Question 1

An 'economic contraction' can cause the unemployment rate to ________ and the inflation rate to ________.

Accepted Answer

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

Question 2

Let G = government purchases; T = taxes; TR = transfer payments. The budget deficit is defined as:

Accepted Answer

A) T - (G + TR) 0. 
C) T + (G - TR)< 0. 
D) T + (G+ TR)< 0. 
A) T - (G + TR) 0. 
C) T + (G - TR)< 0. 
D) T + (G+ TR)< 0.

Question 3

What are financial securities that represent partial ownership of a firm?

Accepted Answer

A) bonds 
B) shares 
C) treasury bills 
D) certificates of deposit 
A) bonds 
B) shares 
C) treasury bills 
D) certificates of deposit

Question 4

Potential GDP is always greater than real GDP in an economy.

Accepted Answer

A) True 
 B)False

Question 5

What is 'human capital'?

Accepted Answer

A) A term used to describe the underground labour market. 
B) Manufactured goods that are used to produce other goods. 
C) Accumulated knowledge and skills acquired by a worker. 
D) The manager or owner of a business. 
A) A term used to describe the underground labour market. 
B) Manufactured goods that are used to produce other goods. 
C) Accumulated knowledge and skills acquired by a worker. 
D) The manager or owner of a business.

Question 6

Explain why increasing the government budget deficit can decrease investment spending.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Saving must equal investment in the econ

Question 7

Explain why the demand for loanable funds curve has a negative slope.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The demand for loanable funds reflects t

Question 8

Which of the following goods would usually see the largest decline in demand during a recession?

Accepted Answer

A) cars 
B) food 
C) clothing 
D) hair cuts 
A) cars 
B) food 
C) clothing 
D) hair cuts

Question 9

When is there a federal budget deficit?

Accepted Answer

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

Question 10

A(n)________ comes to an end with a business cycle ________.

Accepted Answer

A) recession; peak 
B) recession; trough 
C) expansion; trough 
D) expansion; phase 
A) recession; peak 
B) recession; trough 
C) expansion; trough 
D) expansion; phase

Question 11

If real GDP in a closed economy is $50 billion, consumption is $30 billion, and government purchases are $15 billion, what is investment?

Accepted Answer

A) $15 billion 
B) $30 billion 
C) $40 billion 
D) $70 billion 
A) $15 billion 
B) $30 billion 
C) $40 billion 
D) $70 billion

Question 12

Suppose you are an advisor to the federal government. You are asked to look at macroeconomic data to evaluate whether the economy has entered an economic contraction this year. Which data do you look at? How does the economy behave at the onset of an economic contraction?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Since an economic contraction occurs whe

An 'economic contraction' can cause the unemployment rate to and the inflation rate to .

Let G = government purchases; T = taxes; TR = transfer payments. The budget deficit is defined as:

What are financial securities that represent partial ownership of a firm?

Potential GDP is always greater than real GDP in an economy.

What is 'human capital'?

Explain why increasing the government budget deficit can decrease investment spending. _ _

Explain why the demand for loanable funds curve has a negative slope. _ _

Which of the following goods would usually see the largest decline in demand during a recession?

When is there a federal budget deficit?

A(n) comes to an end with a business cycle .

If real GDP in a closed economy is $50 billion, consumption is $30 billion, and government purchases are $15 billion, what is investment?

Suppose you are an advisor to the federal government. You are asked to look at macroeconomic data to evaluate whether the economy has entered an economic contraction this year. Which data do you look at? How does the economy behave at the onset of an economic contraction? _ _

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

An 'economic contraction' can cause the unemployment rate to ________ and the inflation rate to ________.

Let G = government purchases; T = taxes; TR = transfer payments. The budget deficit is defined as:

What are financial securities that represent partial ownership of a firm?

Potential GDP is always greater than real GDP in an economy.

What is 'human capital'?

Explain why increasing the government budget deficit can decrease investment spending. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Explain why the demand for loanable funds curve has a negative slope. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Which of the following goods would usually see the largest decline in demand during a recession?

When is there a federal budget deficit?

A(n)________ comes to an end with a business cycle ________.

If real GDP in a closed economy is $50 billion, consumption is $30 billion, and government purchases are $15 billion, what is investment?

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

An 'economic contraction' can cause the unemployment rate to and the inflation rate to .

Explain why increasing the government budget deficit can decrease investment spending. _ _

Explain why the demand for loanable funds curve has a negative slope. _ _

A(n) comes to an end with a business cycle .