Question 1

When a recession ends,

Accepted Answer

A) interest rates decrease. 
B) households decrease spending on durable goods. 
C) the household sector decreases spending substantially. 
D) firms increase the amount of borrowing. 
A) interest rates decrease. 
B) households decrease spending on durable goods. 
C) the household sector decreases spending substantially. 
D) firms increase the amount of borrowing.

Question 2

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

Accepted Answer

A) An expected recession decreases the profitability of new investment. 
B) Technological change increases the profitability of new investment. 
C) The government runs a budget surplus. 
D) Households become spendthrifts and begin to save less. 
A) An expected recession decreases the profitability of new investment. 
B) Technological change increases the profitability of new investment. 
C) The government runs a budget surplus. 
D) Households become spendthrifts and begin to save less.

Question 3

Since 1950,recessions in the United States

Accepted Answer

A) have not occurred. 
B) have become more severe than before 1950. 
C) have become less severe than before 1950. 
D) are about as severe as they were before 1950. 
A) have not occurred. 
B) have become more severe than before 1950. 
C) have become less severe than before 1950. 
D) are about as severe as they were before 1950.

Question 4

Growth in potential GDP in the United States is estimated to be about

Accepted Answer

A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year. 
A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year.

Question 5

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

Question 6

Give three reasons why the U.S.economy is more stable since 1950.

Accepted Answer

Any two of the following three reasons a

Question 7

India's rapid growth can be explained by

Accepted Answer

A) reduced regulations and market-based reforms. 
B) investment in human capital from 1947 through 2013. 
C) the movement of workers from the agricultural sector to the manufacturing sector. 
D) an increase in labor force participation. 
A) reduced regulations and market-based reforms. 
B) investment in human capital from 1947 through 2013. 
C) the movement of workers from the agricultural sector to the manufacturing sector. 
D) an increase in labor force participation.

Question 8

Technological advances generally result in

Accepted Answer

A) decreased incomes. 
B) increased life expectancy. 
C) increased infant mortality rates. 
D) increased average number of hours worked per day. 
A) decreased incomes. 
B) increased life expectancy. 
C) increased infant mortality rates. 
D) increased average number of hours worked per day.

Question 9

The budget deficit is defined as

Accepted Answer

A) T - (G + TR),and this is negative. 
B) T - (G + TR),and this is positive. 
C) T + (G - TR),and this is negative. 
D) T + (G + TR),and this is negative. 
A) T - (G + TR),and this is negative. 
B) T - (G + TR),and this is positive. 
C) T + (G - TR),and this is negative. 
D) T + (G + TR),and this is negative.

Question 10

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Accepted Answer

Potential GDP is the level of GDP attain

Question 11

Which of the following explains the cause of the change in the unemployment rate at the end of a recession?

Accepted Answer

A) Firms are hesitant to rehire laid off workers,as they continue to operate below capacity. 
B) Firms rapidly hire new workers at the first sign of an increase in demand for their goods. 
C) Discouraged workers return to the labor force,and this makes the unemployment rate fall. 
D) Discouraged workers leave the labor force,and this makes the unemployment rate rise. 
A) Firms are hesitant to rehire laid off workers,as they continue to operate below capacity. 
B) Firms rapidly hire new workers at the first sign of an increase in demand for their goods. 
C) Discouraged workers return to the labor force,and this makes the unemployment rate fall. 
D) Discouraged workers leave the labor force,and this makes the unemployment rate rise.

Question 12

A decrease in the real interest rate will

Accepted Answer

A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment. 
A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment.

Question 13

Potential GDP is estimated to grow at a rate of 3.2% in the United States.Actual GDP in the U.S.

Accepted Answer

A) always grows at a slower rate than potential GDP. 
B) always grows at a faster rate than potential GDP. 
C) always grows at the same rate as potential GDP. 
D) is the same as potential GDP if all firms in the economy were working at capacity. 
A) always grows at a slower rate than potential GDP. 
B) always grows at a faster rate than potential GDP. 
C) always grows at the same rate as potential GDP. 
D) is the same as potential GDP if all firms in the economy were working at capacity.

