Question 1

Public saving in the economy can be increased by

Accepted Answer

A)  lowering taxes. 
B)  raising government spending. 
C)  raising taxes. 
D)  raising transfer payments. 
A)  lowering taxes. 
B)  raising government spending. 
C)  raising taxes. 
D)  raising transfer payments.

Question 2

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 3

Which of the following would increase public saving?

Accepted Answer

A)  an increase in taxes 
B)  an increase in transfers 
C)  an increase in government purchases 
D)  All of the above would increase public saving. 
A)  an increase in taxes 
B)  an increase in transfers 
C)  an increase in government purchases 
D)  All of the above would increase public saving.

Question 4

Figure 21-1
  
-Refer to Figure 21-1.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Accepted Answer

A)  The real interest rate is 5 percent, and the quantity of loanable funds is $150 million. 
B)  The real interest rate is 5 percent, and the quantity of loanable funds is $90 million. 
C)  The real interest rate is 3 percent, and the quantity of loanable funds is $150 million. 
D)  The real interest rate is 3 percent, and the quantity of loanable funds is $90 million. 
A)  The real interest rate is 5 percent, and the quantity of loanable funds is $150 million. 
B)  The real interest rate is 5 percent, and the quantity of loanable funds is $90 million. 
C)  The real interest rate is 3 percent, and the quantity of loanable funds is $150 million. 
D)  The real interest rate is 3 percent, and the quantity of loanable funds is $90 million.

Question 5

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 6

Because ________ in the government budget deficit increase the real interest rate,budget deficits can ________ firm investment.

Accepted Answer

A)  increases; increase 
B)  decreases; increase 
C)  decreases; decrease 
D)  increases; decrease 
A)  increases; increase 
B)  decreases; increase 
C)  decreases; decrease 
D)  increases; decrease

Question 7

Give two reasons why the U.S.economy is more stable since 1950.

Accepted Answer

Any two of the following three reasons a

Question 8

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

Accepted Answer

A)  automobiles 
B)  food 
C)  clothing 
D)  haircuts 
A)  automobiles 
B)  food 
C)  clothing 
D)  haircuts

Question 9

Suppose that real GDP for 2010 was $10,000 billion and real GDP for 2011 was $9,500 billion.What is the rate of growth of real GDP between 2010 and 2011?

Accepted Answer

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

Question 10

Which of the following will result in an increase in labor 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

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

All else equal,the rising demand for air travel in 2011 would cause the demand curve for air travel to shift to the ________,resulting in ________ ticket prices and a ________ quantity of tickets supplied.

Accepted Answer

A)  right; lower; higher 
B)  left; lower; lower 
C)  right; higher; higher 
D)  left; higher; lower 
A)  right; lower; higher 
B)  left; lower; lower 
C)  right; higher; higher 
D)  left; higher; lower

Question 13

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel,responding by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

Accepted Answer

A)  continue expanding and was able to maintain or enhance the company's market share. 
B)  continue expanding and the company ended up losing significant market share. 
C)  curtail expansion plans, and by significantly cutting back on expansion was able to maintain the company's market share. 
D)  curtail expansion plans and the company ended up losing significant market share. 
A)  continue expanding and was able to maintain or enhance the company's market share. 
B)  continue expanding and the company ended up losing significant market share. 
C)  curtail expansion plans, and by significantly cutting back on expansion was able to maintain the company's market share. 
D)  curtail expansion plans and the company ended up losing significant market share.

Question 14

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

Accepted Answer

A)  Prior to 1900, the length of expansions equaled the length of recessions. 
B)  Prior to 1900, the length of expansions were much less than the length of recessions. 
C)  Prior to 1900, the length of expansions were much longer than the length of recessions. 
D)  Prior to 1900, the length of recessions were brief and almost nonexistent. 
A)  Prior to 1900, the length of expansions equaled the length of recessions. 
B)  Prior to 1900, the length of expansions were much less than the length of recessions. 
C)  Prior to 1900, the length of expansions were much longer than the length of recessions. 
D)  Prior to 1900, the length of recessions were brief and almost nonexistent.

