Question 1

In the Solow growth model, investment is only possible if:

Accepted Answer

A)  consumption equals output. 
B)  consumption is greater than output. 
C)  output is greater than consumption. 
D)  firms borrow from overseas. 
A)  consumption equals output. 
B)  consumption is greater than output. 
C)  output is greater than consumption. 
D)  firms borrow from overseas.

Question 2

The cost of cyclical unemployment is also called:

Accepted Answer

A)  real GDP. 
B)  the GDP surplus. 
C)  the inflation gap. 
D)  potential output minus actual output. 
A)  real GDP. 
B)  the GDP surplus. 
C)  the inflation gap. 
D)  potential output minus actual output.

Question 3

Which of the following is not a variable in the index of leading indicators?

Accepted Answer

A)  Average working week. 
B)  Duration of unemployment. 
C)  Unemployment claims. 
D)  New businesses. 
A)  Average working week. 
B)  Duration of unemployment. 
C)  Unemployment claims. 
D)  New businesses.

Question 4

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 steady-state level of capital per person occurs when:

Accepted Answer

A)  the saving rate is 32.5 per cent. 
B)  output per person is 46 units. 
C)  gross investment per person is 12 units. 
D)  consumption per person is at least 36.2 units. 
A)  the saving rate is 32.5 per cent. 
B)  output per person is 46 units. 
C)  gross investment per person is 12 units. 
D)  consumption per person is at least 36.2 units.

Question 5

A coincident indicator:

Accepted Answer

A)  highlights future changes in economic growth. 
B)  highlights previous changes in economic growth. 
C)  highlights current changes in economic growth. 
D)  always runs countercyclically to the business cycle. 
A)  highlights future changes in economic growth. 
B)  highlights previous changes in economic growth. 
C)  highlights current changes in economic growth. 
D)  always runs countercyclically to the business cycle.

Question 6

Over the past century, virtually all countries have experienced long-term growth of:

Accepted Answer

A)  zero per cent. 
B)  2 per cent. 
C)  3 per cent. 
D)  various rates. 
A)  zero per cent. 
B)  2 per cent. 
C)  3 per cent. 
D)  various rates.

Question 7

Changing the long-term growth trajectory includes:

Accepted Answer

A)  microeconomic and macroeconomic policies. 
B)  only macroeconomic policies. 
C)  only microeconomic policies. 
D)  only normative economic policies. 
A)  microeconomic and macroeconomic policies. 
B)  only macroeconomic policies. 
C)  only microeconomic policies. 
D)  only normative economic policies.

Question 8

Which of the following is not a lagging indicator?

Accepted Answer

A)  Outstanding commercial loans. 
B)  Duration of unemployment. 
C)  Prime rate. 
D)  Stock prices. 
A)  Outstanding commercial loans. 
B)  Duration of unemployment. 
C)  Prime rate. 
D)  Stock prices.

Question 9

What stage of the business cycle immediately follows the peak?

Accepted Answer

A)  Peak. 
B)  Recovery. 
C)  Recession. 
D)  Depression. 
A)  Peak. 
B)  Recovery. 
C)  Recession. 
D)  Depression.

Question 10

Which of the following is a lagging indicator?

Accepted Answer

A)  Material prices. 
B)  Changes in inventories. 
C)  Industrial production. 
D)  Retail sales. 
A)  Material prices. 
B)  Changes in inventories. 
C)  Industrial production. 
D)  Retail sales.

Question 11

Macroeconomic policies involve:

Accepted Answer

A)  fiscal and monetary policy. 
B)  antitrust laws. 
C)  the introduction of competition. 
D)  changes in wages in the automotive industry. 
A)  fiscal and monetary policy. 
B)  antitrust laws. 
C)  the introduction of competition. 
D)  changes in wages in the automotive industry.

Question 12

In the simple Solow growth model, investment depends crucially on:

Accepted Answer

A)  the capital stock. 
B)  the supply of labour. 
C)  household savings. 
D)  diminishing returns to capital. 
A)  the capital stock. 
B)  the supply of labour. 
C)  household savings. 
D)  diminishing returns to capital.

Question 13

Which of the following is not an example of government policy in line with the endogenous growth model?

