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

Consider the following data for a closed economy: a.Y = $12 trillion b.C = $8 trillion c.I = $3 trillion d.TR = $2 trillion e.T = $3 trillion Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Since 1961, real GDP in Canada has grown

The best measure of the standard of living is

Typically, as an economy begins to emerge from a recessionary phase of the business cycle

Increases in capital per hour worked cannot sustain high rates of economic growth unless accompanied by technological change.

How is economic growth connected to life expectancy? Based on this connection, in what country would you expect to have a longer life expectancy, Canada or India? Explain.

When the economy reaches a trough in a business cycle, which of the following will occur?

If technological change increases the profitability of new investment for firms, then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.

At the end of an expansion, wages of workers are usually rising faster than prices.

Nominal interest rate must be positive.

Which of the following indicates that the Canadian economy has become more stable since 1980?

Explain and show graphically how an increase in government spending affects the equilibrium interest rate in the market for loanable funds.

In comparison to a government that runs a balanced budget, when the government runs a budget deficit,

A government budget surplus from reduced government spending (no change in net taxes)will ________ the level of investment in the economy and ________ the level of saving (private plus public)in the economy.

Which of the following is most likely to lead to an increase in the interest rate, based on the market for loanable funds?

A recession begins with a(n)________ in spending by firms on capital goods and a(n)________ in spending on durable goods by households.

The effect of a recession on a company like Bombardier is such that

In Canada, from 2001 to 2007, the business cycle was in a period of

An increase in public saving has what impact on the market for loanable funds?