Question 1

In the Solow model, technological progress is assumed to be:

Accepted Answer

A)  zero. 
B)  endogenous. 
C)  exogenous. 
D)  continually increasing. 
A)  zero. 
B)  endogenous. 
C)  exogenous. 
D)  continually increasing. C

Question 2

The GDP gap is the difference between:

Accepted Answer

A)  full-employment real GDP and nominal GDP chain price index. 
B)  unemployment rate and real GDP chain price index. 
C)  full-employment real GDP and actual real GDP. 
D)  discouraged workers and actual real GDP. 
A)  full-employment real GDP and nominal GDP chain price index. 
B)  unemployment rate and real GDP chain price index. 
C)  full-employment real GDP and actual real GDP. 
D)  discouraged workers and actual real GDP. C

Question 3

Which of the following is true?

Accepted Answer

A)  The business cycle is a maximum period of economic growth. 
B)  The rise and fall in nominal GDP is a significant indicator of the business cycle. 
C)  Employment growth indicates a downturn in the business cycle. 
D)  Increase in employment indicates a phase of economic growth. 
A)  The business cycle is a maximum period of economic growth. 
B)  The rise and fall in nominal GDP is a significant indicator of the business cycle. 
C)  Employment growth indicates a downturn in the business cycle. 
D)  Increase in employment indicates a phase of economic growth. D

Question 4

A phase in the business cycle in which the decline in the economy's real GDP persists for at least half a year is known as:

Accepted Answer

A)  a depression. 
B)  a recession. 
C)  a downtick. 
D)  disequilibrium. 
A)  a depression. 
B)  a recession. 
C)  a downtick. 
D)  disequilibrium.

Question 5

If the GDP gap is zero, we can conclude that:

Accepted Answer

A)  unemployment is zero. 
B)  we are below our potential output level. 
C)  cyclical unemployment is zero. 
D)  we are above our potential output level. 
A)  unemployment is zero. 
B)  we are below our potential output level. 
C)  cyclical unemployment is zero. 
D)  we are above our potential output level.

Question 6

The phase of the business cycle that follows a recession is known as the:

Accepted Answer

A)  peak. 
B)  recession. 
C)  recovery. 
D)  trough. 
A)  peak. 
B)  recession. 
C)  recovery. 
D)  trough.

Question 7

Narrbegin Exhibit 12.2
 \[\begin{array} { | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Capital stock } \
\text { per person }
\end{array} & \begin{array} { c } 
\text { Output per } \
\text { person }
\end{array} & \begin{array} { c } 
\text { Capital stock } \
\text { depreciation } \
\text { (at rate of 10 } \
\text { per cent) }
\end{array} & \begin{array} { c } 
\text { Gross in- } \
\text { vestment } \
\text { per person }
\end{array} & \begin{array} { c } 
\text { Required } \
\text { saving } \
\text { per per- } \
\text { son }
\end{array} & \begin{array} { c } 
\text { Required } \
\text { saving } \
\text { rate }
\end{array} & \begin{array} { c } 
\text { Consump- } \
\text { tion per } \
\text { person }
\end{array} \
\hline 100 \quad ( \langle 20 \% ) & 40 & 10 & 10 & 10 & 25 \% & 30 \
\hline 120 \quad ( \langle 20 \% ) & 46 ( < 15 \% ) & 12 & 12 & 12 & 26 \% &-?- \ 
\hline 144 \quad ( \langle 20 \% ) & \begin{array} { c } 
50.6 ( < \
10 \% )
\end{array} & 14 & 14 & 144 & 28.5 \% & 36.2 \
\hline 172.8 ( \langle 20 \% ) & 53.1 ( \langle 5 \% ) & 17.3 & 17.3 & 17.3 &  { } _ { - } { ?} _ { - } \% & 35.8 \
\hline
\end{array}\]
-According to Exhibit 12.2, the required saving rate when the capital stock per person is 172.8 units will be:

Accepted Answer

A)  35 per cent. 
B)  40 per cent. 
C)  30 per cent. 
D)  32.5 per cent. 
A)  35 per cent. 
B)  40 per cent. 
C)  30 per cent. 
D)  32.5 per cent.

Question 8

The 'golden rule' level of output per worker in the Solow growth model occurs when the savings rate is maximised.

Accepted Answer

A) True 
 B)False

Question 9

The term 'trough' refers to the maximum point of the business cycle.

Accepted Answer

A) True 
 B)False

Question 10

The business cycle is the periodic but recurrent fluctuations in real GDP.

Accepted Answer

A) True 
 B)False

Question 11

The government's main statistic for forecasting business cycles is the index of coincident indicators.