Accepted Answer

A)  Tax incentives for spending on research and development. 
B)  Increased public spending on research and development. 
C)  Patent protection for private firms. 
D)  Increased spending on roads. 
A)  Tax incentives for spending on research and development. 
B)  Increased public spending on research and development. 
C)  Patent protection for private firms. 
D)  Increased spending on roads.

Question 14

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then, ceteris paribus, the economy is operating with:

Accepted Answer

A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  economies of scale. 
A)  increasing returns to scale. 
B)  decreasing returns to scale. 
C)  constant returns to scale. 
D)  economies of scale.

Question 15

One of the goals of macroeconomists is to:

Accepted Answer

A)  reduce the severity of business-cycle fluctuations. 
B)  increase short-term output. 
C)  keep output at a constant level. 
D)  keep consumption at a constant level. 
A)  reduce the severity of business-cycle fluctuations. 
B)  increase short-term output. 
C)  keep output at a constant level. 
D)  keep consumption at a constant level.

Question 16

The four phases of a single business cycle are, in order, the trough, followed by a recovery, then a recession, ending with a peak.

Accepted Answer

A) True 
 B)False

Question 17

Variables that change before real GDP changes are measured by the:

Accepted Answer

A)  personal income index. 
B)  real GDP index. 
C)  forecasting gauge. 
D)  index of leading indicators. 
A)  personal income index. 
B)  real GDP index. 
C)  forecasting gauge. 
D)  index of leading indicators.

Question 18

Which of the following can improve labour productivity?

Accepted Answer

A)  Less spending on education and training. 
B)  More unskilled labour. 
C)  More spending on managers' office supplies. 
D)  Better educated workforce and improved management practice. 
A)  Less spending on education and training. 
B)  More unskilled labour. 
C)  More spending on managers' office supplies. 
D)  Better educated workforce and improved management practice.

Question 19

Contrary to the original Solow model, many economists today claim that technological progress may be _____ to long-term economic growth.

Accepted Answer

A)  exogenous 
B)  endogenous 
C)  harmful 
D)  beneficial 
A)  exogenous 
B)  endogenous 
C)  harmful 
D)  beneficial

Question 20

A country can increase its real GDP per person by:

Accepted Answer

A)  reducing the quantity of production factors. 
B)  increasing the number of holidays. 
C)  reducing its spending. 
D)  using more productive technology. 
A)  reducing the quantity of production factors. 
B)  increasing the number of holidays. 
C)  reducing its spending. 
D)  using more productive technology.

In the Solow growth model, investment is only possible if:

The cost of cyclical unemployment is also called:

Which of the following is not a variable in the index of leading indicators?

A coincident indicator:

Over the past century, virtually all countries have experienced long-term growth of:

Changing the long-term growth trajectory includes:

Which of the following is not a lagging indicator?

What stage of the business cycle immediately follows the peak?

Which of the following is a lagging indicator?

Macroeconomic policies involve:

In the simple Solow growth model, investment depends crucially on:

Which of the following is not an example of government policy in line with the endogenous growth model?

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then, ceteris paribus, the economy is operating with:

One of the goals of macroeconomists is to:

The four phases of a single business cycle are, in order, the trough, followed by a recovery, then a recession, ending with a peak.

Variables that change before real GDP changes are measured by the:

Which of the following can improve labour productivity?

Contrary to the original Solow model, many economists today claim that technological progress may be _____ to long-term economic growth.

A country can increase its real GDP per person by:

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 growth model, investment is only possible if:

The cost of cyclical unemployment is also called:

Which of the following is not a variable in the index of leading indicators?

A coincident indicator:

Over the past century, virtually all countries have experienced long-term growth of:

Changing the long-term growth trajectory includes:

Which of the following is not a lagging indicator?

What stage of the business cycle immediately follows the peak?

Which of the following is a lagging indicator?

Macroeconomic policies involve:

In the simple Solow growth model, investment depends crucially on:

Which of the following is not an example of government policy in line with the endogenous growth model?

If an increase in labour and capital of 10 per cent leads to output increasing by 10 per cent then, ceteris paribus, the economy is operating with:

One of the goals of macroeconomists is to:

The four phases of a single business cycle are, in order, the trough, followed by a recovery, then a recession, ending with a peak.

Variables that change before real GDP changes are measured by the:

Which of the following can improve labour productivity?

Contrary to the original Solow model, many economists today claim that technological progress may be _____ to long-term economic growth.

A country can increase its real GDP per person by:

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