Question 1

Centrally-planned economies tend to grow more quickly than market economies.

Accepted Answer

A) True 
 B)False

Question 2

Typically,as an economy begins to emerge from a recessionary phase of the business cycle,

Accepted Answer

A)  unemployment falls immediately. 
B)  unemployment continues to rise. 
C)  inflation begins to fall. 
D)  investment begins to fall. 
A)  unemployment falls immediately. 
B)  unemployment continues to rise. 
C)  inflation begins to fall. 
D)  investment begins to fall.

Question 3

How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes)affect private saving in the economy?

Accepted Answer

A)  Private saving will increase by the amount of increase in the budget surplus. 
B)  Private saving will decrease by the amount of increase in the budget surplus. 
C)  Private saving will decrease by less than the amount of increase in the budget surplus. 
D)  Private saving will be unaffected by the increase in the budget surplus. 
A)  Private saving will increase by the amount of increase in the budget surplus. 
B)  Private saving will decrease by the amount of increase in the budget surplus. 
C)  Private saving will decrease by less than the amount of increase in the budget surplus. 
D)  Private saving will be unaffected by the increase in the budget surplus.

Question 4

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

Accepted Answer

A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system. 
A)  avoid playing any role in developing communication systems. 
B)  provide secure rights to private property. 
C)  establish an independent court system that enforces contracts. 
D)  facilitate the development of an efficient financial system.

Question 5

If labor productivity growth slows down in a country,this means that the growth rate in ________ has declined.

Accepted Answer

A)  labor force participation 
B)  the quantity of goods or services that can be produced by one hour of work 
C)  the working-age population 
D)  nominal GDP 
A)  labor force participation 
B)  the quantity of goods or services that can be produced by one hour of work 
C)  the working-age population 
D)  nominal GDP

Question 6

When potential GDP increases,is it necessarily the case that real GDP increases as well? Explain.

Accepted Answer

An increase in potential GDP is a result

Question 7

Since 1900,real GDP in the United States has grown

Accepted Answer

A)  more rapidly than the population. 
B)  more slowly than the population. 
C)  as rapidly as the population. 
D)  in a random unpredictable manner relative to the population. 
A)  more rapidly than the population. 
B)  more slowly than the population. 
C)  as rapidly as the population. 
D)  in a random unpredictable manner relative to the population.

Question 8

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Accepted Answer

Potential GDP is the level of GDP attain

Question 9

Figure 21-2  
-Refer to Figure 21-2.Which of the following is consistent with the graph depicted above?

Accepted Answer

A)  An expected expansion increases the profitability of new investment. 
B)  The government runs a budget surplus. 
C)  There is a shift from an income tax to a consumption tax. 
D)  New government regulations decrease the profitability of new investment. 
A)  An expected expansion increases the profitability of new investment. 
B)  The government runs a budget surplus. 
C)  There is a shift from an income tax to a consumption tax. 
D)  New government regulations decrease the profitability of new investment.

Question 10

Figure 21-5  
-Refer to Figure 21-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

Accepted Answer

A)  A to B 
B)  B to A 
C)  B to C 
D)  C to A 
A)  A to B 
B)  B to A 
C)  B to C 
D)  C to A

Question 11

Economist Robert Fogel has estimated that by the year 2040,individuals in the United States will be spending

Accepted Answer

A)  more time in the workforce and more time in leisure activities than they do today. 
B)  less time in the workforce and less time in leisure activities than they do today. 
C)  less time in the workforce and more time in leisure activities than they do today. 
D)  more time in the workforce and less time in leisure activities than they do today. 
A)  more time in the workforce and more time in leisure activities than they do today. 
B)  less time in the workforce and less time in leisure activities than they do today. 
C)  less time in the workforce and more time in leisure activities than they do today. 
D)  more time in the workforce and less time in leisure activities than they do today.

Question 12

Which of the following will increase investment spending in the economy,holding everything else constant?

Accepted Answer

A)  an increase in the federal government surplus 
B)  an increase in the budget deficit 
C)  an increase in consumer dissavings 
D)  an increase in transfer payments 
A)  an increase in the federal government surplus 
B)  an increase in the budget deficit 
C)  an increase in consumer dissavings 
D)  an increase in transfer payments

Question 13

What is investment in a closed economy if you have the following economic data? Y = $10 trillion
C = $5 trillion
TR = $2 trillion
G = $2 trillion

Accepted Answer

A)  $2 trillion 
B)  $3 trillion 
C)  $5 trillion 
D)  cannot be determined without information on taxes (T) 
A)  $2 trillion 
B)  $3 trillion 
C)  $5 trillion 
D)  cannot be determined without information on taxes (T)

Question 14

The growth rate of real GDP in the United States rises from 4.2% to 4.4%.Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

Accepted Answer

The "Rule of 70" states that the number

Question 15

According to the "Rule of 70",it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

Accepted Answer

A)  4 percent. 
B)  12.25 percent. 
C)  17.5 percent. 
D)  28 percent. 
A)  4 percent. 
B)  12.25 percent. 
C)  17.5 percent. 
D)  28 percent.

Question 16

Table 21-1
  
-Refer to Table 21-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?

Accepted Answer

A)  1% 
B)  2% 
C)  3% 
D)  4% 
A)  1% 
B)  2% 
C)  3% 
D)  4%

Question 17

Which of the following will not occur as the result of a decrease in net taxes?

Accepted Answer

A)  decreased household saving 
B)  decreased government saving 
C)  a shift to the left of the supply curve for loanable funds 
D)  all of the above 
A)  decreased household saving 
B)  decreased government saving 
C)  a shift to the left of the supply curve for loanable funds 
D)  all of the above

Question 18

If real GDP in a small country in 2010 is $8 billion and real GDP in the same country in 2011 is $8.3 billion,the growth rate of real GDP between 2010 and 2011

Accepted Answer

A)  is 3.0%. 
B)  is 3.6%. 
C)  is 3.75%. 
D)  cannot be determined from the information given. 
A)  is 3.0%. 
B)  is 3.6%. 
C)  is 3.75%. 
D)  cannot be determined from the information given.

Question 19

During the expansion phase of the business cycle,which of the following eventually increases?

Accepted Answer

A)  production 
B)  employment 
C)  income 
D)  all of the above 
A)  production 
B)  employment 
C)  income 
D)  all of the above

Question 20

Countries without well-developed financial systems are able to sustain high levels of economic growth.

Accepted Answer

A) True 
 B)False

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

Centrally-planned economies tend to grow more quickly than market economies.

Typically,as an economy begins to emerge from a recessionary phase of the business cycle,

How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes)affect private saving in the economy?

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

If labor productivity growth slows down in a country,this means that the growth rate in ________ has declined.

When potential GDP increases,is it necessarily the case that real GDP increases as well? Explain.

Since 1900,real GDP in the United States has grown

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Figure 21-2 -Refer to Figure 21-2.Which of the following is consistent with the graph depicted above?

Figure 21-5 -Refer to Figure 21-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

Economist Robert Fogel has estimated that by the year 2040,individuals in the United States will be spending

Which of the following will increase investment spending in the economy,holding everything else constant?

What is investment in a closed economy if you have the following economic data? Y = $10 trillion C = $5 trillion TR = $2 trillion G = $2 trillion

The growth rate of real GDP in the United States rises from 4.2% to 4.4%.Explain and calculate how this increase in the growth rate of real GDP affects the number of years it will take for real GDP to double.

According to the "Rule of 70",it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

Table 21-1 -Refer to Table 21-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?

Which of the following will not occur as the result of a decrease in net taxes?

If real GDP in a small country in 2010 is $8 billion and real GDP in the same country in 2011 is $8.3 billion,the growth rate of real GDP between 2010 and 2011

During the expansion phase of the business cycle,which of the following eventually increases?

Countries without well-developed financial systems are able to sustain high levels of economic growth.

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

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