Question 15

If the CPI is currently 202,what does this tell you about inflation between last year and this year?

Accepted Answer

A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next. 
A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next.

Question 16

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 17

Potential GDP is estimated to grow at a rate of 3.3% in the United States.Actual GDP in the U.S.

Accepted Answer

A)  always grows at a slower rate than potential GDP. 
B)  always grows at a faster rate than potential GDP. 
C)  always grows at the same rate as potential GDP. 
D)  is the same as potential GDP if all firms in the economy were working at capacity. 
A)  always grows at a slower rate than potential GDP. 
B)  always grows at a faster rate than potential GDP. 
C)  always grows at the same rate as potential GDP. 
D)  is the same as potential GDP if all firms in the economy were working at capacity.

Question 18

If GDP grows at a rate of 3% per year,approximately how long will it take for GDP to double in size?

Accepted Answer

A)  12 years 
B)  21 years 
C)  23 years 
D)  35 years 
A)  12 years 
B)  21 years 
C)  23 years 
D)  35 years

Question 19

Economists point to the "pro-growth" policies of the government of which African country in explaining a high growth rate relative to other African countries?

Accepted Answer

A)  South Africa 
B)  Botswana 
C)  Mali 
D)  Malawi 
A)  South Africa 
B)  Botswana 
C)  Mali 
D)  Malawi

Question 20

Explain what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

Accepted Answer

Inflation will rise during an expansion

Public saving in the economy can be increased by

Equilibrium in the loanable funds market determines

Which of the following would increase public saving?

Figure 21-1 -Refer to Figure 21-1.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

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

Because in the government budget deficit increase the real interest rate,budget deficits can firm investment.

Give two reasons why the U.S.economy is more stable since 1950.

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

Suppose that real GDP for 2010 was $10,000 billion and real GDP for 2011 was $9,500 billion.What is the rate of growth of real GDP between 2010 and 2011?

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

All else equal,the rising demand for air travel in 2011 would cause the demand curve for air travel to shift to the ,resulting in ticket prices and a quantity of tickets supplied.

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel,responding by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

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

If the CPI is currently 202,what does this tell you about inflation between last year and this year?

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

Potential GDP is estimated to grow at a rate of 3.3% in the United States.Actual GDP in the U.S.

If GDP grows at a rate of 3% per year,approximately how long will it take for GDP to double in size?

Economists point to the "pro-growth" policies of the government of which African country in explaining a high growth rate relative to other African countries?

Explain what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

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

Public saving in the economy can be increased by

Equilibrium in the loanable funds market determines

Which of the following would increase public saving?

Figure 21-1 -Refer to Figure 21-1.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

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

Because ________ in the government budget deficit increase the real interest rate,budget deficits can ________ firm investment.

Give two reasons why the U.S.economy is more stable since 1950.

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

Suppose that real GDP for 2010 was $10,000 billion and real GDP for 2011 was $9,500 billion.What is the rate of growth of real GDP between 2010 and 2011?

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

All else equal,the rising demand for air travel in 2011 would cause the demand curve for air travel to shift to the ________,resulting in ________ ticket prices and a ________ quantity of tickets supplied.

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel,responding by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

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

If the CPI is currently 202,what does this tell you about inflation between last year and this year?

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

Potential GDP is estimated to grow at a rate of 3.3% in the United States.Actual GDP in the U.S.

If GDP grows at a rate of 3% per year,approximately how long will it take for GDP to double in size?

Economists point to the "pro-growth" policies of the government of which African country in explaining a high growth rate relative to other African countries?

Explain what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

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

Because in the government budget deficit increase the real interest rate,budget deficits can firm investment.

All else equal,the rising demand for air travel in 2011 would cause the demand curve for air travel to shift to the ,resulting in ticket prices and a quantity of tickets supplied.