Exam 10: Economic Growth, the Financial System, and Business Cycles

The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade,and due to these higher deficits,"the nation's capital stock ultimately would be smaller,and productivity and income would be lower than would be the case if the debt was smaller." This higher budget deficit could crowd out business investment if it resulted in an increase in interest rates.Crowding out of business investment would be represented graphically by a

If an economy is growing at a rate of 2.5% per year,how long will it take the economy to double in size?

Which of the following is most liquid?

If real GDP per capita doubles between 2005 and 2020,what is the average annual growth rate of real GDP per capita?

Describe what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

During the expansion phase of the business cycle,which of the following eventually increases?

Which of the following indicates that the U.S.economy has become more stable since 1950?

From 1950 - 2007,recessions in the United States

How has economist Robert Fogel explained that economic growth is connected to life expectancy? Based on this connection,in what country would you expect to have a longer life expectancy,the United States or India? Explain.

Table 10-2 -Refer to Table 10-2.Using the table above,what is the approximate average annual growth rate from 2015 to 2018?

The demand for loanable funds is downward sloping because the ________ the interest rate,the ________ the number of profitable investment projects a firm can undertake,and the ________ the quantity demanded of loanable funds.

Figure 10-1 -Refer to Figure 10-1.Which of the following is consistent with the graph depicted above?

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

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

Which of the following is not a reason why the U.S.economy has been more stable since 1950?

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

An increase in government purchases will

During the recession phase of the business cycle

There is public dissaving if

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 ________.