Question 1

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 2

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 3

Carefully define the two categories of saving in the economy.

Accepted Answer

There are two categories of saving in th

Question 4

What is human capital?

Accepted Answer

A)  a slang term for the underground labor 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 slang term for the underground labor 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 5

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 6

What is one difference between stocks and bonds?

Accepted Answer

A)  Bonds earn a higher rate of return than stocks. 
B)  Stocks earn a higher rate of return than bonds. 
C)  Bonds are purchased at a bank, while stocks are purchased through the federal government. 
D)  Stocks represent partial ownership in a firm, while bonds do not. 
A)  Bonds earn a higher rate of return than stocks. 
B)  Stocks earn a higher rate of return than bonds. 
C)  Bonds are purchased at a bank, while stocks are purchased through the federal government. 
D)  Stocks represent partial ownership in a firm, while bonds do not.

Question 7

The U.S.economy has been more stable since 1950.

Accepted Answer

A) True 
 B)False

Question 8

If,as economist Alwyn Young has suggested,high growth rates in Singapore are not a result of technological progress,how are growth rates in Singapore expected to change over time?

Accepted Answer

A)  Without technological progress, the high growth rates cannot be sustained. 
B)  As long as the labor force participation rate is rising, growth can still continue, despite a lack of technological progress. 
C)  As long as the amount of capital per hour worked continues to expand, the growth rate in Singapore will continue to rise at an increasing rate. 
D)  Agricultural workers will continue to expand their productivity, thereby allowing Singapore to achieve growth rates above those of higher-income countries. 
A)  Without technological progress, the high growth rates cannot be sustained. 
B)  As long as the labor force participation rate is rising, growth can still continue, despite a lack of technological progress. 
C)  As long as the amount of capital per hour worked continues to expand, the growth rate in Singapore will continue to rise at an increasing rate. 
D)  Agricultural workers will continue to expand their productivity, thereby allowing Singapore to achieve growth rates above those of higher-income countries.

Question 9

Table 21-1
  
-Refer to Table 21-1. Using the table above,what is the approximate average annual growth rate from 2008 to 2011?

Accepted Answer

A)  -1% 
B)  1% 
C)  2% 
D)  4% 
A)  -1% 
B)  1% 
C)  2% 
D)  4%

Question 10

________ is the ease with which a financial security can be exchanged for money.

Accepted Answer

A)  Risk 
B)  The face value 
C)  Liquidity 
D)  The rate of return 
A)  Risk 
B)  The face value 
C)  Liquidity 
D)  The rate of return

Question 11

Figure 21-1
  
-Refer to Figure 21-1.The loanable funds market is in equilibrium,as shown in the figure above.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 12

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 13

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 14

Table 21-1
  
-Refer to Table 21-1. Using the table above,what is the approximate growth rate of real GDP from 2009 to 2010?

Accepted Answer

A)  1% 
B)  2% 
C)  3% 
D)  4% 
A)  1% 
B)  2% 
C)  3% 
D)  4%

Question 15

________ 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 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

Workers in high-income countries have ________ to work with than do workers in low-income countries.

Accepted Answer

A)  less physical capital 
B)  more physical capital 
C)  more labor 
D)  more labor and less physical capital 
A)  less physical capital 
B)  more physical capital 
C)  more labor 
D)  more labor and less physical capital

Question 19

Figure 21-1
  
-Refer to Figure 21-1.The loanable funds market is given in the figure above.If the current real interest rate is 5 percent,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 20

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

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

A decrease in the real interest rate will

Carefully define the two categories of saving in the economy.

What is human capital?

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.

What is one difference between stocks and bonds?

The U.S.economy has been more stable since 1950.

If,as economist Alwyn Young has suggested,high growth rates in Singapore are not a result of technological progress,how are growth rates in Singapore expected to change over time?

Table 21-1 -Refer to Table 21-1. Using the table above,what is the approximate average annual growth rate from 2008 to 2011?

________ is the ease with which a financial security can be exchanged for money.

Figure 21-1 -Refer to Figure 21-1.The loanable funds market is in equilibrium,as shown in the figure above.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.

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

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?

Table 21-1 -Refer to Table 21-1. Using the table above,what is the approximate growth rate of real GDP from 2009 to 2010?

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

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

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

Workers in high-income countries have ________ to work with than do workers in low-income countries.

Figure 21-1 -Refer to Figure 21-1.The loanable funds market is given in the figure above.If the current real interest rate is 5 percent,which of the following is true?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 10: Economic Growth, the Financial System, and Business Cycles

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

A decrease in the real interest rate will

Carefully define the two categories of saving in the economy.

What is human capital?

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.

What is one difference between stocks and bonds?

The U.S.economy has been more stable since 1950.

If,as economist Alwyn Young has suggested,high growth rates in Singapore are not a result of technological progress,how are growth rates in Singapore expected to change over time?

Table 21-1 -Refer to Table 21-1. Using the table above,what is the approximate average annual growth rate from 2008 to 2011?

________ is the ease with which a financial security can be exchanged for money.

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

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?

Table 21-1 -Refer to Table 21-1. Using the table above,what is the approximate growth rate of real GDP from 2009 to 2010?

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

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

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

Workers in high-income countries have ________ to work with than do workers in low-income countries.

Figure 21-1 -Refer to Figure 21-1.The loanable funds market is given in the figure above.If the current real interest rate is 5 percent,which of the following is true?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters