Question 1

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

Accepted Answer

A)  60 years 
B)  43 years 
C)  36 years 
D)  28 years 
A)  60 years 
B)  43 years 
C)  36 years 
D)  28 years

Question 2

In a closed economy, what is the relationship between saving and investment?

Accepted Answer

A)  Saving is greater than investment. 
B)  Investment is greater than saving. 
C)  Investment is equal to saving. 
D)  Investment may be greater or smaller than saving. 
A)  Saving is greater than investment. 
B)  Investment is greater than saving. 
C)  Investment is equal to saving. 
D)  Investment may be greater or smaller than saving.

Question 3

Briefly explain how the miserliness of Ebenezer Scrooge might actually be beneficial for economic growth.

Accepted Answer

Ebenezer Scrooge is known for his unwill

Question 4

In an open economy, the relationship between GDP (Y) and expenditures is Y = C + I + G.

Accepted Answer

A) True 
 B)False

Question 5

When the economy enters a recessionary phase of the business cycle, unemployment tends to

Accepted Answer

A)  decrease. 
B)  increase. 
C)  be unchanged. 
D)  change in the same direction as the rate of inflation. 
A)  decrease. 
B)  increase. 
C)  be unchanged. 
D)  change in the same direction as the rate of inflation.

Question 6

The demand for durable goods

Accepted Answer

A)  has decreased over time. 
B)  declines by a greater percentage than does GDP during a recession. 
C)  declines by a smaller percentage than does GDP during a recession. 
D)  rises by a greater percentage than does GDP during a recession. 
A)  has decreased over time. 
B)  declines by a greater percentage than does GDP during a recession. 
C)  declines by a smaller percentage than does GDP during a recession. 
D)  rises by a greater percentage than does GDP during a recession.

Question 7

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 8

Table 21-2
  
-Refer to Table 21-2. Using the table above, what is the approximate growth rate of real GDP from 2012 to 2013?

Accepted Answer

A)  -2% 
B)  -1% 
C)  1% 
D)  2% 
A)  -2% 
B)  -1% 
C)  1% 
D)  2%

Question 9

If the CPI is currently 202, what does this tell you about inflation between last year and this year?

Accepted Answer

A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next. 
A)  There was deflation in the economy between this year and last year. 
B)  Inflation in the economy between this year and last year was 2%. 
C)  Inflation in the economy between this year and last year was 102%. 
D)  The CPI measures only the level of prices in a given year, not the percentage change in prices from one year to the next.

Question 10

Carefully define the two categories of saving in the economy.

Accepted Answer

There are two categories of saving in th

Question 11

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.

Accepted Answer

A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; decrease 
B)  increase; increase 
C)  decrease; increase 
D)  decrease; decrease

Question 12

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

Accepted Answer

A)  longer recessions 
B)  shorter expansions 
C)  less severe fluctuations in real GDP 
D)  All of the above indicate that the U.S. economy has become more stable since 1950. 
A)  longer recessions 
B)  shorter expansions 
C)  less severe fluctuations in real GDP 
D)  All of the above indicate that the U.S. economy has become more stable since 1950.

Question 13

During an expansion, how do inflation and unemployment typically change?

Accepted Answer

A)  Inflation and unemployment both rise. 
B)  Inflation and unemployment both fall. 
C)  Inflation falls and unemployment rises. 
D)  Inflation rises and unemployment falls. 
A)  Inflation and unemployment both rise. 
B)  Inflation and unemployment both fall. 
C)  Inflation falls and unemployment rises. 
D)  Inflation rises and unemployment falls.

Question 14

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

Accepted Answer

The demand for loanable funds reflects t

Question 15

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

Accepted Answer

A)  4.7% 
B)  10.5% 
C)  15% 
D)  21% 
A)  4.7% 
B)  10.5% 
C)  15% 
D)  21%

Question 16

Labor productivity is

Accepted Answer

A)  the quantity of output produced in one hour by several workers. 
B)  the quantity of capital one worker can produce in one day. 
C)  the quantity of output produced by one worker or by one hour of work. 
D)  the quantity of output produced in one hour by one machine. 
A)  the quantity of output produced in one hour by several workers. 
B)  the quantity of capital one worker can produce in one day. 
C)  the quantity of output produced by one worker or by one hour of work. 
D)  the quantity of output produced in one hour by one machine.

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

Question 18

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Accepted Answer

A)  Prior to 1900, the length of expansions equaled the length of recessions. 
B)  Prior to 1900, the length of expansions were much less than the length of recessions. 
C)  Prior to 1900, the length of expansions were much longer than the length of recessions. 
D)  Prior to 1900, the length of recessions were brief and almost nonexistent. 
A)  Prior to 1900, the length of expansions equaled the length of recessions. 
B)  Prior to 1900, the length of expansions were much less than the length of recessions. 
C)  Prior to 1900, the length of expansions were much longer than the length of recessions. 
D)  Prior to 1900, the length of recessions were brief and almost nonexistent.

Question 19

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

Question 20

Actual real GDP will be above potential GDP if

Accepted Answer

A)  firms are producing below capacity. 
B)  firms are producing at capacity. 
C)  firms are producing above capacity. 
D)  inflation is rising. 
A)  firms are producing below capacity. 
B)  firms are producing at capacity. 
C)  firms are producing above capacity. 
D)  inflation is rising.

Exam 21: Economic Growth, the Financial System, and Business Cycles

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

In a closed economy, what is the relationship between saving and investment?

Briefly explain how the miserliness of Ebenezer Scrooge might actually be beneficial for economic growth.

In an open economy, the relationship between GDP (Y) and expenditures is Y = C + I + G.

When the economy enters a recessionary phase of the business cycle, unemployment tends to

The demand for durable goods

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

Table 21-2 -Refer to Table 21-2. Using the table above, what is the approximate growth rate of real GDP from 2012 to 2013?

If the CPI is currently 202, what does this tell you about inflation between last year and this year?

Carefully define the two categories of saving in the economy.

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

During an expansion, how do inflation and unemployment typically change?

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

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

Labor productivity is

The federal budget deficit can be reduced by

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

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

Actual real GDP will be above potential GDP if

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

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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

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.