Question 1

A period of expansion in the business cycle ends when

Accepted Answer

A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP. 
E) real GDP returns to growth. 
A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP. 
E) real GDP returns to growth.

Question 2

Empirical evidence shows that the impact of government budget deficits and surpluses on the equilibrium interest rate is quite large.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a correct statement?

Accepted Answer

A) Inflation is measured as the percent change in the CPI. 
B) The CPI is a widely used measure of the inflation rate. 
C) Real GDP is our best measure of economic growth. 
D) The PPI measures inflation as experienced by producers. 
E) Inflation is measured as changes in the unemployment rate. 
A) Inflation is measured as the percent change in the CPI. 
B) The CPI is a widely used measure of the inflation rate. 
C) Real GDP is our best measure of economic growth. 
D) The PPI measures inflation as experienced by producers. 
E) Inflation is measured as changes in the unemployment rate.

Question 4

The commonly accepted definition of a recession is at least two consecutive quarters of falling real GDP.

Accepted Answer

A) True 
 B)False

Question 5

Purchases of Huggies diapers should

Accepted Answer

A) remain fairly constant over the business cycle. 
B) increase in recessions and decrease in expansions. 
C) decrease in recessions and increase in expansions. 
D) increase in recessions and remain constant in expansions. 
E) increase in both recessions and expansions. 
A) remain fairly constant over the business cycle. 
B) increase in recessions and decrease in expansions. 
C) decrease in recessions and increase in expansions. 
D) increase in recessions and remain constant in expansions. 
E) increase in both recessions and expansions.

Question 6

Purchases of which of the following goods would be dramatically reduced during a recession?

Accepted Answer

A) tomatoes 
B) ink pens 
C) gasoline 
D) refrigerators 
E) used cars 
A) tomatoes 
B) ink pens 
C) gasoline 
D) refrigerators 
E) used cars

Question 7

The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________.

Accepted Answer

A) production; population 
B) population; GDP per capita 
C) population; production 
D) population; income 
E) debt; GDP per capita 
A) production; population 
B) population; GDP per capita 
C) population; production 
D) population; income 
E) debt; GDP per capita

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not one of the key services provided by the financial system?

Accepted Answer

A) decreasing taxes 
B) risk sharing 
C) liquidity 
D) generating information 
A) decreasing taxes 
B) risk sharing 
C) liquidity 
D) generating information

Question 10

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

Accepted Answer

A) an increase in the demand for loanable funds 
B) an increase in the quantity of loanable funds demanded 
C) an increase in the supply of loanable funds 
D) an increase in the quantity of loanable funds supplied 
E) a decrease in consumption spending 
A) an increase in the demand for loanable funds 
B) an increase in the quantity of loanable funds demanded 
C) an increase in the supply of loanable funds 
D) an increase in the quantity of loanable funds supplied 
E) a decrease in consumption spending

Question 11

A(n)________ comes to an end with a business cycle ________.

Accepted Answer

A) recession; peak 
B) recession; trough 
C) expansion; trough 
D) expansion; bubble 
E) expansion; depression 
A) recession; peak 
B) recession; trough 
C) expansion; trough 
D) expansion; bubble 
E) expansion; depression

Question 12

Centrally-planned economies tend to grow more quickly than market economies.

Accepted Answer

A) True 
 B)False

Question 13

The rule of 70 states that

Accepted Answer

A) it takes an economy 70 years to double its real GDP. 
B) the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C) the number of years it takes an economy to double in size is the growth rate times 70. 
D) the number of years it takes an economy to double in size is the growth rate divided by 70. 
E) the number of years it takes an economy to shrink by half is 70 divided by the growth rate. 
A) it takes an economy 70 years to double its real GDP. 
B) the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C) the number of years it takes an economy to double in size is the growth rate times 70. 
D) the number of years it takes an economy to double in size is the growth rate divided by 70. 
E) the number of years it takes an economy to shrink by half is 70 divided by the growth rate.

Question 14

The growth rate of real GDP in Canada rises from 4.2% to 4.4%.Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Accepted Answer

The "Rule of 70" states that the number

Question 15

Which of the following is an example of human capital?

