Question 1

In a closed economy

Accepted Answer

A) I = Y - C - G. 
B) I = Y + C - G. 
C) I = Y - C + G. 
D) I = Y + C + G. 
A) I = Y - C - G. 
B) I = Y + C - G. 
C) I = Y - C + G. 
D) I = Y + C + G.

Question 2

Which of the following statements about the budget deficit is true?

Accepted Answer

A) In 1992, the federal budget was balanced. 
B) In 2000, the federal budget was in surplus. 
C) In 2004, the federal budget was in surplus. 
D) In 2011, the federal budget was in surplus. 
A) In 1992, the federal budget was balanced. 
B) In 2000, the federal budget was in surplus. 
C) In 2004, the federal budget was in surplus. 
D) In 2011, the federal budget was in surplus.

Question 3

The Business Cycle Dating Committee defines a recession as

Accepted Answer

A) two consecutive quarters of declining real GDP. 
B) two consecutive quarters of declining nominal GDP. 
C) a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D) a significant decline in inflation and unemployment lasting more than a few months. 
A) two consecutive quarters of declining real GDP. 
B) two consecutive quarters of declining nominal GDP. 
C) a significant decline in activity visible in industrial production, employment, real income, and wholesale/retail trade lasting more than a few months. 
D) a significant decline in inflation and unemployment lasting more than a few months.

Question 4

There is a federal budget deficit when

Accepted Answer

A) the government spends less that it collects in taxes. 
B) the government spends more that it collects in taxes. 
C) the government spends the same amount it collects in taxes. 
D) taxes are too high. 
A) the government spends less that it collects in taxes. 
B) the government spends more that it collects in taxes. 
C) the government spends the same amount it collects in taxes. 
D) taxes are too high.

Question 5

In comparison to a government that runs a balanced budget,when the government runs a budget deficit

Accepted Answer

A) the equilibrium interest rate will fall. 
B) business investment will fall. 
C) household savings will fall. 
D) none of the above 
A) the equilibrium interest rate will fall. 
B) business investment will fall. 
C) household savings will fall. 
D) none of the above

Question 6

________ are financial securities that represent partial ownership of a firm.

Accepted Answer

A) Stocks 
B) Bonds 
C) Treasury bills 
D) Certificates of deposit 
A) Stocks 
B) Bonds 
C) Treasury bills 
D) Certificates of deposit

Question 7

Explain and show graphically how an increase in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds.

Accepted Answer

An increase in household saving increase

Question 8

If net taxes fall by $80 billion,we would expect

Accepted Answer

A) the government deficit to fall by $80 billion. 
B) household saving to rise by $80 billion. 
C) household saving to rise by less than $80 billion. 
D) household saving to fall by more than $80 billion. 
A) the government deficit to fall by $80 billion. 
B) household saving to rise by $80 billion. 
C) household saving to rise by less than $80 billion. 
D) household saving to fall by more than $80 billion.

Question 9

Which of the following statements describes the experiences of the Whirlpool Corporation since it was established in 1911?

Accepted Answer

A) strong uninterrupted growth in demand 
B) long-run growth interrupted by periods of business cycle recession 
C) little or no growth in the long run, and unaffected by the business cycle 
D) little or no growth in the long run, but very vulnerable to the business cycle 
A) strong uninterrupted growth in demand 
B) long-run growth interrupted by periods of business cycle recession 
C) little or no growth in the long run, and unaffected by the business cycle 
D) little or no growth in the long run, but very vulnerable to the business cycle

Question 10

The demand for loanable funds is downward sloping because the ________ the interest rate,the ________ the number of profitable investment projects a firm can undertake,and the ________ the quantity demanded of loanable funds.

Accepted Answer

A) lower; greater; greater 
B) lower; smaller; greater 
C) greater; greater; greater 
D) greater; smaller; greater 
A) lower; greater; greater 
B) lower; smaller; greater 
C) greater; greater; greater 
D) greater; smaller; greater

Question 11

In 2003,Congress passed a tax cut that included a reduction in the marginal tax rate on stock dividends.This essentially increased the after-tax rate of return on stocks that offer dividends.Using the loanable funds market,describe what will happen to saving,investment,economic growth,the real interest rate,and the quantity of loanable funds exchanged.

Accepted Answer

Dividends are the portion of corporate p

Question 12

If,between 2003 and 2013,the economy's real GDP grew from $20 billion to $40 billion,what was the average annual growth rate in the economy?

Accepted Answer

A) 3% 
B) 7% 
C) 20% 
D) 100% 
A) 3% 
B) 7% 
C) 20% 
D) 100%

Question 13

Equilibrium in the loanable funds market determines

Accepted Answer

A) the nominal interest rate. 
B) the current interest rate. 
C) the real interest rate. 
D) the expected interest rate. 
A) the nominal interest rate. 
B) the current interest rate. 
C) the real interest rate. 
D) the expected interest rate.

