Question 1

Explain why a centrally-planned economy might not grow as rapidly as a market economy.

Accepted Answer

Technological change is very important f

Question 2

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 
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

Question 3

The output gap is

Accepted Answer

A) negative if potential GDP is smaller than real GDP. 
B) a measure of potential output. 
C) negative if potential GDP is larger than real GDP. 
D) constant throughout the business cycle. 
E) shrinking all the time. 
A) negative if potential GDP is smaller than real GDP. 
B) a measure of potential output. 
C) negative if potential GDP is larger than real GDP. 
D) constant throughout the business cycle. 
E) shrinking all the time.

Question 4

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. 
E) a decrease in taxation. 
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. 
E) a decrease in taxation.

Question 5

The response of investment spending to an increase in the government budget deficit is called

Accepted Answer

A) expansionary investment. 
B) private dissaving. 
C) crowding out. 
D) income minus net taxes. 
E) accelerating investment. 
A) expansionary investment. 
B) private dissaving. 
C) crowding out. 
D) income minus net taxes. 
E) accelerating investment.

Question 6

The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ the number of profitable investment projects, and the ________ the quantity of loanable funds demanded.

Accepted Answer

A) negative; greater; greater 
B) negative; greater; lower 
C) negative; lower; greater 
D) positive; lower; lower 
E) negative; lower; lower 
A) negative; greater; greater 
B) negative; greater; lower 
C) negative; lower; greater 
D) positive; lower; lower 
E) negative; lower; lower

Question 7

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

Accepted Answer

A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling. 
E) The price level is falling. 
A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling. 
E) The price level is falling.

Question 8

Labour productivity is

Accepted Answer

A) the quantity of output produced in one hour by several workers. 
B) the quantity of capital one worker can produce in one day. 
C) the quantity of output produced by one worker or by one hour of work. 
D) the quantity of output produced in one hour by one machine. 
E) the quantity of capital produced by one machine in one hour. 
A) the quantity of output produced in one hour by several workers. 
B) the quantity of capital one worker can produce in one day. 
C) the quantity of output produced by one worker or by one hour of work. 
D) the quantity of output produced in one hour by one machine. 
E) the quantity of capital produced by one machine in one hour.

Question 9

Labour productivity will increase if the ________ increases and ________.

Accepted Answer

A) quantity of capital per hour worked; technology improves 
B) quantity of labour per unit of capital; technology improves 
C) quantity of capital per hour worked; immigration increases while capital is fixed 
D) quantity of labour per unit of capital; immigration increases while capital is fixed 
E) quantity of labour in the economy; capital depreciates more quickly 
A) quantity of capital per hour worked; technology improves 
B) quantity of labour per unit of capital; technology improves 
C) quantity of capital per hour worked; immigration increases while capital is fixed 
D) quantity of labour per unit of capital; immigration increases while capital is fixed 
E) quantity of labour in the economy; capital depreciates more quickly

Question 10

According to Robert Fogel, economic growth ________ health, and health ________ economic growth.

Accepted Answer

A) improves; worsens 
B) improves; improves 
C) worsens; improves 
D) worsens; worsens 
A) improves; worsens 
B) improves; improves 
C) worsens; improves 
D) worsens; worsens

Question 11

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

Question 12

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $950 billion.What is the rate of growth of real GDP between 2010 and 2011?

Accepted Answer

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

Question 13

Explain how unemployment changes over the business cycle.Why do these changes occur?

Accepted Answer

Unemployment will fall during an expansi

Question 14

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

Accepted Answer

A) The equilibrium quantity of loanable funds would rise. 
B) The equilibrium quantity of loanable funds would fall. 
C) The equilibrium quantity of loanable funds would be unaffected. 
D) The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax. 
E) The equilibrium quantity of loanable funds will initially fall and then return to its initial value. 
A) The equilibrium quantity of loanable funds would rise. 
B) The equilibrium quantity of loanable funds would fall. 
C) The equilibrium quantity of loanable funds would be unaffected. 
D) The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax. 
E) The equilibrium quantity of loanable funds will initially fall and then return to its initial value.