Accepted Answer

A) a computer 
B) a factory building 
C) a university or college education 
D) a software program 
E) computers used by human resource departments 
A) a computer 
B) a factory building 
C) a university or college education 
D) a software program 
E) computers used by human resource departments

Question 16

Since 1980, recessions in Canada

Accepted Answer

A) have not occurred. 
B) have only occurred once. 
C) have occurred twice. 
D) have occurred three times. 
E) have occured four times. 
A) have not occurred. 
B) have only occurred once. 
C) have occurred twice. 
D) have occurred three times. 
E) have occured four times.

Question 17

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

Accepted Answer

The demand for loanable funds reflects t

Question 18

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 given in the figure above.If the current real interest rate is 5 percent, which of the following is true?

Accepted Answer

A) The loanable funds market is in equilibrium. 
B) There is a surplus of loanable funds in the market. 
C) There is a shortage of loanable funds in the market. 
D) The quantity of loanable funds being demanded in the market is less than $90 million. 
E) The quantity of loanable funds is undetermined. 
A) The loanable funds market is in equilibrium. 
B) There is a surplus of loanable funds in the market. 
C) There is a shortage of loanable funds in the market. 
D) The quantity of loanable funds being demanded in the market is less than $90 million. 
E) The quantity of loanable funds is undetermined.

Question 19

Which of the following would occur if the federal government of Canada cut all income taxes to zero and increased the GST (the federal consumption tax)to make up for the lost revenue?

Accepted Answer

A) Consumption would increase. 
B) The supply of loanable funds would decrease. 
C) Saving would increase. 
D) Tax revenues would rise. 
E) Demand for loanable funds would fall. 
A) Consumption would increase. 
B) The supply of loanable funds would decrease. 
C) Saving would increase. 
D) Tax revenues would rise. 
E) Demand for loanable funds would fall.

Question 20

A good measure of the standard of living is

Accepted Answer

A) real GDP per capita. 
B) nominal GDP per capita. 
C) total real GDP. 
D) total nominal GDP. 
E) the real interest rate. 
A) real GDP per capita. 
B) nominal GDP per capita. 
C) total real GDP. 
D) total nominal GDP. 
E) the real interest rate.

A period of expansion in the business cycle ends when

Empirical evidence shows that the impact of government budget deficits and surpluses on the equilibrium interest rate is quite large.

Which of the following is a correct statement?

The commonly accepted definition of a recession is at least two consecutive quarters of falling real GDP.

Purchases of Huggies diapers should

Purchases of which of the following goods would be dramatically reduced during a recession?

The only way the standard of living of the average person in a country can increase is if increases faster than .

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

Which of the following is not one of the key services provided by the financial system?

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

A(n) comes to an end with a business cycle .

Centrally-planned economies tend to grow more quickly than market economies.

The rule of 70 states that

The growth rate of real GDP in Canada rises from 4.2% to 4.4%.Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Which of the following is an example of human capital?

Since 1980, recessions in Canada

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

Which of the following would occur if the federal government of Canada cut all income taxes to zero and increased the GST (the federal consumption tax)to make up for the lost revenue?

A good measure of the standard of living is

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 expansion in the business cycle ends when

Empirical evidence shows that the impact of government budget deficits and surpluses on the equilibrium interest rate is quite large.

Which of the following is a correct statement?

The commonly accepted definition of a recession is at least two consecutive quarters of falling real GDP.

Purchases of Huggies diapers should

Purchases of which of the following goods would be dramatically reduced during a recession?

The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________.

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

Which of the following is not one of the key services provided by the financial system?

Using the market for loanable funds, which of the following has the potential to raise the real interest rate?

A(n)________ comes to an end with a business cycle ________.

Centrally-planned economies tend to grow more quickly than market economies.

The rule of 70 states that

The growth rate of real GDP in Canada rises from 4.2% to 4.4%.Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Which of the following is an example of human capital?

Since 1980, recessions in Canada

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

Which of the following would occur if the federal government of Canada cut all income taxes to zero and increased the GST (the federal consumption tax)to make up for the lost revenue?

A good measure of the standard of living is

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 only way the standard of living of the average person in a country can increase is if increases faster than .

A(n) comes to an end with a business cycle .