Question 1

________ are financial securities that represent promises to repay a fixed amount of funds.

Accepted Answer

A) Stocks 
B) Bonds 
C) Interest rates 
D) Mutual funds 
A) Stocks 
B) Bonds 
C) Interest rates 
D) Mutual funds

Question 2

Which of the following is not one of the key services provided by the financial system?

Accepted Answer

A) decreasing taxes 
B) risk sharing 
C) liquidity 
D) generating information 
A) decreasing taxes 
B) risk sharing 
C) liquidity 
D) generating information

Question 3

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Accepted Answer

A) Prior to 1900,the length of expansions equaled the length of recessions. 
B) Prior to 1900,the length of expansions were much less than the length of recessions. 
C) Prior to 1900,the length of expansions were much longer than the length of recessions. 
D) Prior to 1900,the length of recessions were brief and almost nonexistent. 
A) Prior to 1900,the length of expansions equaled the length of recessions. 
B) Prior to 1900,the length of expansions were much less than the length of recessions. 
C) Prior to 1900,the length of expansions were much longer than the length of recessions. 
D) Prior to 1900,the length of recessions were brief and almost nonexistent.

Question 4

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 5

When the government runs a deficit,which of the following is true?

Accepted Answer

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

Question 6

Which of the following statements about the budget deficit is true?

Accepted Answer

A) In 1992,the federal budget was balanced. 
B) In 2000,the federal budget was in surplus. 
C) In 2004,the federal budget was in surplus. 
D) In 2011,the federal budget was in surplus. 
A) In 1992,the federal budget was balanced. 
B) In 2000,the federal budget was in surplus. 
C) In 2004,the federal budget was in surplus. 
D) In 2011,the federal budget was in surplus.

Question 7

In 2003,Congress passed a tax cut that included a reduction in the marginal tax rate on stock dividends.This essentially increased the after-tax rate of return on stocks that offer dividends.Using the loanable funds market,describe what will happen to saving,investment,economic growth,the real interest rate,and the quantity of loanable funds exchanged.

Accepted Answer

Dividends are the portion of corporate p

Question 8

In a closed economy,private saving is equal to which of the following? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Accepted Answer

A) Y - C - T 
B) Y - G - T 
C) Y - G - T + TR 
D) Y + TR - C - T 
A) Y - C - T 
B) Y - G - T 
C) Y - G - T + TR 
D) Y + TR - C - T

Question 9

Financial markets and financial intermediaries comprise the financial system.

Accepted Answer

A) True 
 B)False

Question 10

The Business Cycle Dating Committee,a part of the ________,officially decides when a recession begins and ends.

Accepted Answer

A) federal government 
B) Bureau of Labor Statistics 
C) National Bureau of Economic Research 
D) Federal Reserve 
A) federal government 
B) Bureau of Labor Statistics 
C) National Bureau of Economic Research 
D) Federal Reserve

Question 11

The best measure of the standard of living is

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) nominal GDP per capita. 
D) real GDP per capita. 
A) nominal GDP. 
B) real GDP. 
C) nominal GDP per capita. 
D) real GDP per capita.

Question 12

For the recessions in the United States since the 1950s

Accepted Answer

A) inflation has been nonexistent. 
B) the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C) the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D) deflation occurs. 
A) inflation has been nonexistent. 
B) the inflation rate rises on average by about 2.5 percentage points 12 months after a recession begins. 
C) the inflation rate falls on average by about 2.5 percentage points 12 months after a recession begins. 
D) deflation occurs.

Question 13

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel and responded by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

Accepted Answer

A) continue expanding and was able to maintain or enhance the company's market share. 
B) continue expanding and the company ended up losing significant market share. 
C) curtail expansion plans,and by significantly cutting back on expansion was able to maintain the company's market share. 
D) curtail expansion plans and the company ended up losing significant market share. 
A) continue expanding and was able to maintain or enhance the company's market share. 
B) continue expanding and the company ended up losing significant market share. 
C) curtail expansion plans,and by significantly cutting back on expansion was able to maintain the company's market share. 
D) curtail expansion plans and the company ended up losing significant market share.

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

________ are financial securities that represent promises to repay a fixed amount of funds.

Which of the following is not one of the key services provided by the financial system?

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

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

When the government runs a deficit,which of the following is true?

Which of the following statements about the budget deficit is true?

In a closed economy,private saving is equal to which of the following? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Financial markets and financial intermediaries comprise the financial system.

The Business Cycle Dating Committee,a part of the ________,officially decides when a recession begins and ends.

The best measure of the standard of living is

For the recessions in the United States since the 1950s

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel and responded by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

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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