Question 1

There is a federal budget deficit when

Accepted Answer

A)  the government spends less that it collects in taxes. 
B)  the government spends more that it collects in taxes. 
C)  the government spends the same amount it collects in taxes. 
D)  taxes are too high. 
A)  the government spends less that it collects in taxes. 
B)  the government spends more that it collects in taxes. 
C)  the government spends the same amount it collects in taxes. 
D)  taxes are too high.

Question 2

How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?

Accepted Answer

A)  The equilibrium interest rate would rise. 
B)  The equilibrium interest rate would fall. 
C)  The equilibrium interest rate would be unaffected. 
D)  The equilibrium interest rate may rise or fall based on whether the demand or supply of loanable funds changes. 
A)  The equilibrium interest rate would rise. 
B)  The equilibrium interest rate would fall. 
C)  The equilibrium interest rate would be unaffected. 
D)  The equilibrium interest rate may rise or fall based on whether the demand or supply of loanable funds changes.

Question 3

Under which of the following circumstances would private saving be positive in a closed economy?

Accepted Answer

A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion 
A)  Y = $10 trillion C = $5 trillion
TR = $2 trillion
G = $2 trillion
Public saving = $1 trillion 
B)  Y = $9 trillion C = $5 trillion
TR = $1 trillion
G = $1 trillion
Public saving = $3 trillion 
C)  Y = $8 trillion C = $2 trillion
TR = $4 trillion
G = $2 trillion
Public saving = $4 trillion 
D)  Y = $6 trillion C = $2 trillion
TR = $8 trillion
G = $3 trillion
Public saving = $1 trillion

Question 4

In the United States,the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

Accepted Answer

A)  growth in capital per hour accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change 
A)  growth in capital per hour accompanied by technological change 
B)  increases in labor force participation rates as workers who are out of the labor force pursue rising wages 
C)  a shift of workers in the economy from the agricultural sector to the nonagricultural sector 
D)  an influx of immigrant labor into an economy without any accompanying technological change

Question 6

According to the National Bureau of Economic Research,the recession that began in December 2007

Accepted Answer

A)  lasted 12 months. 
B)  lasted 18 months. 
C)  lasted 27 months. 
D)  had not ended by December 2011. 
A)  lasted 12 months. 
B)  lasted 18 months. 
C)  lasted 27 months. 
D)  had not ended by December 2011.

Question 7

Borrowers are ________ of loanable funds,and lenders are ________ of loanable funds.

Accepted Answer

A)  demanders; suppliers 
B)  suppliers; demanders 
C)  suppliers; suppliers 
D)  demanders; demanders 
A)  demanders; suppliers 
B)  suppliers; demanders 
C)  suppliers; suppliers 
D)  demanders; demanders

Question 8

The total amount of physical capital available in a country is know as the country's

Accepted Answer

A)  labor productivity. 
B)  savings. 
C)  investment. 
D)  capital stock. 
A)  labor productivity. 
B)  savings. 
C)  investment. 
D)  capital stock.

Question 9

Increasing the amount of consumption spending and reducing the amount of savings ________ investment expenditures,and ________ long-run economic growth in the economy.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 10

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

Accepted Answer

A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million. 
A)  Public saving is $500 million. 
B)  The budget deficit is $100 million. 
C)  The budget deficit is $500 million. 
D)  Public saving is $100 million.

Question 11

Purchases of Huggies diapers should

Accepted Answer

A)  remain fairly constant over the business cycle. 
B)  increase in recessions and decrease in expansions. 
C)  decrease in recessions and increase in expansions. 
D)  increase in recessions and remain constant in expansions. 
A)  remain fairly constant over the business cycle. 
B)  increase in recessions and decrease in expansions. 
C)  decrease in recessions and increase in expansions. 
D)  increase in recessions and remain constant in expansions.

Question 12

What is "human capital," and how does human capital affect labor productivity and economic growth?

Accepted Answer

Human capital is the accumulated knowled

Question 13

The demand for loanable funds is downward sloping because the ________ the interest rate,the ________ the number of profitable investment projects a firm can undertake,and the ________ the quantity demanded of loanable funds.

