Question 1

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 2

Figure 6.1   Alt text for Figure 6.1: In figure 6.1, a graph comparing loanable funds and real interest rate.
Long description for Figure 6.1: The x-axis is labelled, loanable funds (billions of dollars per year), with values L1 and L2 marked.The y-axis is labelled, real interest rate, with values i1 and i2 marked.3 lines are plotted; Demand D1, D2 and S.Line D1 begins at the top left corner and slopes down to centre bottom.Line D2 follows the same slope as D1, but is plotted to the right.The line S begins near the origin and slopes up to the top right corner.The area between lines D1 and D2 is indicated by a right pointing arrow.Line S intersects line D1 at the point (L1, i1), approximately 3 quarters of the way along both lines.S intersects D2 at the point (L2, i2)approximately 3 quarters of the way along both lines.These points of intersection are connected to the corresponding values on the x-axis and y-axis by dotted lines.Between the dotted lines, a rightward arrow points from L1 toward L2, and another arrow points up from i1 toward i2.
-Refer to Figure 6.1.Which of the following is consistent with the graph depicted above?

Accepted Answer

A) An expected recession decreases the profitability of new investment. 
B) Technological change increases the profitability of new investment. 
C) The government runs a budget surplus. 
D) Households become spendthrifts and begin to save less. 
E) Government making more effort to balance the budget. 
A) An expected recession decreases the profitability of new investment. 
B) Technological change increases the profitability of new investment. 
C) The government runs a budget surplus. 
D) Households become spendthrifts and begin to save less. 
E) Government making more effort to balance the budget.

Question 3

Which of the following explains the cause of the change in the unemployment rate during the early stages of recovery?

Accepted Answer

A) At the end of a recession the number of new firms being created (and therefore hiring workers, falls. 
B) Firms rapidly hire new workers at the first sign of on an increase in demand for their goods. 
C) Discouraged workers return to the labour force and this makes the unemployment rate fall. 
D) Discouraged workers return to the labour force and this makes the unemployment rate rise. 
E) There is a rise in the number of new workers entering the labour force for the first time. 
A) At the end of a recession the number of new firms being created (and therefore hiring workers, falls. 
B) Firms rapidly hire new workers at the first sign of on an increase in demand for their goods. 
C) Discouraged workers return to the labour force and this makes the unemployment rate fall. 
D) Discouraged workers return to the labour force and this makes the unemployment rate rise. 
E) There is a rise in the number of new workers entering the labour force for the first time.

Question 4

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) an increase in consumption 
E) 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) an increase in consumption 
E) All of the above would increase public saving.

Question 5

Figure 6.6   Alt text for Figure 6.6: In figure 6.6, a graph shows loanable funds market in equilibrium.
Long description for Figure 6.6: The x-axis is labelled, quantity of loanable funds (millions of dollars), ranging from 0 to 180 in increments of 30.The y-axis is labelled real interest rate, ranging from 0 to 6% in increments of 1.2 intersecting lines are shown.A line labelled D begins at the top left corner and slopes down toward the end of the x-axis.Another line labelled S begins near the origin and slopes upward to the top right corner.5 points are plotted on these two lines as (90, 5), (90, 3), (120, 4), (150, 5), (150, 3).These points are connected to their respective coordinates on the x-axis and y-axis using dotted lines.
-Refer to Figure 6.6.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. 
E) The real interest rate is 1 percent and the quantity of loanable funds is $180 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. 
E) The real interest rate is 1 percent and the quantity of loanable funds is $180 million.

Question 6

If real GDP in a small country in 2016 is $8 billion and real GDP in the same country in 2017 is $8.3 billion, the growth rate of real GDP between 2016 and 2017

Accepted Answer

A) is - 3.0 % 
B) is 3.0%. 
C) is 3.6%. 
D) is 3.75%. 
E) cannot be determined from the information given. 
A) is - 3.0 % 
B) is 3.0%. 
C) is 3.6%. 
D) is 3.75%. 
E) cannot be determined from the information given.

Question 7

Recessions 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 8

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $1,100 billion.What is the rate of growth of real GDP between 2010 and 2011?

Accepted Answer

A) 1% 
B) 2% 
C) 5% 
D) 7% 
E) 10% 
A) 1% 
B) 2% 
C) 5% 
D) 7% 
E) 10%

Question 9

If, in an economy experiencing inflation, the government decided to tax real interest income rather than nominal interest income, this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Accepted Answer

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

Question 10

Which of the following describes the growth in real GDP per person in Canada from 1960 to the present?

Accepted Answer

A) It has decreased. 
B) It has increased by three times. 
C) It has doubled. 
D) It has increased by four times. 
E) It has increased by five times. 
A) It has decreased. 
B) It has increased by three times. 
C) It has doubled. 
D) It has increased by four times. 
E) It has increased by five times.

Question 11

What is human capital?

Accepted Answer

A) a slang term for 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 
E) the number of workers a firm can hire on short notice 
A) a slang term for 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 
E) the number of workers a firm can hire on short notice

Question 12

An increase in the real interest rate results in which of the following?

Accepted Answer

A) an increase in the demand for loanable funds 
B) a decrease in the demand for loanable funds 
C) an increase in the quantity of loanable funds supplied 
D) a decrease in the supply of loanable funds 
E) Both B and C will occur as a result of an increase in the real interest rate. 
A) an increase in the demand for loanable funds 
B) a decrease in the demand for loanable funds 
C) an increase in the quantity of loanable funds supplied 
D) a decrease in the supply of loanable funds 
E) Both B and C will occur as a result of an increase in the real interest rate.