Question 14

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

Accepted Answer

A) less than 1 year 
B) 5 years 
C) 14 years 
D) 35 years 
A) less than 1 year 
B) 5 years 
C) 14 years 
D) 35 years

Question 15

If real GDP grows by 3% in 2011,3.2% in 2012,and 2.5% in 2013,what is the average annual growth rate of real GDP?

Accepted Answer

A) 2.6% 
B) 2.9% 
C) 3.1% 
D) 4.2% 
A) 2.6% 
B) 2.9% 
C) 3.1% 
D) 4.2%

Question 16

When the government runs a budget deficit,we would expect to see that

Accepted Answer

A) private saving will fall. 
B) investment will fall. 
C) G + TR < T. 
D) public saving is positive. 
A) private saving will fall. 
B) investment will fall. 
C) G + TR < T. 
D) public saving is positive.

Question 17

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

Accepted Answer

A) 23.3 years to 17.5 years. 
B) 28.0 years to 21.0 years. 
C) 11.2 years to 10.8 years. 
D) 23.3 years to 20.6 years. 
A) 23.3 years to 17.5 years. 
B) 28.0 years to 21.0 years. 
C) 11.2 years to 10.8 years. 
D) 23.3 years to 20.6 years.

Question 18

As the economy nears the end of a recession,which of the following do we typically see?

Accepted Answer

A) further decreases in consumer spending 
B) increased spending on capital goods by firms 
C) increasing interest rates 
D) all of the above 
A) further decreases in consumer spending 
B) increased spending on capital goods by firms 
C) increasing interest rates 
D) all of the above

Question 19

Suppose you are a famous international economic advisor.You have been asked to asses the possibilities for growth in an African country.It is a country abundant in labor and some natural resources.The capital to labor ratio is low.It has a free market economy.You have found that this country does not have a very strong and healthy banking system,however the political system is stable and the government does a good job protecting property rights.Assess this country's prospects for growth.Recommend two things that would enhance the country's growth.

Accepted Answer

The prospects for this country's growth

Question 20

If you spend more of your income on consumption goods,which of the following will occur?

Accepted Answer

A) The production of investment goods will fall. 
B) Economic growth will be stimulated. 
C) Investments in education will rise. 
D) For every dollar you spend on consumption,real GDP will fall by a dollar. 
A) The production of investment goods will fall. 
B) Economic growth will be stimulated. 
C) Investments in education will rise. 
D) For every dollar you spend on consumption,real GDP will fall by a dollar.

When a recession ends,

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

Since 1950,recessions in the United States

Growth in potential GDP in the United States is estimated to be about

Long-run economic growth requires all of the following except

Give three reasons why the U.S.economy is more stable since 1950.

India's rapid growth can be explained by

Technological advances generally result in

The budget deficit is defined as

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Which of the following explains the cause of the change in the unemployment rate at the end of a recession?

A decrease in the real interest rate will

Potential GDP is estimated to grow at a rate of 3.2% in the United States.Actual GDP in the U.S.

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

If real GDP grows by 3% in 2011,3.2% in 2012,and 2.5% in 2013,what is the average annual growth rate of real GDP?

When the government runs a budget deficit,we would expect to see that

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

As the economy nears the end of a recession,which of the following do we typically see?

If you spend more of your income on consumption goods,which of the following will occur?

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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

When a recession ends,

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

Since 1950,recessions in the United States

Growth in potential GDP in the United States is estimated to be about

Long-run economic growth requires all of the following except

Give three reasons why the U.S.economy is more stable since 1950.

India's rapid growth can be explained by

Technological advances generally result in

The budget deficit is defined as

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Which of the following explains the cause of the change in the unemployment rate at the end of a recession?

A decrease in the real interest rate will

Potential GDP is estimated to grow at a rate of 3.2% in the United States.Actual GDP in the U.S.

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

If real GDP grows by 3% in 2011,3.2% in 2012,and 2.5% in 2013,what is the average annual growth rate of real GDP?

When the government runs a budget deficit,we would expect to see that

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

As the economy nears the end of a recession,which of the following do we typically see?

If you spend more of your income on consumption goods,which of the following will occur?

Economics: Foundations and Models

Trade-Offs,comparative Advantage,and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

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 Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters