Question 1

Which of the following explains why the rate of unemployment continues to rise once a recession is over?

Accepted Answer

A) Discouraged workers leave the labour force. 
B) Wages rise faster than productivity increases so firms are reluctant to hire workers. 
C) Firms are operating below capacity for some time after the recession is finished. 
D) The unemployment rate does not continue to rise after a recession is over. 
A) Discouraged workers leave the labour force. 
B) Wages rise faster than productivity increases so firms are reluctant to hire workers. 
C) Firms are operating below capacity for some time after the recession is finished. 
D) The unemployment rate does not continue to rise after a recession is over.

Question 2

Refer to Figure 5.1 for the following questions.
Figure 5.1
  
-Refer to Figure 5.1. If the current real interest rate is 5%, which of the following is true?

Accepted Answer

A) The loanable funds market is in equilibrium. 
B) There is a surplus of loanable funds in the market. 
C) There is a shortage of loanable funds in the market. 
D) The quantity of loanable funds being demanded in the market is less than $90 million. 
A) The loanable funds market is in equilibrium. 
B) There is a surplus of loanable funds in the market. 
C) There is a shortage of loanable funds in the market. 
D) The quantity of loanable funds being demanded in the market is less than $90 million.

Question 3

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

Accepted Answer

When government spending decreases, gove

Question 4

'Labour productivity' will increase if the ________ increases and ________.

Accepted Answer

A) quantity of capital per hour worked; technological change occurs 
B) quantity of labour per unit of capital; technological change occurs 
C) quantity of capital per hour worked; immigration increases while capital is fixed 
D) quantity of labour per unit of capital; immigration increases while capital is fixed 
A) quantity of capital per hour worked; technological change occurs 
B) quantity of labour per unit of capital; technological change occurs 
C) quantity of capital per hour worked; immigration increases while capital is fixed 
D) quantity of labour per unit of capital; immigration increases while capital is fixed

Question 5

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

Accepted Answer

A) expectations of high returns to investments 
B) the effect of technological change on profitability 
C) lower interest rates 
D) the expectation of a recession by businesses 
A) expectations of high returns to investments 
B) the effect of technological change on profitability 
C) lower interest rates 
D) the expectation of a recession by businesses

Question 6

'Long-term economic growth' is a term used to describe the:

Accepted Answer

A) falling unemployment rates over time. 
B) rising price level over time. 
C) more rapid growth in population than of real output. 
D) increasing trend in real GDP per capita. 
A) falling unemployment rates over time. 
B) rising price level over time. 
C) more rapid growth in population than of real output. 
D) increasing trend in real GDP per capita.

Question 7

A decrease in the real interest rate does which of the following?

Accepted Answer

A) increases the demand for loanable funds 
B) decreases saving 
C) increases consumption spending 
D) decreases the demand for loanable funds 
A) increases the demand for loanable funds 
B) decreases saving 
C) increases consumption spending 
D) decreases the demand for loanable funds

Question 8

Equilibrium in the loanable funds market determines the:

Accepted Answer

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

Question 9

Which of the following has not been a long-term trend in the Australian economy since 1901?

Accepted Answer

A) increasing nominal GDP 
B) increasing real GDP 
C) increasing unemployment rates 
D) increasing real GDP per capita 
A) increasing nominal GDP 
B) increasing real GDP 
C) increasing unemployment rates 
D) increasing real GDP per capita

Question 10

Which of the following will result in an increase in labour productivity?

Accepted Answer

A) A decrease in the number of people attending institutions of higher education. 
B) A decline in the amount of human capital per worker. 
C) An increase in technology. 
D) A decline in the capital stock per hour worked. 
A) A decrease in the number of people attending institutions of higher education. 
B) A decline in the amount of human capital per worker. 
C) An increase in technology. 
D) A decline in the capital stock per hour worked.

Question 11

Explain what happens to inflation and unemployment during the business cycle.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The changes in the inflation rate depend

Question 12

'Potential GDP' is defined as the:

Accepted Answer

A) maximum level of GDP that the economy can produce. 
B) amount of GDP produced if there is a zero rate of unemployment. 
C) level of GDP attained when all firms are producing at capacity. 
D) amount of GDP produced when the economy is in equilibrium. 
A) maximum level of GDP that the economy can produce. 
B) amount of GDP produced if there is a zero rate of unemployment. 
C) level of GDP attained when all firms are producing at capacity. 
D) amount of GDP produced when the economy is in equilibrium.

Question 13

What is the term for a country with no trade and no borrowing and lending with other countries?

Accepted Answer

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

Question 14

If firms are anticipating that the profitability of new investments will be lower in the future, then the ________ curve for loanable funds will shift to the ________.

Accepted Answer

A) supply; right 
B) supply; left 
C) demand; right 
D) demand; left 
A) supply; right 
B) supply; left 
C) demand; right 
D) demand; left

Question 15

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

Accepted Answer

A) government 
B) households 
C) banks 
D) firms 
A) government 
B) households 
C) banks 
D) firms

Question 16

Which of the following is the best measure of the standard of living?

Accepted Answer

A) Nominal GDP for the whole economy. 
B) Real GDP for the whole economy. 
C) Nominal GDP per capita. 
D) Real GDP per capita. 
A) Nominal GDP for the whole economy. 
B) Real GDP for the whole economy. 
C) Nominal GDP per capita. 
D) Real GDP per capita.

Question 17

In a closed economy, the relationship between saving and investment is that:

Accepted Answer

A) saving is greater than investment. 
B) investment is equal to saving. 
C) investment is greater than saving. 
D) investment may be greater or smaller than saving. 
A) saving is greater than investment. 
B) investment is equal to saving. 
C) investment is greater than saving. 
D) investment may be greater or smaller than saving.

Question 18

Suppose you are a highly regarded international economic advisor. You have been asked to assess the possibilities of growth in an African country. It is a country abundant in labour and some natural resources. The capital to labour 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 19

The supply of loanable funds has a ________ slope because the greater the interest rate, the ________ the reward to savings, and the ________ the quantity of loanable funds supplied.

Accepted Answer

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

Question 20

In an open economy, the relationship between total income (Y)and expenditures is:
Y = C + I + G.

Accepted Answer

A) True 
 B)False

Which of the following explains why the rate of unemployment continues to rise once a recession is over?

Refer to Figure 5.1 for the following questions. Figure 5.1 -Refer to Figure 5.1. If the current real interest rate is 5%, which of the following is true?

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

'Labour productivity' will increase if the increases and .

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

'Long-term economic growth' is a term used to describe the:

A decrease in the real interest rate does which of the following?

Equilibrium in the loanable funds market determines the:

Which of the following has not been a long-term trend in the Australian economy since 1901?

Which of the following will result in an increase in labour productivity?

Explain what happens to inflation and unemployment during the business cycle. _ _

'Potential GDP' is defined as the:

What is the term for a country with no trade and no borrowing and lending with other countries?

If firms are anticipating that the profitability of new investments will be lower in the future, then the curve for loanable funds will shift to the .

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

Which of the following is the best measure of the standard of living?

In a closed economy, the relationship between saving and investment is that:

The supply of loanable funds has a slope because the greater the interest rate, the the reward to savings, and the the quantity of loanable funds supplied.

In an open economy, the relationship between total income (Y)and expenditures is: Y = C + I + G.

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

Which of the following explains why the rate of unemployment continues to rise once a recession is over?

Refer to Figure 5.1 for the following questions. Figure 5.1 -Refer to Figure 5.1. If the current real interest rate is 5%, which of the following is true?

'Labour productivity' will increase if the ________ increases and ________.

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

'Long-term economic growth' is a term used to describe the:

A decrease in the real interest rate does which of the following?

Equilibrium in the loanable funds market determines the:

Which of the following has not been a long-term trend in the Australian economy since 1901?

Which of the following will result in an increase in labour productivity?

Explain what happens to inflation and unemployment during the business cycle. _____________________________________________________________________________________________ _____________________________________________________________________________________________

'Potential GDP' is defined as the:

What is the term for a country with no trade and no borrowing and lending with other countries?

If firms are anticipating that the profitability of new investments will be lower in the future, then the ________ curve for loanable funds will shift to the ________.

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

Which of the following is the best measure of the standard of living?

In a closed economy, the relationship between saving and investment is that:

The supply of loanable funds has a ________ slope because the greater the interest rate, the ________ the reward to savings, and the ________ the quantity of loanable funds supplied.

In an open economy, the relationship between total income (Y)and expenditures is: Y = C + I + G.

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

'Labour productivity' will increase if the increases and .

Explain what happens to inflation and unemployment during the business cycle. _ _

If firms are anticipating that the profitability of new investments will be lower in the future, then the curve for loanable funds will shift to the .

The supply of loanable funds has a slope because the greater the interest rate, the the reward to savings, and the the quantity of loanable funds supplied.