Accepted Answer

A) True 
 B)False

Question 12

The 1987 the Nobel Laureate, awarded for his contribution to growth theory, was:

Accepted Answer

A)  John Maynard Keynes. 
B)  Milton Friedman. 
C)  Robert Solow. 
D)  Gregory Mankiw. 
A)  John Maynard Keynes. 
B)  Milton Friedman. 
C)  Robert Solow. 
D)  Gregory Mankiw.

Question 13

In the simple Solow growth model, with constant technology and constant returns to scale, GDP per capita can only increase if:

Accepted Answer

A)  capital increases at the same rate as labour increases. 
B)  capital increases at a slower rate than labour. 
C)  capital increases at a faster rate than labour. 
D)  increasing marginal returns to capital exists. 
A)  capital increases at the same rate as labour increases. 
B)  capital increases at a slower rate than labour. 
C)  capital increases at a faster rate than labour. 
D)  increasing marginal returns to capital exists.

Question 14

Macroeconomic policies should:

Accepted Answer

A)  reduce the severity of the ups and downs of the business cycle. 
B)  encourage the economy to grow very fast. 
C)  enable the economy to achieve the highest possible unsustainable long-term economic growth. 
D)  encourage the economy not to grow in the long run. 
A)  reduce the severity of the ups and downs of the business cycle. 
B)  encourage the economy to grow very fast. 
C)  enable the economy to achieve the highest possible unsustainable long-term economic growth. 
D)  encourage the economy not to grow in the long run.

Question 15

Leading indicators are the most important indicators of recession.

Accepted Answer

A) True 
 B)False

Question 16

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

Accepted Answer

A) True 
 B)False

Question 17

A trough represents the highest point in a recession phase.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not an example of technological progress?

Accepted Answer

A)  Better training for workers. 
B)  Improvements in the quality of capital. 
C)  Improvements in management practices. 
D)  Increases in the quantity of capital. 
A)  Better training for workers. 
B)  Improvements in the quality of capital. 
C)  Improvements in management practices. 
D)  Increases in the quantity of capital.

Question 19

If technological progress involves positive externalities, then private sector spending on research and development may be:

Accepted Answer

A)  too high. 
B)  wasted. 
C)  too low. 
D)  less than public sector spending on research and development. 
A)  too high. 
B)  wasted. 
C)  too low. 
D)  less than public sector spending on research and development.

Question 20

A business cycle is the period of time in which:

Accepted Answer

A)  a business is established and ceases operations. 
B)  there are three phases, which are: peak, depression and recovery. 
C)  real GDP declines. 
D)  expansion and contraction of economic activities are alternated. 
A)  a business is established and ceases operations. 
B)  there are three phases, which are: peak, depression and recovery. 
C)  real GDP declines. 
D)  expansion and contraction of economic activities are alternated.

In the Solow model, technological progress is assumed to be:

The GDP gap is the difference between:

Which of the following is true?

A phase in the business cycle in which the decline in the economy's real GDP persists for at least half a year is known as:

If the GDP gap is zero, we can conclude that:

The phase of the business cycle that follows a recession is known as the:

The 'golden rule' level of output per worker in the Solow growth model occurs when the savings rate is maximised.

The term 'trough' refers to the maximum point of the business cycle.

The business cycle is the periodic but recurrent fluctuations in real GDP.

The government's main statistic for forecasting business cycles is the index of coincident indicators.

The 1987 the Nobel Laureate, awarded for his contribution to growth theory, was:

In the simple Solow growth model, with constant technology and constant returns to scale, GDP per capita can only increase if:

Macroeconomic policies should:

Leading indicators are the most important indicators of recession.

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

A trough represents the highest point in a recession phase.

Which of the following is not an example of technological progress?

If technological progress involves positive externalities, then private sector spending on research and development may be:

A business cycle is the period of time in which:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 13: Business Cycles and Economic Growth

In the Solow model, technological progress is assumed to be:

The GDP gap is the difference between:

Which of the following is true?

A phase in the business cycle in which the decline in the economy's real GDP persists for at least half a year is known as:

If the GDP gap is zero, we can conclude that:

The phase of the business cycle that follows a recession is known as the:

The 'golden rule' level of output per worker in the Solow growth model occurs when the savings rate is maximised.

The term 'trough' refers to the maximum point of the business cycle.

The business cycle is the periodic but recurrent fluctuations in real GDP.

The government's main statistic for forecasting business cycles is the index of coincident indicators.

The 1987 the Nobel Laureate, awarded for his contribution to growth theory, was:

In the simple Solow growth model, with constant technology and constant returns to scale, GDP per capita can only increase if:

Macroeconomic policies should:

Leading indicators are the most important indicators of recession.

The 'golden rule' level of output in the Solow model occurs when the consumption per person is maximised.

A trough represents the highest point in a recession phase.

Which of the following is not an example of technological progress?

If technological progress involves positive externalities, then private sector spending on research and development may be:

A business cycle is the period of time in which:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters