Question 1

A period of economic expansion ends with a business cycle trough.

Accepted Answer

A) True 
 B)False

Question 2

Financial securities that represent promises to repay a fixed amount of funds are known as

Accepted Answer

A) bonds. 
B) stocks. 
C) pension funds. 
D) insurance premiums. 
E) preferred shares. 
A) bonds. 
B) stocks. 
C) pension funds. 
D) insurance premiums. 
E) preferred shares.

Question 3

Potential GDP in Canada

Accepted Answer

A) grows as people become more educated. 
B) shrinks as natural resource prices rise. 
C) does not change over time. 
D) grows as demand for our exports grows. 
E) grows at the same rate every year. 
A) grows as people become more educated. 
B) shrinks as natural resource prices rise. 
C) does not change over time. 
D) grows as demand for our exports grows. 
E) grows at the same rate every year.

Question 4

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 
E) 42 years 
A) 12 years 
B) 21 years 
C) 23 years 
D) 35 years 
E) 42 years

Question 5

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

Accepted Answer

A) government 
B) households 
C) banks 
D) firms 
E) foreigners 
A) government 
B) households 
C) banks 
D) firms 
E) foreigners

Question 6

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

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 
E) G = $5 trillion T = $13 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 
E) G = $5 trillion T = $13 trillion

Question 7

Ebenezer Scrooge's (the main character in Charles Dickens' A Christmas Carol)change in behaviour from miser to spender might actually be detrimental to the economy because

Accepted Answer

A) Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. 
B) Scrooge was happiest when he was saving money, and happiness is the key to economic growth. 
C) saving has to be greater than consumption for the economy to grow. 
D) Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits. 
E) Scrooge's spending is likely to reduce the demand for loanable funds. 
A) Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. 
B) Scrooge was happiest when he was saving money, and happiness is the key to economic growth. 
C) saving has to be greater than consumption for the economy to grow. 
D) Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits. 
E) Scrooge's spending is likely to reduce the demand for loanable funds.

Question 8

If GDP grew 3% in 1990, 2.2% in 1991, and 2.5% in 1992, what is the average annual growth rate over this period?

Accepted Answer

A) 5% 
B) 4% 
C) 2.6% 
D) -2.2% 
E) -3.1% 
A) 5% 
B) 4% 
C) 2.6% 
D) -2.2% 
E) -3.1%

Question 9

Potential GDP is always greater than real GDP in an economy.

Accepted Answer

A) True 
 B)False

Question 10

Long-run economic growth requires all of the following except

Accepted Answer

A) technological change. 
B) increases in capital per hour worked. 
C) government provision of secure property rights. 
D) political instability. 
E) an impartial court system. 
A) technological change. 
B) increases in capital per hour worked. 
C) government provision of secure property rights. 
D) political instability. 
E) an impartial court system.

Question 11

Which of the following would you expect to increase the equilibrium interest rate?

Accepted Answer

A) an increase in the percentage of income after net taxes that households save 
B) an increase in the budget deficit 
C) a decrease in the profitability of investment projects firms are considering 
D) a change from an income tax to a consumption tax 
E) an increase in household savings 
A) an increase in the percentage of income after net taxes that households save 
B) an increase in the budget deficit 
C) a decrease in the profitability of investment projects firms are considering 
D) a change from an income tax to a consumption tax 
E) an increase in household savings

Question 12

What is one difference between stocks and bonds?

Accepted Answer

A) Bonds earn a higher rate of return than stocks. 
B) Stocks earn a higher rate of return than bonds. 
C) Bonds are purchased at a bank, while stocks are purchased through the federal government. 
D) Stocks represent partial ownership in a firm, while bonds do not. 
E) Stocks represent a guarantee of future payment, while bonds do not. 
A) Bonds earn a higher rate of return than stocks. 
B) Stocks earn a higher rate of return than bonds. 
C) Bonds are purchased at a bank, while stocks are purchased through the federal government. 
D) Stocks represent partial ownership in a firm, while bonds do not. 
E) Stocks represent a guarantee of future payment, while bonds do not.

Question 13

Most economists believe that the return of ________ during the 2008-2009 recession is a key reason why the recession was so severe.

Accepted Answer

A) high tariffs 
B) financial instability 
C) rapid inflation 
D) high interest rates 
E) high unemployment 
A) high tariffs 
B) financial instability 
C) rapid inflation 
D) high interest rates 
E) high unemployment

Question 14

Countries with high rates of economic growth tend to have

Accepted Answer

A) a labour force that is more productive. 
B) a lower life expectancy at birth. 
C) low rates of technological advancement. 
D) a declining incidence of business cycle fluctuations. 
E) higher levels of corruption. 
A) a labour force that is more productive. 
B) a lower life expectancy at birth. 
C) low rates of technological advancement. 
D) a declining incidence of business cycle fluctuations. 
E) higher levels of corruption.

Question 15

How are unemployment, inflation, and the business cycle related?

Accepted Answer

A recessionary phase of a business cycle

Question 16

There is public dissaving if

Accepted Answer

A) G + TR > T. B) G + TR G + T. D) TR < G + T. E) TR - G < T. A) G + TR > T. B) G + TR G + T. D) TR < G + T. E) TR - G < T.

Question 17

The federal budget deficit can be reduced by

Accepted Answer

A) raising taxes. 
B) raising government spending. 
C) raising transfer payments. 
D) higher interest rates. 
E) reducing consumption. 
A) raising taxes. 
B) raising government spending. 
C) raising transfer payments. 
D) higher interest rates. 
E) reducing consumption.

Question 18

If GDP is currently $1.7 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $3.4 trillion?

Accepted Answer

A) about 7 years 
B) about 15 years 
C) about 17 years 
D) about 25 years 
E) about 30 years 
A) about 7 years 
B) about 15 years 
C) about 17 years 
D) about 25 years 
E) about 30 years

Question 19

In a closed economy, private saving is equal to which of the following? (Y = GDP,   ,   , T = Taxes, and TR = Transfers)

Accepted Answer

A) Y - C - T 
B) Y - G - T 
C) Y - G - T + TR 
D) Y + TR - C - T 
E) C + I + G 
A) Y - C - T 
B) Y - G - T 
C) Y - G - T + TR 
D) Y + TR - C - T 
E) C + I + G

Question 20

________ is the ease with which a financial security can be exchanged for another.

Accepted Answer

A) Risk 
B) The face value 
C) Liquidity 
D) The rate of return 
E) Convertability 
A) Risk 
B) The face value 
C) Liquidity 
D) The rate of return 
E) Convertability

A period of economic expansion ends with a business cycle trough.

Financial securities that represent promises to repay a fixed amount of funds are known as

Potential GDP in Canada

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

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

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

Ebenezer Scrooge's (the main character in Charles Dickens' A Christmas Carol)change in behaviour from miser to spender might actually be detrimental to the economy because

If GDP grew 3% in 1990, 2.2% in 1991, and 2.5% in 1992, what is the average annual growth rate over this period?

Potential GDP is always greater than real GDP in an economy.

Long-run economic growth requires all of the following except

Which of the following would you expect to increase the equilibrium interest rate?

What is one difference between stocks and bonds?

Most economists believe that the return of ________ during the 2008-2009 recession is a key reason why the recession was so severe.

Countries with high rates of economic growth tend to have

How are unemployment, inflation, and the business cycle related?

There is public dissaving if

The federal budget deficit can be reduced by

If GDP is currently $1.7 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $3.4 trillion?

In a closed economy, private saving is equal to which of the following? (Y = GDP, , , T = Taxes, and TR = Transfers)

________ is the ease with which a financial security can be exchanged for another.

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

A period of economic expansion ends with a business cycle trough.

Financial securities that represent promises to repay a fixed amount of funds are known as

Potential GDP in Canada

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

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

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

Ebenezer Scrooge's (the main character in Charles Dickens' A Christmas Carol)change in behaviour from miser to spender might actually be detrimental to the economy because

If GDP grew 3% in 1990, 2.2% in 1991, and 2.5% in 1992, what is the average annual growth rate over this period?

Potential GDP is always greater than real GDP in an economy.

Long-run economic growth requires all of the following except

Which of the following would you expect to increase the equilibrium interest rate?

What is one difference between stocks and bonds?

Most economists believe that the return of ________ during the 2008-2009 recession is a key reason why the recession was so severe.

Countries with high rates of economic growth tend to have

How are unemployment, inflation, and the business cycle related?

There is public dissaving if

The federal budget deficit can be reduced by

If GDP is currently $1.7 trillion and is growing at a rate of 2.3% per year, how long will it take GDP to reach $3.4 trillion?

In a closed economy, private saving is equal to which of the following? (Y = GDP, , , T = Taxes, and TR = Transfers)

________ is the ease with which a financial security can be exchanged for another.

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