Question 1

Economists have not found a way to predict when recessions will begin and end.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Which of the following is most likely to be able to sustain economic growth in an economy?

Accepted Answer

A) sustained increases in the labor force participation rate 
B) technological change 
C) increases in capital per hour worked 
D) accumulations of economic resources 
A) sustained increases in the labor force participation rate 
B) technological change 
C) increases in capital per hour worked 
D) accumulations of economic resources

Question 4

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 5

If real GDP grows by 3% in 2014,3.2% in 2015,and 2.5% in 2016,what is the average annual growth rate of real GDP?

Accepted Answer

A) 2.6% 
B) 2.9% 
C) 3.1% 
D) 4.2% 
A) 2.6% 
B) 2.9% 
C) 3.1% 
D) 4.2%

Question 6

In a closed economy,which of the following components of GDP is not included?

Accepted Answer

A) investment 
B) government spending 
C) net exports 
D) consumption 
A) investment 
B) government spending 
C) net exports 
D) consumption

Question 7

At the end of an expansion,wages of workers are usually rising faster than prices.

Accepted Answer

A) True 
 B)False

Question 8

If technological change increases the profitability of new investment for firms,then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.

Accepted Answer

A) supply;right;fall 
B) supply;left;rise 
C) demand;right;rise 
D) demand;left;fall 
A) supply;right;fall 
B) supply;left;rise 
C) demand;right;rise 
D) demand;left;fall

Question 9

Which of the following would encourage economic growth through increases in the capital stock?

Accepted Answer

A) a change from an income tax to a consumption tax 
B) an increase in household saving 
C) a decrease in the government deficit 
D) all of the above 
A) a change from an income tax to a consumption tax 
B) an increase in household saving 
C) a decrease in the government deficit 
D) all of the above

Question 10

Figure 21-4  
-Refer to Figure 21-4.Which of the following is consistent with the graph depicted?

Accepted Answer

A) an increase in household income 
B) an increase in transfer payments to households 
C) an increase in the proportion of income after net taxes used for consumption 
D) an increase in tax revenues collected by the government 
A) an increase in household income 
B) an increase in transfer payments to households 
C) an increase in the proportion of income after net taxes used for consumption 
D) an increase in tax revenues collected by the government

Question 11

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Accepted Answer

Private saving is equal to Y + TR - C -

Question 12

Explain how unemployment changes over the business cycle.Why do these changes occur?

Accepted Answer

Unemployment will fall during an expansi

Question 13

If there is public dissaving,investment spending in the economy will decline,holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 14

If government saving is negative,then

Accepted Answer

A) T > TR. B) G > T. C) T - TR < G. D) Y + TR < C - T. A) T > TR. B) G > T. C) T - TR < G. D) Y + TR < C - T.

Question 15

Empirical evidence shows that the impact of government budget deficits and surpluses on the equilibrium interest rate is quite large.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

At the end of World War II in 1945,many economists and business managers expected that the U.S.economy would enter a severe recession.At that time,Sears and Montgomery Ward were the two largest department store chains in the country.Sears CEO Robert Wood expected continuing prosperity and opened new stores.Montgomery Ward CEO Sewell Avery expected falling incomes and rising unemployment and closed a number of existing stores.The results of their actions were seen during the late 1940s,when

Accepted Answer

A) Sears declared bankruptcy and was purchased by Montgomery Ward. 
B) Montgomery Ward weathered the economic downturn in better financial shape than Sears. 
C) Sears rapidly gained market share at Montgomery Ward's expense. 
D) Sears had to close many of the new stores it had opened following the end of the war. 
A) Sears declared bankruptcy and was purchased by Montgomery Ward. 
B) Montgomery Ward weathered the economic downturn in better financial shape than Sears. 
C) Sears rapidly gained market share at Montgomery Ward's expense. 
D) Sears had to close many of the new stores it had opened following the end of the war.

Question 19

Human capital refers to which of the following?

Accepted Answer

A) the quantity of goods and services that can be produced by one worker or by one hour of work 
B) the accumulated knowledge and skills workers acquire from education and training or from their life experiences 
C) manufactured goods that are used to produce other goods and services 
D) physical equipment that is made by human laborers,not machines 
A) the quantity of goods and services that can be produced by one worker or by one hour of work 
B) the accumulated knowledge and skills workers acquire from education and training or from their life experiences 
C) manufactured goods that are used to produce other goods and services 
D) physical equipment that is made by human laborers,not machines

Question 20

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.

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

Economists have not found a way to predict when recessions will begin and end.

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

Which of the following is most likely to be able to sustain economic growth in an economy?

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

If real GDP grows by 3% in 2014,3.2% in 2015,and 2.5% in 2016,what is the average annual growth rate of real GDP?

In a closed economy,which of the following components of GDP is not included?

At the end of an expansion,wages of workers are usually rising faster than prices.

If technological change increases the profitability of new investment for firms,then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.

Which of the following would encourage economic growth through increases in the capital stock?

Figure 21-4 -Refer to Figure 21-4.Which of the following is consistent with the graph depicted?

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Explain how unemployment changes over the business cycle.Why do these changes occur?

If there is public dissaving,investment spending in the economy will decline,holding everything else constant.

If government saving is negative,then

Empirical evidence shows that the impact of government budget deficits and surpluses on the equilibrium interest rate is quite large.

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

Purchases of Huggies diapers should

Human capital refers to which of the following?

Countries with high rates of economic growth tend to have

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

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

If technological change increases the profitability of new investment for firms,then the curve for loanable funds will shift to the and the equilibrium real interest rate will .