Question 1

If you spend more of your income on consumption goods, which of the following will occur?

Accepted Answer

A) The production of investment goods will fall. 
B) Economic growth will be stimulated. 
C) Investments in education will rise. 
D) For every dollar you spend on consumption, real GDP will fall by a dollar. 
A) The production of investment goods will fall. 
B) Economic growth will be stimulated. 
C) Investments in education will rise. 
D) For every dollar you spend on consumption, real GDP will fall by a dollar.

Question 2

The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded.

Accepted Answer

A) negative; greater; greater 
B) negative; greater; lesser 
C) negative; lesser; greater 
D) positive; lesser; lesser 
A) negative; greater; greater 
B) negative; greater; lesser 
C) negative; lesser; greater 
D) positive; lesser; lesser

Question 3

The experience of recessions in Australia has shown that the unemployment rate:

Accepted Answer

A) rises for about six months after the recession has finished. 
B) rises for at least one year after the recession has finished. 
C) falls within one year of a recession finishing. 
D) falls within six months of a recession finishing. 
A) rises for about six months after the recession has finished. 
B) rises for at least one year after the recession has finished. 
C) falls within one year of a recession finishing. 
D) falls within six months of a recession finishing.

Question 4

How is the 'inflation rate' defined?

Accepted Answer

A) As the percentage decrease in the price level between time periods. 
B) As the percentage change in the price level between time periods. 
C) As the dollar increase in prices between time periods. 
D) As the percentage change in real GDP during a year. 
A) As the percentage decrease in the price level between time periods. 
B) As the percentage change in the price level between time periods. 
C) As the dollar increase in prices between time periods. 
D) As the percentage change in real GDP during a year.

Question 5

What is 'potential GDP'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Potential GDP is the level of

Question 6

Public saving is equal to taxation receipts, minus government purchases, minus transfer payments.

Accepted Answer

A) True 
 B)False

Question 7

The beginning of an economic contraction coincides with a/an ________ while during an economic expansion ________

Accepted Answer

A) decrease in government spending; investment increases. 
B) decrease in investment; investment increases. 
C) decrease in government spending; government spending increases. 
D) increase in government spending; investment decreases. 
A) decrease in government spending; investment increases. 
B) decrease in investment; investment increases. 
C) decrease in government spending; government spending increases. 
D) increase in government spending; investment decreases.

Question 8

Explain and show graphically how a decrease in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

A decrease in household saving decreases

Question 9

The rate of inflation does not necessarily increase during the expansion phase of the business cycle.

Accepted Answer

A) True 
 B)False

Question 10

A period of expansion in the business cycle ends when:

Accepted Answer

A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP. 
A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP.

Question 11

If, between 2007 and 2017, the economy's real GDP grew from $20 billion to $40 billion, the average growth rate in the economy was

Accepted Answer

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

Question 12

Government budget surpluses and deficits affect the supply of loanable funds, and therefore affect interest rates.

Accepted Answer

A) True 
 B)False

Question 13

In the model of the market for loanable funds, which of the following will not shift the supply curve for loanable funds?

Accepted Answer

A) expectations of high returns to investments 
B) a decrease in taxation on interest earned on savings accounts 
C) a government budget surplus 
D) a government budget deficit 
A) expectations of high returns to investments 
B) a decrease in taxation on interest earned on savings accounts 
C) a government budget surplus 
D) a government budget deficit

Question 14

Explain why the increase in GDP per capita understates the whole effect of economic growth on the standard of living.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Economic growth has led not ju

Question 15

A financial intermediary's main function is to match ________ with excess funds to ________ who want to borrow funds.

Accepted Answer

A) households; firms 
B) firms; firms 
C) households; households 
D) firms; households 
A) households; firms 
B) firms; firms 
C) households; households 
D) firms; households

Question 16

Refer to Figure 5.1 for the following questions.
Figure 5.1
  
-Refer to Figure 5.1. As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the equilibrium real interest rate and ________ the equilibrium quantity of loanable funds.

Accepted Answer

A) demand; rise; increasing; decreasing 
B) supply; rise; decreasing; increasing 
C) demand; fall; decreasing; decreasing 
D) supply; fall; increasing; decreasing 
A) demand; rise; increasing; decreasing 
B) supply; rise; decreasing; increasing 
C) demand; fall; decreasing; decreasing 
D) supply; fall; increasing; decreasing

Question 17

Retained earnings are usually sufficient to finance a firm's rapid expansion in a high growth economy.