Accepted Answer

A)  lower; greater; greater 
B)  lower; smaller; greater 
C)  greater; greater; greater 
D)  greater; smaller; greater 
A)  lower; greater; greater 
B)  lower; smaller; greater 
C)  greater; greater; greater 
D)  greater; smaller; greater

Question 14

What is the name of the organization that defines business cycle peaks and troughs in the United States?

Accepted Answer

A)  the Bureau of Labor Statistics 
B)  the Federal Reserve 
C)  the National Bureau of Economic Research 
D)  the National Peak and Trough Committee 
A)  the Bureau of Labor Statistics 
B)  the Federal Reserve 
C)  the National Bureau of Economic Research 
D)  the National Peak and Trough Committee

Question 15

Liquidity refers to

Accepted Answer

A)  the ease with a stock can be traded for a bond. 
B)  the ease with which a financial security can be traded for cash. 
C)  the number of times a dollar changes hands in the creation of GDP in an economy. 
D)  the number of shares of stock a corporation issues. 
A)  the ease with a stock can be traded for a bond. 
B)  the ease with which a financial security can be traded for cash. 
C)  the number of times a dollar changes hands in the creation of GDP in an economy. 
D)  the number of shares of stock a corporation issues.

Question 16

Financial securities that represent promises to repay a fixed amount of funds are known as

Accepted Answer

A)  bonds. 
B)  stocks. 
C)  pension funds. 
D)  insurance premiums. 
A)  bonds. 
B)  stocks. 
C)  pension funds. 
D)  insurance premiums.

Question 17

If real GDP per capita measured in 2000 dollars was $6,000 in 1950 and $48,000 in 2010,we would say that in the year 2010,the average American could buy ________ times as many goods and services as the average American in 1950.

Accepted Answer

A)  1/8 
B)  4 
C)  8 
D)  12 
A)  1/8 
B)  4 
C)  8 
D)  12

Question 18

Countries with high rates of economic growth tend to have

Accepted Answer

A)  a labor force that is more productive. 
B)  a lower life expectancy at birth. 
C)  low rates of technological advancement. 
D)  a declining incidence of business cycle fluctuations. 
A)  a labor force that is more productive. 
B)  a lower life expectancy at birth. 
C)  low rates of technological advancement. 
D)  a declining incidence of business cycle fluctuations.

Question 19

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 20

If you invest $10,000 in a bond that earns 8% interest per year,how many years will it take to double your money?

Accepted Answer

A)  1 year and 3 months 
B)  2 years and 6 months 
C)  8 years 
D)  8 years and 9 months 
A)  1 year and 3 months 
B)  2 years and 6 months 
C)  8 years 
D)  8 years and 9 months

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

There is a federal budget deficit when

How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?

Under which of the following circumstances would private saving be positive in a closed economy?

In the United States,the average length of expansions from 1950 to 2009 was more than twice as long than they were from 1900 to 1950.

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

According to the National Bureau of Economic Research,the recession that began in December 2007

Borrowers are ________ of loanable funds,and lenders are ________ of loanable funds.

The total amount of physical capital available in a country is know as the country's

Increasing the amount of consumption spending and reducing the amount of savings ________ investment expenditures,and ________ long-run economic growth in the economy.

If government purchases are $400 million,taxes are $700 million,and transfers are $200 million,which of the following is true?

Purchases of Huggies diapers should

What is "human capital," and how does human capital affect labor productivity and economic growth?

The demand for loanable funds is downward sloping because the ________ the interest rate,the ________ the number of profitable investment projects a firm can undertake,and the ________ the quantity demanded of loanable funds.

What is the name of the organization that defines business cycle peaks and troughs in the United States?

Liquidity refers to

Financial securities that represent promises to repay a fixed amount of funds are known as

If real GDP per capita measured in 2000 dollars was $6,000 in 1950 and $48,000 in 2010,we would say that in the year 2010,the average American could buy ________ times as many goods and services as the average American in 1950.

Countries with high rates of economic growth tend to have

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

If you invest $10,000 in a bond that earns 8% interest per year,how many years will it take to double your money?

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

Borrowers are of loanable funds,and lenders are of loanable funds.

Increasing the amount of consumption spending and reducing the amount of savings investment expenditures,and long-run economic growth in the economy.

The demand for loanable funds is downward sloping because the the interest rate,the the number of profitable investment projects a firm can undertake,and the the quantity demanded of loanable funds.