Question 1

The point at which real output reaches a maximum during a business cycle is called the:

Accepted Answer

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

Question 2

According to the Solow model, with constant technology, an increase in capital per worker will lead to a smaller increase in GDP per capita. This is explained by:

Accepted Answer

A)  constant returns to scale. 
B)  the law of diminishing marginal returns. 
C)  the law of diminishing marginal utility. 
D)  decreasing returns to scale. 
A)  constant returns to scale. 
B)  the law of diminishing marginal returns. 
C)  the law of diminishing marginal utility. 
D)  decreasing returns to scale.

Question 3

It is desirable to reduce the rise in unemployment during recession.

Accepted Answer

A) True 
 B)False

Question 4

The business cycle is the:

Accepted Answer

A)  succession of long-run fluctuations around the long-term trend. 
B)  succession of short-run fluctuations around the long-term trend. 
C)  erratic movements around the long-term trend. 
D)  straight line. 
A)  succession of long-run fluctuations around the long-term trend. 
B)  succession of short-run fluctuations around the long-term trend. 
C)  erratic movements around the long-term trend. 
D)  straight line.

Question 5

According to the Solow growth model, technological progress:

Accepted Answer

A)  was thought to occur within the economic system. 
B)  was thought to occur independently of the economic growth process. 
C)  was thought not to exist. 
D)  was thought to exist but only inside the economic system. 
A)  was thought to occur within the economic system. 
B)  was thought to occur independently of the economic growth process. 
C)  was thought not to exist. 
D)  was thought to exist but only inside the economic system.

Question 6

The 'golden rule' of saving is:

Accepted Answer

A)  the rate of saving that produces the minimum level of consumption per capita in the long-steady state. 
B)  the rate of saving that produces the maximum level of production per capita in the long-steady state. 
C)  the rate of saving that produces the maximum level of consumption per capita in the long-steady state. 
D)  The rate of saving that produces the minimum level of investment per capita in the long-steady state. 
A)  the rate of saving that produces the minimum level of consumption per capita in the long-steady state. 
B)  the rate of saving that produces the maximum level of production per capita in the long-steady state. 
C)  the rate of saving that produces the maximum level of consumption per capita in the long-steady state. 
D)  The rate of saving that produces the minimum level of investment per capita in the long-steady state.

Question 7

A recession is a decline in real GDP lasting at least:

Accepted Answer

A)  one year. 
B)  six months. 
C)  three months. 
D)  one month. 
A)  one year. 
B)  six months. 
C)  three months. 
D)  one month.

Question 8

The 'golden rule' level of capital per worker in the Solow model implies:

Accepted Answer

A)  governments should consistently follow the same monetary policy rule regardless of the economy's stage in the business cycle. 
B)  consumption will be maximised when capital per worker is at its maximum. 
C)  there is an optimal rate of saving that will maximise investment. 
D)  there is an optimal rate of saving that will maximise consumption. 
A)  governments should consistently follow the same monetary policy rule regardless of the economy's stage in the business cycle. 
B)  consumption will be maximised when capital per worker is at its maximum. 
C)  there is an optimal rate of saving that will maximise investment. 
D)  there is an optimal rate of saving that will maximise consumption.

Question 9

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur, a country needs to:

Accepted Answer

A)  continually increase the quantity of capital. 
B)  continually increase the proportion of savings. 
C)  continually increase consumption. 
D)  have technological progress. 
A)  continually increase the quantity of capital. 
B)  continually increase the proportion of savings. 
C)  continually increase consumption. 
D)  have technological progress.

Question 10

If patent protection were not offered by governments, the result would be:

Accepted Answer

A)  a solution to the problem of positive externalities. 
B)  more private research would be undertaken. 
C)  less public research would be undertaken. 
D)  less opportunities for the technological progress. 
A)  a solution to the problem of positive externalities. 
B)  more private research would be undertaken. 
C)  less public research would be undertaken. 
D)  less opportunities for the technological progress.

Question 11

If you look for a job for 18 months after graduation, but fail to generate an offer, even after lowering your expectations, the economy is probably in the business cycle phase called:

Accepted Answer

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

Question 12

What saving rate is optimal?

Accepted Answer

A)  The rate of spending that produces the minimum level of consumption per capita in the long-run steady state. 
B)  The rate of saving at which the community will be made no better off by additional
Saving. 
C)  The rate of saving that produces the steady level of consumption per capita in the long- run steady state. 
D)  The rate of saving that produces the maximum level of consumption per capita during the recession. 
A)  The rate of spending that produces the minimum level of consumption per capita in the long-run steady state. 
B)  The rate of saving at which the community will be made no better off by additional
Saving. 
C)  The rate of saving that produces the steady level of consumption per capita in the long- run steady state. 
D)  The rate of saving that produces the maximum level of consumption per capita during the recession.

Question 13

One country can have a higher level of output per worker because of:

Accepted Answer

A)  an increase in the unemployment rate. 
B)  a reduction in its labour force. 
C)  improvement in its available production technologies. 
D)  a reduction in population. 
A)  an increase in the unemployment rate. 
B)  a reduction in its labour force. 
C)  improvement in its available production technologies. 
D)  a reduction in population.

Question 14

The Solow growth model was the first economic model to show that long-term increases in living standards depended crucially on:

Accepted Answer

A)  increases in capital. 
B)  increases in labour. 
C)  increases in saving rates. 
D)  technological progress. 
A)  increases in capital. 
B)  increases in labour. 
C)  increases in saving rates. 
D)  technological progress.

Question 15

The period during which real output falls during a business cycle is called:

Accepted Answer

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

Question 16

The trough is good news because:

Accepted Answer

A)  it is the middle of the expansion phase of the business cycle. 
B)  production is at the highest level. 
C)  unemployment is low. 
D)  it is the starting point to improve economic conditions. 
A)  it is the middle of the expansion phase of the business cycle. 
B)  production is at the highest level. 
C)  unemployment is low. 
D)  it is the starting point to improve economic conditions.

Question 17

One of the goals of macroeconomic policy should be:

Accepted Answer

A)  to keep inflation at zero per cent. 
B)  to reduce the unemployment rate to zero. 
C)  to increase the productive potential of the economy. 
D)  to continually increase the saving rate. 
A)  to keep inflation at zero per cent. 
B)  to reduce the unemployment rate to zero. 
C)  to increase the productive potential of the economy. 
D)  to continually increase the saving rate.

Question 18

Endogenous growth theory suggests technological progress may have substantial positive externalities for society as a whole.

Accepted Answer

A) True 
 B)False

Question 19

In the Solow model, technological change:

Accepted Answer

A)  is not included in the model. 
B)  is assumed to be endogenous. 
C)  is assumed not to exist. 
D)  is assumed to be exogenous. 
A)  is not included in the model. 
B)  is assumed to be endogenous. 
C)  is assumed not to exist. 
D)  is assumed to be exogenous.

Question 20

Which of the following statements is correct regarding the Solow growth model?

Accepted Answer

A)  Increases in living standards will be achieved automatically in the long run. 
B)  An increase in the saving rate will always result in a higher level of output per person. 
C)  An increase in the saving rate will always result in a higher level of consumption per person. 
D)  The optimal saving rate will be achieved as the community is no better off by additional saving. 
A)  Increases in living standards will be achieved automatically in the long run. 
B)  An increase in the saving rate will always result in a higher level of output per person. 
C)  An increase in the saving rate will always result in a higher level of consumption per person. 
D)  The optimal saving rate will be achieved as the community is no better off by additional saving.

The point at which real output reaches a maximum during a business cycle is called the:

According to the Solow model, with constant technology, an increase in capital per worker will lead to a smaller increase in GDP per capita. This is explained by:

It is desirable to reduce the rise in unemployment during recession.

The business cycle is the:

According to the Solow growth model, technological progress:

The 'golden rule' of saving is:

A recession is a decline in real GDP lasting at least:

The 'golden rule' level of capital per worker in the Solow model implies:

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur, a country needs to:

If patent protection were not offered by governments, the result would be:

If you look for a job for 18 months after graduation, but fail to generate an offer, even after lowering your expectations, the economy is probably in the business cycle phase called:

What saving rate is optimal?

One country can have a higher level of output per worker because of:

The Solow growth model was the first economic model to show that long-term increases in living standards depended crucially on:

The period during which real output falls during a business cycle is called:

The trough is good news because:

One of the goals of macroeconomic policy should be:

Endogenous growth theory suggests technological progress may have substantial positive externalities for society as a whole.

In the Solow model, technological change:

Which of the following statements is correct regarding the Solow growth model?

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

The point at which real output reaches a maximum during a business cycle is called the:

According to the Solow model, with constant technology, an increase in capital per worker will lead to a smaller increase in GDP per capita. This is explained by:

It is desirable to reduce the rise in unemployment during recession.

The business cycle is the:

According to the Solow growth model, technological progress:

The 'golden rule' of saving is:

A recession is a decline in real GDP lasting at least:

The 'golden rule' level of capital per worker in the Solow model implies:

The law of diminishing returns in the Solow model implies that for sustained long-term economic growth to occur, a country needs to:

If patent protection were not offered by governments, the result would be:

If you look for a job for 18 months after graduation, but fail to generate an offer, even after lowering your expectations, the economy is probably in the business cycle phase called:

What saving rate is optimal?

One country can have a higher level of output per worker because of:

The Solow growth model was the first economic model to show that long-term increases in living standards depended crucially on:

The period during which real output falls during a business cycle is called:

The trough is good news because:

One of the goals of macroeconomic policy should be:

Endogenous growth theory suggests technological progress may have substantial positive externalities for society as a whole.

In the Solow model, technological change:

Which of the following statements is correct regarding the Solow growth model?

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