Question 1

Over time, real GDP tends to:

Accepted Answer

A)  fluctuate. 
B)  trend upward. 
C)  slow down. 
D)  trend downward. 
A)  fluctuate. 
B)  trend upward. 
C)  slow down. 
D)  trend downward.

Question 2

If real GDP is currently $500 billion, there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion, we can conclude with certainty that:

Accepted Answer

A)  the GDP gap is $100 billion. 
B)  there is no GDP gap. 
C)  there is a GDP gap. 
D)  the economy is operating above full employment. 
A)  the GDP gap is $100 billion. 
B)  there is no GDP gap. 
C)  there is a GDP gap. 
D)  the economy is operating above full employment.

Question 3

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 'golden rule' steady-state occurs when the level of capital per worker is:

Accepted Answer

A)  100. 
B)  120. 
C)  between 144 and 172.8. 
D)  172.8. 
A)  100. 
B)  120. 
C)  between 144 and 172.8. 
D)  172.8.

Question 4

A goal of macroeconomic policy should be to _____ business-cycle fluctuations in an economy.

Accepted Answer

A)  increase 
B)  reduce 
C)  ignore 
D)  encourage 
A)  increase 
B)  reduce 
C)  ignore 
D)  encourage

Question 5

The Solow growth model attempts to explain:

Accepted Answer

A)  how consumption, saving, capital, labour and technology combine to determine long-term economic growth. 
B)  how technology is endogenous to economic growth. 
C)  how government spending, saving, capital, labour and technology combine to determine long-term economic growth. 
D)  how capital and labour combine to determine short-term economic growth. 
A)  how consumption, saving, capital, labour and technology combine to determine long-term economic growth. 
B)  how technology is endogenous to economic growth. 
C)  how government spending, saving, capital, labour and technology combine to determine long-term economic growth. 
D)  how capital and labour combine to determine short-term economic growth.

Question 6

Economic growth is measured by the annual percentage increase in a nation's level of:

Accepted Answer

A)  nominal GDP. 
B)  real GDP. 
C)  real GDP deflator. 
D)  economic indicators. 
A)  nominal GDP. 
B)  real GDP. 
C)  real GDP deflator. 
D)  economic indicators.

Question 7

According to the Solow growth model, the only way for a country to enjoy long-term economic growth is through:

Accepted Answer

A)  increasing saving to the optimal steady-state level. 
B)  maximising consumption per worker. 
C)  technological progress. 
D)  increasing the quantity of capital per worker. 
A)  increasing saving to the optimal steady-state level. 
B)  maximising consumption per worker. 
C)  technological progress. 
D)  increasing the quantity of capital per worker.

Question 8

It is important to increase inflation fast during expansion.

Accepted Answer

A) True 
 B)False

Question 9

The economic cost of unemployment is the loss of potential output which can never be realised.

Accepted Answer

A) True 
 B)False

Question 10

In terms of the Solow growth model, the recent situation in Japan is perhaps an example of where a country has:

Accepted Answer

A)  failed to increase its savings to the optimal rate. 
B)  been consistently able to achieve its optimal savings rate. 
C)  exceeded its optimal savings rate. 
D)  put too much emphasis on current consumption at the expense of future generations. 
A)  failed to increase its savings to the optimal rate. 
B)  been consistently able to achieve its optimal savings rate. 
C)  exceeded its optimal savings rate. 
D)  put too much emphasis on current consumption at the expense of future generations.

Question 11

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

Accepted Answer

A)  Increases in living standards are not necessarily guaranteed in an economy. 
B)  The optimal saving rate is achieved when saving per person is maximised. 
C)  The optimal saving rate is achieved when consumption per capita is maximised. 
D)  The optimal saving rate is derived under the assumption that technology is constant. 
A)  Increases in living standards are not necessarily guaranteed in an economy. 
B)  The optimal saving rate is achieved when saving per person is maximised. 
C)  The optimal saving rate is achieved when consumption per capita is maximised. 
D)  The optimal saving rate is derived under the assumption that technology is constant.

Question 12

A trough is the turning point in national output between recession and peak.

Accepted Answer

A) True 
 B)False

Question 13

The endogenous growth model suggests that technological progress in an economy:

Accepted Answer

A)  may lead to further improvements in technology. 
B)  occurs randomly. 
C)  is not as important as suggested in the Solow growth model. 
D)  depends crucially on the level of consumption. 
A)  may lead to further improvements in technology. 
B)  occurs randomly. 
C)  is not as important as suggested in the Solow growth model. 
D)  depends crucially on the level of consumption.

Question 14

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

Accepted Answer

A)  current generations may not want to sacrifice investment for the benefit of future
Generations. 
B)  current generations may not want to sacrifice consumption for the benefit of future
Generations. 
C)  current generations may not want to sacrifice savings for the benefit of future
Generations. 
D)  future generations may not want to have to sacrifice consumption for the benefit of current generations. 
A)  current generations may not want to sacrifice investment for the benefit of future
Generations. 
B)  current generations may not want to sacrifice consumption for the benefit of future
Generations. 
C)  current generations may not want to sacrifice savings for the benefit of future
Generations. 
D)  future generations may not want to have to sacrifice consumption for the benefit of current generations.

Question 15

Which of the following is not a part of the business cycle?

Accepted Answer

A)  Peak. 
B)  Trough. 
C)  Existence. 
D)  Recession. 
A)  Peak. 
B)  Trough. 
C)  Existence. 
D)  Recession.

Question 16

The 'golden rule', steady-state in the Solow growth model occurs when:

Accepted Answer

A)  the level at which the economy will be made no better off is by additional saving. 
B)  the level of output per person is maximised. 
C)  the level of savings per person is minimised. 
D)  the level of consumption per person is maximised. 
A)  the level at which the economy will be made no better off is by additional saving. 
B)  the level of output per person is maximised. 
C)  the level of savings per person is minimised. 
D)  the level of consumption per person is maximised.

Question 17

Arguments for reducing business-cycle fluctuations include which of the following?

Accepted Answer

A)  These fluctuations do not affect the long-term growth potential. 
B)  It increases the costs of unemployment. 
C)  It increases the costs of inflation. 
D)  It reduces the negative impact on the community. 
A)  These fluctuations do not affect the long-term growth potential. 
B)  It increases the costs of unemployment. 
C)  It increases the costs of inflation. 
D)  It reduces the negative impact on the community.

Question 18

Retail sales data is an example of a:

Accepted Answer

A)  leading indicator. 
B)  lagging indicator. 
C)  coincident indicator. 
D)  goal of macroeconomic policy. 
E)  countercyclical indicator. 
A)  leading indicator. 
B)  lagging indicator. 
C)  coincident indicator. 
D)  goal of macroeconomic policy. 
E)  countercyclical indicator.

Question 19

Exogenous technological progress is the progress that:

Accepted Answer

A)  depends on the economic growth process. 
B)  is independent of the economic growth process. 
C)  is undefinable. 
D)  is growing slowly according to spending in the economy. 
A)  depends on the economic growth process. 
B)  is independent of the economic growth process. 
C)  is undefinable. 
D)  is growing slowly according to spending in the economy.

Question 20

The 'golden rule', steady-state level of capital per worker in the Solow model is where:

Accepted Answer

A)  the savings rate equals zero. 
B)  the savings rate equals the consumption rate. 
C)  the savings rate results in the maximum level of output per worker. 
D)  the savings rate results in the maximum level of consumption per worker. 
A)  the savings rate equals zero. 
B)  the savings rate equals the consumption rate. 
C)  the savings rate results in the maximum level of output per worker. 
D)  the savings rate results in the maximum level of consumption per worker.

Over time, real GDP tends to:

If real GDP is currently $500 billion, there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion, we can conclude with certainty that:

A goal of macroeconomic policy should be to _____ business-cycle fluctuations in an economy.

The Solow growth model attempts to explain:

Economic growth is measured by the annual percentage increase in a nation's level of:

According to the Solow growth model, the only way for a country to enjoy long-term economic growth is through:

It is important to increase inflation fast during expansion.

The economic cost of unemployment is the loss of potential output which can never be realised.

In terms of the Solow growth model, the recent situation in Japan is perhaps an example of where a country has:

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

A trough is the turning point in national output between recession and peak.

The endogenous growth model suggests that technological progress in an economy:

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

Which of the following is not a part of the business cycle?

The 'golden rule', steady-state in the Solow growth model occurs when:

Arguments for reducing business-cycle fluctuations include which of the following?

Retail sales data is an example of a:

Exogenous technological progress is the progress that:

The 'golden rule', steady-state level of capital per worker in the Solow model is where:

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

Over time, real GDP tends to:

If real GDP is currently $500 billion, there is 3 per cent cyclical unemployment and the potential nominal GDP is $600 billion, we can conclude with certainty that:

A goal of macroeconomic policy should be to _____ business-cycle fluctuations in an economy.

The Solow growth model attempts to explain:

Economic growth is measured by the annual percentage increase in a nation's level of:

According to the Solow growth model, the only way for a country to enjoy long-term economic growth is through:

It is important to increase inflation fast during expansion.

The economic cost of unemployment is the loss of potential output which can never be realised.

In terms of the Solow growth model, the recent situation in Japan is perhaps an example of where a country has:

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

A trough is the turning point in national output between recession and peak.

The endogenous growth model suggests that technological progress in an economy:

One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:

Which of the following is not a part of the business cycle?

The 'golden rule', steady-state in the Solow growth model occurs when:

Arguments for reducing business-cycle fluctuations include which of the following?

Retail sales data is an example of a:

Exogenous technological progress is the progress that:

The 'golden rule', steady-state level of capital per worker in the Solow model is where:

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