Accepted Answer

A) True 
 B)False

Question 18

During an expansion, how do inflation and unemployment typically change?

Accepted Answer

A) inflation and unemployment both rise 
B) inflation and unemployment both fall 
C) inflation falls and unemployment rises 
D) inflation rises and unemployment falls 
A) inflation and unemployment both rise 
B) inflation and unemployment both fall 
C) inflation falls and unemployment rises 
D) inflation rises and unemployment falls

Question 19

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

Accepted Answer

A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling. 
A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling.

Question 20

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

Accepted Answer

A) After 1950, the length of expansions equalled 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 non-existent. 
A) After 1950, the length of expansions equalled 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 non-existent.

If you spend more of your income on consumption goods, which of the following will occur?

The demand for loanable funds has a slope because the lower the interest rate, the number of investment projects are profitable, and the the quantity of loanable funds demanded.

The experience of recessions in Australia has shown that the unemployment rate:

How is the 'inflation rate' defined?

What is 'potential GDP'? _ _

Public saving is equal to taxation receipts, minus government purchases, minus transfer payments.

The beginning of an economic contraction coincides with a/an while during an economic expansion

Explain and show graphically how a decrease in household saving affects the equilibrium interest rate and the equilibrium quantity of loanable funds. _ _

The rate of inflation does not necessarily increase during the expansion phase of the business cycle.

A period of expansion in the business cycle ends when:

If, between 2007 and 2017, the economy's real GDP grew from $20 billion to $40 billion, the average growth rate in the economy was

Government budget surpluses and deficits affect the supply of loanable funds, and therefore affect interest rates.

In the model of the market for loanable funds, which of the following will not shift the supply curve for loanable funds?

Explain why the increase in GDP per capita understates the whole effect of economic growth on the standard of living. _ _

A financial intermediary's main function is to match with excess funds to who want to borrow funds.

Refer to Figure 5.1 for the following questions. Figure 5.1 -Refer to Figure 5.1. As a result of an increase in the government budget deficit, the for loanable funds will , thereby the equilibrium real interest rate and the equilibrium quantity of loanable funds.

Retained earnings are usually sufficient to finance a firm's rapid expansion in a high growth economy.

During an expansion, how do inflation and unemployment typically change?

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

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

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 5: Economic Growth, the Financial System and Business Cycles

If you spend more of your income on consumption goods, which of the following will occur?

The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded.

The experience of recessions in Australia has shown that the unemployment rate:

How is the 'inflation rate' defined?

What is 'potential GDP'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Public saving is equal to taxation receipts, minus government purchases, minus transfer payments.

The beginning of an economic contraction coincides with a/an ________ while during an economic expansion ________

The rate of inflation does not necessarily increase during the expansion phase of the business cycle.

A period of expansion in the business cycle ends when:

If, between 2007 and 2017, the economy's real GDP grew from $20 billion to $40 billion, the average growth rate in the economy was

Government budget surpluses and deficits affect the supply of loanable funds, and therefore affect interest rates.

In the model of the market for loanable funds, which of the following will not shift the supply curve for loanable funds?

A financial intermediary's main function is to match ________ with excess funds to ________ who want to borrow funds.

Refer to Figure 5.1 for the following questions. Figure 5.1 -Refer to Figure 5.1. As a result of an increase in the government budget deficit, the ________ for loanable funds will ________, thereby ________ the equilibrium real interest rate and ________ the equilibrium quantity of loanable funds.

Retained earnings are usually sufficient to finance a firm's rapid expansion in a high growth economy.

During an expansion, how do inflation and unemployment typically change?

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

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

Economics: Foundations and Models

Choices and Trade Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Gdp: Measuring Total Production, Income and Economic Growth

Long-Run Economic Growth: Sources and Policies

Unemployment

Inflation

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The demand for loanable funds has a slope because the lower the interest rate, the number of investment projects are profitable, and the the quantity of loanable funds demanded.

What is 'potential GDP'? _ _

The beginning of an economic contraction coincides with a/an while during an economic expansion

A financial intermediary's main function is to match with excess funds to who want to borrow funds.

Refer to Figure 5.1 for the following questions. Figure 5.1 -Refer to Figure 5.1. As a result of an increase in the government budget deficit, the for loanable funds will , thereby the equilibrium real interest rate and the equilibrium quantity of loanable funds.