Question 15

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 16

If consumers decide to be more frugal and save more out of their income, then this will cause

Accepted Answer

A) a shift in the supply curve for loanable funds to the right. 
B) a shift in the supply curve for loanable funds to the left. 
C) a movement to the right along the supply curve for loanable funds. 
D) a movement to the left along the supply curve for loanable funds. 
E) a shift in the demand for loanable funds to the right. 
A) a shift in the supply curve for loanable funds to the right. 
B) a shift in the supply curve for loanable funds to the left. 
C) a movement to the right along the supply curve for loanable funds. 
D) a movement to the left along the supply curve for loanable funds. 
E) a shift in the demand for loanable funds to the right.

Question 17

If real GDP per capita measured in 2007 dollars was $16,000 in 1961 and $48,500 in 2015, we would say that in the year 2015, the average Canadian could buy approximately ________ times as many goods and services as the average Canadian in 1961.

Accepted Answer

A) 0.3 
B) 2 
C) 3 
D) 7 
E) 12 
A) 0.3 
B) 2 
C) 3 
D) 7 
E) 12

Question 18

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion, by more than $150 billion, or by less than $150 billion?

Accepted Answer

Private saving is equal to Y - C - T, so

Question 19

Liquidity refers to

Accepted Answer

A) the ability to purchase a very small share of a company. 
B) the ease with which an asset can be converted into a different asset. 
C) the number of times a dollar changes hands in the creation of GDP in an economy. 
D) the number of shares of stock a corporation issues. 
E) the number of bonds a firm has issued. 
A) the ability to purchase a very small share of a company. 
B) the ease with which an asset can be converted into a different asset. 
C) the number of times a dollar changes hands in the creation of GDP in an economy. 
D) the number of shares of stock a corporation issues. 
E) the number of bonds a firm has issued.

Question 20

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

Accepted Answer

A) True 
 B)False

Explain why a centrally-planned economy might not grow as rapidly as a market economy.

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

The output gap is

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

The response of investment spending to an increase in the government budget deficit is called

The demand for loanable funds has a slope because the lower the interest rate, the the number of profitable investment projects, and the the quantity of loanable funds demanded.

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

Labour productivity is

Labour productivity will increase if the increases and .

According to Robert Fogel, economic growth health, and health economic growth.

Public saving in the economy can be increased by

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $950 billion.What is the rate of growth of real GDP between 2010 and 2011?

Explain how unemployment changes over the business cycle.Why do these changes occur?

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

If consumers decide to be more frugal and save more out of their income, then this will cause

If real GDP per capita measured in 2007 dollars was $16,000 in 1961 and $48,500 in 2015, we would say that in the year 2015, the average Canadian could buy approximately ________ times as many goods and services as the average Canadian in 1961.

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion, by more than $150 billion, or by less than $150 billion?

Liquidity refers to

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

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

Explain why a centrally-planned economy might not grow as rapidly as a market economy.

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

The output gap is

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

The response of investment spending to an increase in the government budget deficit is called

The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ the number of profitable investment projects, and the ________ the quantity of loanable funds demanded.

When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?

Labour productivity is

Labour productivity will increase if the ________ increases and ________.

According to Robert Fogel, economic growth ________ health, and health ________ economic growth.

Public saving in the economy can be increased by

Suppose that real GDP for 2010 was $1,000 billion and real GDP for 2011 was $950 billion.What is the rate of growth of real GDP between 2010 and 2011?

Explain how unemployment changes over the business cycle.Why do these changes occur?

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

If consumers decide to be more frugal and save more out of their income, then this will cause

If real GDP per capita measured in 2007 dollars was $16,000 in 1961 and $48,500 in 2015, we would say that in the year 2015, the average Canadian could buy approximately ________ times as many goods and services as the average Canadian in 1961.

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion, by more than $150 billion, or by less than $150 billion?

Liquidity refers to

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

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

The demand for loanable funds has a slope because the lower the interest rate, the the number of profitable investment projects, and the the quantity of loanable funds demanded.

Labour productivity will increase if the increases and .

According to Robert Fogel, economic growth health, and health economic growth.