Question 13

People born in wealthier countries can expect

Accepted Answer

A) to live shorter lives than those born in poorer countries. 
B) to live just as long as those born in poorer countries because wealth and life expectancy are unrelated. 
C) to live longer than those born in poorer countries because wealthy countries can provide more health care. 
D) to live shorter lives than those born in the same country 40 years ago. 
E) to live shorter lives than those in poorer countries due to the pollution associated with economic activity. 
A) to live shorter lives than those born in poorer countries. 
B) to live just as long as those born in poorer countries because wealth and life expectancy are unrelated. 
C) to live longer than those born in poorer countries because wealthy countries can provide more health care. 
D) to live shorter lives than those born in the same country 40 years ago. 
E) to live shorter lives than those in poorer countries due to the pollution associated with economic activity.

Question 14

Which of the following is not a way to reduce the government's budget deficit

Accepted Answer

A) issuing government bonds. 
B) selling government assets. 
C) raising taxes. 
D) reducing government spending. 
A) issuing government bonds. 
B) selling government assets. 
C) raising taxes. 
D) reducing government spending.

Question 15

Suppose you are employed by a large corporation to forecast the state of the economy.You are asked to look at macroeconomic data to evaluate whether the economy is entering a recession.Which data do you look at? How does the economy behave at the onset of a recession?

Accepted Answer

Since the generally agreed definition of

Question 16

An increase in the real interest rate will decrease consumption and investment.

Accepted Answer

A) True 
 B)False

Question 17

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 labour 
D) more labour and less physical capital 
E) less human capital 
A) less physical capital 
B) more physical capital 
C) more labour 
D) more labour and less physical capital 
E) less human capital

Question 18

Table 6.1  
-Refer to Table 6.1.Using the table above, what is the approximate average annual growth rate from 2012 to 2015?

Accepted Answer

A) 2% 
B) 3% 
C) 4% 
D) 6% 
E) 8% 
A) 2% 
B) 3% 
C) 4% 
D) 6% 
E) 8%

Question 19

There is a government budget surplus if

Accepted Answer

A) T - TR > G. 
B) G > T. 
C) G > TR. 
D) TR  T. 
A) T - TR > G. 
B) G > T. 
C) G > TR. 
D) TR  T.

Question 20

In a closed economy,

Accepted Answer

A) I = Y - C - G. 
B) I = Y + C - G. 
C) I = Y - C + G. 
D) I = Y + C + G. 
E) Nx = Y - C - I - G. 
A) I = Y - C - G. 
B) I = Y + C - G. 
C) I = Y - C + G. 
D) I = Y + C + G. 
E) Nx = Y - C - I - G.

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

Which of the following explains the cause of the change in the unemployment rate during the early stages of recovery?

Which of the following would increase public saving?

If real GDP in a small country in 2016 is $8 billion and real GDP in the same country in 2017 is $8.3 billion, the growth rate of real GDP between 2016 and 2017

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

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $1,100 billion.What is the rate of growth of real GDP between 2010 and 2011?

If, in an economy experiencing inflation, the government decided to tax real interest income rather than nominal interest income, this change would cause the real interest rate to and the equilibrium quantity of loanable funds to .

Which of the following describes the growth in real GDP per person in Canada from 1960 to the present?

What is human capital?

An increase in the real interest rate results in which of the following?

People born in wealthier countries can expect

Which of the following is not a way to reduce the government's budget deficit

Suppose you are employed by a large corporation to forecast the state of the economy.You are asked to look at macroeconomic data to evaluate whether the economy is entering a recession.Which data do you look at? How does the economy behave at the onset of a recession?

An increase in the real interest rate will decrease consumption and investment.

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

Table 6.1 -Refer to Table 6.1.Using the table above, what is the approximate average annual growth rate from 2012 to 2015?

There is a government budget surplus if

In a closed economy,

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 6: Economic Growth, The Financial System, and Business Cycles

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

Which of the following explains the cause of the change in the unemployment rate during the early stages of recovery?

Which of the following would increase public saving?

If real GDP in a small country in 2016 is $8 billion and real GDP in the same country in 2017 is $8.3 billion, the growth rate of real GDP between 2016 and 2017

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

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $1,100 billion.What is the rate of growth of real GDP between 2010 and 2011?

If, in an economy experiencing inflation, the government decided to tax real interest income rather than nominal interest income, this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Which of the following describes the growth in real GDP per person in Canada from 1960 to the present?

What is human capital?

An increase in the real interest rate results in which of the following?

People born in wealthier countries can expect

Which of the following is not a way to reduce the government's budget deficit

Suppose you are employed by a large corporation to forecast the state of the economy.You are asked to look at macroeconomic data to evaluate whether the economy is entering a recession.Which data do you look at? How does the economy behave at the onset of a recession?

An increase in the real interest rate will decrease consumption and investment.

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

Table 6.1 -Refer to Table 6.1.Using the table above, what is the approximate average annual growth rate from 2012 to 2015?

There is a government budget surplus if

In a closed economy,

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

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 Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada 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.

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

If, in an economy experiencing inflation, the government decided to tax real interest income rather than nominal interest income, this change would cause the real interest rate to and the equilibrium quantity of loanable funds to .