Question 1

Under which of the following circumstances would private saving be positive in a closed economy?

Accepted Answer

A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion 
A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion A

Question 2

Which of the following would encourage economic growth through increases in the capital stock?

Accepted Answer

A)  an increase in the profitability of new investment due to technological change 
B)  an increase in household saving 
C)  a decrease in the government deficit 
D)  all of the above 
A)  an increase in the profitability of new investment due to technological change 
B)  an increase in household saving 
C)  a decrease in the government deficit 
D)  all of the above D

Question 3

The U.S.economy experienced a period of relative stability from 1950-2007.

Accepted Answer

A) True 
 B)False  True

Question 4

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

Accepted Answer

The demand for loanable funds reflects t

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

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 7

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 8

The period between a business cycle peak and a business cycle trough is called

Accepted Answer

A)  expansion. 
B)  recession. 
C)  diffusion. 
D)  recalculation. 
A)  expansion. 
B)  recession. 
C)  diffusion. 
D)  recalculation.

Question 9

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Accepted Answer

A) True 
 B)False

Question 10

For the recessions in the United States since the 1950s

Accepted Answer

A)  inflation has been nonexistent. 
B)  the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C)  the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D)  deflation occurs. 
A)  inflation has been nonexistent. 
B)  the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C)  the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D)  deflation occurs.

Question 11

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

Accepted Answer

A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million. 
A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million.

Question 12

An increase in the demand for loanable funds will occur if there is

Accepted Answer

A)  an increase in the real interest rate. 
B)  a decrease in the real interest rate. 
C)  an increase in expected profits from firm investment projects. 
D)  an increase in the nominal interest rate accompanied by an equal increase in inflation. 
A)  an increase in the real interest rate. 
B)  a decrease in the real interest rate. 
C)  an increase in expected profits from firm investment projects. 
D)  an increase in the nominal interest rate accompanied by an equal increase in inflation.

Question 13

The period of expansion ends with a ________ and the period of recession ends with a ________.

Accepted Answer

A)  business cycle peak; business cycle trough 
B)  business cycle trough; business cycle peak 
C)  business cycle peak; business cycle peak 
D)  business cycle trough; business cycle trough 
A)  business cycle peak; business cycle trough 
B)  business cycle trough; business cycle peak 
C)  business cycle peak; business cycle peak 
D)  business cycle trough; business cycle trough

Question 14

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

Accepted Answer

A)  23.3 years to 17.5 years. 
B)  28.0 years to 21.0 years. 
C)  11.2 years to 10.8 years. 
D)  23.3 years to 20.6 years. 
A)  23.3 years to 17.5 years. 
B)  28.0 years to 21.0 years. 
C)  11.2 years to 10.8 years. 
D)  23.3 years to 20.6 years.

Question 15

In the United States,the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.

Accepted Answer

A) True 
 B)False

Question 16

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Accepted Answer

A)  savers; borrower 
B)  borrower; savers 
C)  governments; households 
D)  firms; insurance companies 
A)  savers; borrower 
B)  borrower; savers 
C)  governments; households 
D)  firms; insurance companies

Question 17

When the government runs a deficit,which of the following is true?

Accepted Answer

A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR A) T > TR - G B) G > T + TR C) G > TR - T D) T < G + TR

Question 18

Which of the following financial securities is most liquid?

Accepted Answer

A)  a savings account 
B)  a share of stock 
C)  a cashier's check 
D)  a $20 bill 
A)  a savings account 
B)  a share of stock 
C)  a cashier's check 
D)  a $20 bill

Question 19

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 20

Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides

Accepted Answer

A)  services. 
B)  durable goods. 
C)  nondurable goods. 
D)  goods and services for export. 
A)  services. 
B)  durable goods. 
C)  nondurable goods. 
D)  goods and services for export.

Under which of the following circumstances would private saving be positive in a closed economy?

Which of the following would encourage economic growth through increases in the capital stock?

The U.S.economy experienced a period of relative stability from 1950-2007.

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

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.

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

The period between a business cycle peak and a business cycle trough is called

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

For the recessions in the United States since the 1950s

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

An increase in the demand for loanable funds will occur if there is

The period of expansion ends with a and the period of recession ends with a .

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

In the United States,the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.

A financial intermediary's main function is to match with excess funds to with a shortage of funds.

When the government runs a deficit,which of the following is true?

Which of the following financial securities is most liquid?

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

Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 14: Economic Growth, The Financial System, and Business Cycles

Under which of the following circumstances would private saving be positive in a closed economy?

Which of the following would encourage economic growth through increases in the capital stock?

The U.S.economy experienced a period of relative stability from 1950-2007.

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

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.

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

The period between a business cycle peak and a business cycle trough is called

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

For the recessions in the United States since the 1950s

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

An increase in the demand for loanable funds will occur if there is

The period of expansion ends with a ________ and the period of recession ends with a ________.

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

In the United States,the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

When the government runs a deficit,which of the following is true?

Which of the following financial securities is most liquid?

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

Cutting costs at the beginning of a recession tends to make the most sense for a business that produces or provides

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

The period of expansion ends with a and the period of recession ends with a .

A financial intermediary's main function is to match with excess funds to with a shortage of funds.

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