion ends with a business cycle trough.

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Growth in potential GDP in the United States is estimated to be about

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

The period of expansion ends with a and the period of recession ends with a .

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 saving (private plus public)in the economy.

An increase in the government budget deficit will shift the curve for loanable funds to the and the equilibrium real interest rate will .