Question 14

For the recessions in the United States since the 1950s

Accepted Answer

A) cyclical unemployment has been non-existent. 
B) unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. 
C) unemployment falls on average by 2 percentage points 12 months after a recession begins. 
D) unemployment rises on average about 5 percentage points 12 months after a recession begins. 
A) cyclical unemployment has been non-existent. 
B) unemployment rises on average by about 1.2 percentage points 12 months after a recession begins. 
C) unemployment falls on average by 2 percentage points 12 months after a recession begins. 
D) unemployment rises on average about 5 percentage points 12 months after a recession begins.

Question 15

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Accepted Answer

A) fall; rise 
B) fall; fall 
C) rise; fall 
D) rise; rise 
A) fall; rise 
B) fall; fall 
C) rise; fall 
D) rise; rise

Question 16

Explain and show graphically how an increase in government spending affects the equilibrium interest rate in the market for loanable funds.

Accepted Answer

When government spending increases,gover

Question 17

Potential GDP is defined as

Accepted Answer

A) the maximum of GDP that the economy can produce. 
B) the amount of GDP produced if there is no frictional unemployment. 
C) the level of GDP attained when all firms are producing at capacity. 
D) the amount of GDP produced if there is no structural unemployment. 
A) the maximum of GDP that the economy can produce. 
B) the amount of GDP produced if there is no frictional unemployment. 
C) the level of GDP attained when all firms are producing at capacity. 
D) the amount of GDP produced if there is no structural unemployment.

Question 18

Suppose that real GDP for 2012 was $10,000 billion and real GDP for 2013 was $11,000 billion.What is the rate of growth of real GDP between 2012 and 2013?

Accepted Answer

A) 1% 
B) 2% 
C) 5% 
D) 10% 
A) 1% 
B) 2% 
C) 5% 
D) 10%

Question 19

Since the 1950s

Accepted Answer

A) the United States has not experienced a business cycle. 
B) U)S.business cycle fluctuations have becomes more volatile. 
C) U)S.business cycle fluctuations have become milder. 
D) U)S.business cycle fluctuations have not changed. 
A) the United States has not experienced a business cycle. 
B) U)S.business cycle fluctuations have becomes more volatile. 
C) U)S.business cycle fluctuations have become milder. 
D) U)S.business cycle fluctuations have not changed.

Question 20

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

Accepted Answer

Private saving is equal to Y - C - T,so

In a closed economy

Which of the following statements about the budget deficit is true?

The Business Cycle Dating Committee defines a recession as

There is a federal budget deficit when

In comparison to a government that runs a balanced budget,when the government runs a budget deficit

________ are financial securities that represent partial ownership of a firm.

Explain and show graphically how an increase in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds.

If net taxes fall by $80 billion,we would expect

Which of the following statements describes the experiences of the Whirlpool Corporation since it was established in 1911?

The demand for loanable funds is downward sloping because the the interest rate,the the number of profitable investment projects a firm can undertake,and the the quantity demanded of loanable funds.

If,between 2003 and 2013,the economy's real GDP grew from $20 billion to $40 billion,what was the average annual growth rate in the economy?

Equilibrium in the loanable funds market determines

For the recessions in the United States since the 1950s

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to and the equilibrium quantity of loanable funds to .

Explain and show graphically how an increase in government spending affects the equilibrium interest rate in the market for loanable funds.

Potential GDP is defined as

Suppose that real GDP for 2012 was $10,000 billion and real GDP for 2013 was $11,000 billion.What is the rate of growth of real GDP between 2012 and 2013?

Since the 1950s

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

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

In a closed economy

Which of the following statements about the budget deficit is true?

The Business Cycle Dating Committee defines a recession as

There is a federal budget deficit when

In comparison to a government that runs a balanced budget,when the government runs a budget deficit

________ are financial securities that represent partial ownership of a firm.

Explain and show graphically how an increase in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds.

If net taxes fall by $80 billion,we would expect

Which of the following statements describes the experiences of the Whirlpool Corporation since it was established in 1911?

The demand for loanable funds is downward sloping because the ________ the interest rate,the ________ the number of profitable investment projects a firm can undertake,and the ________ the quantity demanded of loanable funds.

If,between 2003 and 2013,the economy's real GDP grew from $20 billion to $40 billion,what was the average annual growth rate in the economy?

Equilibrium in the loanable funds market determines

For the recessions in the United States since the 1950s

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Explain and show graphically how an increase in government spending affects the equilibrium interest rate in the market for loanable funds.

Potential GDP is defined as

Suppose that real GDP for 2012 was $10,000 billion and real GDP for 2013 was $11,000 billion.What is the rate of growth of real GDP between 2012 and 2013?

Since the 1950s

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

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 demand for loanable funds is downward sloping because the the interest rate,the the number of profitable investment projects a firm can undertake,and the the quantity demanded of loanable funds.

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to and the equilibrium quantity of loanable funds to .