Question 1

In a closed economy,what is the relationship between saving and investment?

Accepted Answer

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

Question 2

Potential GDP refers to

Accepted Answer

A)  the level of GDP attained when all firms are producing at capacity. 
B)  the level of GDP attained by the country with the highest growth in real GDP in a given year. 
C)  the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. 
D)  the extent to which real GDP is above or below nominal GDP. 
A)  the level of GDP attained when all firms are producing at capacity. 
B)  the level of GDP attained by the country with the highest growth in real GDP in a given year. 
C)  the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year. 
D)  the extent to which real GDP is above or below nominal GDP.

Question 3

If Ebenezer Scrooge spends rather than saves his vast wealth,he will

Accepted Answer

A)  slow economic growth because he is reducing the amount of funds available for investment. 
B)  slow economic growth because he is increasing the amount of funds available for investment. 
C)  promote economic growth because he is increasing the amount of funds available for investment. 
D)  promote economic growth because he is decreasing the amount of funds available for investment. 
A)  slow economic growth because he is reducing the amount of funds available for investment. 
B)  slow economic growth because he is increasing the amount of funds available for investment. 
C)  promote economic growth because he is increasing the amount of funds available for investment. 
D)  promote economic growth because he is decreasing the amount of funds available for investment.

Question 4

What type of consumer goods is more affected by the business cycle: durable goods or nondurable goods? Why?

Accepted Answer

Some workers lose income during a recess

Question 5

Economists have not found a way to predict when recessions will begin and end.

Accepted Answer

A) True 
 B)False

Question 6

According to the National Bureau of Economic Research,the United States has experienced ________ recessions since 1950.

Accepted Answer

A)  4 
B)  7 
C)  10 
D)  15 
A)  4 
B)  7 
C)  10 
D)  15

Question 7

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

Accepted Answer

A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system. 
A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system.

Question 8

________ 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 9

Recessions typically cause the unemployment rate to ________ and the inflation rate to ________.

Accepted Answer

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

Question 10

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

Accepted Answer

An increase in household saving increase

Question 11

The supply of loanable funds has a ________ slope because the greater the interest rate,the ________ the reward to saving,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 12

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Accepted Answer

A)  about 15 years 
B)  about 17 years 
C)  about 25 years 
D)  about 30 years 
A)  about 15 years 
B)  about 17 years 
C)  about 25 years 
D)  about 30 years

Question 13

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

Accepted Answer

A)  growth in capital per hour worked accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change 
A)  growth in capital per hour worked accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change

Question 14

Since 1950

Accepted Answer

A)  economic expansions in the United States have been so short that expansions barely exist. 
B)  the average length of expansions in the United States have become shorter as compared to before 1950. 
C)  the average length of expansions in the United States have become longer as compared to before 1950. 
D)  the average length of expansions in the United States are about the same length as compared to before 1950. 
A)  economic expansions in the United States have been so short that expansions barely exist. 
B)  the average length of expansions in the United States have become shorter as compared to before 1950. 
C)  the average length of expansions in the United States have become longer as compared to before 1950. 
D)  the average length of expansions in the United States are about the same length as compared to before 1950.

Question 15

Describe 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

Question 16

An increase in government purchases will

Accepted Answer

A)  increase public saving. 
B)  increase the supply of loanable funds. 
C)  reduce investment. 
D)  reduce real GDP. 
A)  increase public saving. 
B)  increase the supply of loanable funds. 
C)  reduce investment. 
D)  reduce real GDP.

Question 17

During the recession phase of the business cycle

Accepted Answer

A)  production is usually rising. 
B)  interest rates are usually falling. 
C)  unemployment is usually falling. 
D)  income is usually rising. 
A)  production is usually rising. 
B)  interest rates are usually falling. 
C)  unemployment is usually falling. 
D)  income is usually rising.

Question 18

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 19

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Accepted Answer

Government programs like unemployment in

Question 20

Under which of the following circumstances would the government be running a deficit?

Accepted Answer

A)  G = $5 trillion T = $5 trillion
TR = $1 trillion 
B)  G = $5 trillion T = $7 trillion
TR = $1 trillion 
C)  G = $7 trillion T = $7 trillion
TR = $0 
D)  G = $7 trillion T = $10 trillion
TR = $3 trillion 
A)  G = $5 trillion T = $5 trillion
TR = $1 trillion 
B)  G = $5 trillion T = $7 trillion
TR = $1 trillion 
C)  G = $7 trillion T = $7 trillion
TR = $0 
D)  G = $7 trillion T = $10 trillion
TR = $3 trillion

In a closed economy,what is the relationship between saving and investment?

Potential GDP refers to

If Ebenezer Scrooge spends rather than saves his vast wealth,he will

What type of consumer goods is more affected by the business cycle: durable goods or nondurable goods? Why?

Economists have not found a way to predict when recessions will begin and end.

According to the National Bureau of Economic Research,the United States has experienced ________ recessions since 1950.

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

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

Recessions typically cause the unemployment rate to and the inflation rate to .

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

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

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

Since 1950

Describe 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.

An increase in government purchases will

During the recession phase of the business cycle

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

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Under which of the following circumstances would the government be running a deficit?

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

In a closed economy,what is the relationship between saving and investment?

Potential GDP refers to

If Ebenezer Scrooge spends rather than saves his vast wealth,he will

What type of consumer goods is more affected by the business cycle: durable goods or nondurable goods? Why?

Economists have not found a way to predict when recessions will begin and end.

According to the National Bureau of Economic Research,the United States has experienced ________ recessions since 1950.

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

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

Recessions typically cause the unemployment rate to ________ and the inflation rate to ________.

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

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

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

Since 1950

Describe 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.

An increase in government purchases will

During the recession phase of the business cycle

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

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Under which of the following circumstances would the government be running a deficit?

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

Recessions typically cause the unemployment rate to and the inflation rate to .

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