Question 1

A(n)________ comes to an end with a business cycle ________.

Accepted Answer

A) recession;peak 
B) recession;trough 
C) expansion;trough 
D) expansion;bubble 
A) recession;peak 
B) recession;trough 
C) expansion;trough 
D) expansion;bubble

Question 2

Suppose that real GDP for 2015 was $10,000 billion and real GDP for 2016 was $9,500 billion.What is the rate of growth of real GDP between 2015 and 2016?

Accepted Answer

A) -10% 
B) -5% 
C) -2% 
D) -1% 
A) -10% 
B) -5% 
C) -2% 
D) -1%

Question 3

Labor productivity is

Accepted Answer

A) the quantity of output produced in one hour by several workers. 
B) the quantity of capital one worker can produce in one day. 
C) the quantity of output produced by one worker or by one hour of work. 
D) the quantity of output produced in one hour by one machine. 
A) the quantity of output produced in one hour by several workers. 
B) the quantity of capital one worker can produce in one day. 
C) the quantity of output produced by one worker or by one hour of work. 
D) the quantity of output produced in one hour by one machine.

Question 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

If technological change increases the profitability of new investments for firms,then the ________ curve for loanable funds will shift to the ________.

Accepted Answer

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

Question 7

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Accepted Answer

A) technology. 
B) labor productivity. 
C) real GDP. 
D) human capital. 
A) technology. 
B) labor productivity. 
C) real GDP. 
D) human capital.

Question 8

Potential GDP is defined as

Accepted Answer

A) the maximum of GDP that the economy can produce. 
B) the amount of GDP produced if there is no frictional unemployment. 
C) the level of GDP attained when all firms are producing at capacity. 
D) the amount of GDP produced if there is no structural unemployment. 
A) the maximum of GDP that the economy can produce. 
B) the amount of GDP produced if there is no frictional unemployment. 
C) the level of GDP attained when all firms are producing at capacity. 
D) the amount of GDP produced if there is no structural unemployment.

Question 9

What two factors are the keys to determining labor productivity?

Accepted Answer

A) the business cycle and the growth rate of real GDP 
B) the growth rate of real GDP and the interest rate 
C) technology and the quantity of capital per hour worked 
D) the average level of education of the workforce and the price level 
A) the business cycle and the growth rate of real GDP 
B) the growth rate of real GDP and the interest rate 
C) technology and the quantity of capital per hour worked 
D) the average level of education of the workforce and the price level

Question 10

Which of the following is not a reason why the U.S.economy has been more stable since 1950?

Accepted Answer

A) Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP. 
B) The government has actively pursued policy to combat recessions and prolong expansions. 
C) Unemployment insurance and other government programs curtail the decline in spending that occurs during a recession. 
D) Services have become a larger fraction of GDP and goods have become a smaller fraction of GDP. 
A) Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP. 
B) The government has actively pursued policy to combat recessions and prolong expansions. 
C) Unemployment insurance and other government programs curtail the decline in spending that occurs during a recession. 
D) Services have become a larger fraction of GDP and goods have become a smaller fraction of GDP.

Question 11

As the economy nears the end of a recession,which of the following do we typically see?

Accepted Answer

A) further decreases in consumer spending 
B) increased spending on capital goods by firms 
C) increasing interest rates 
D) all of the above 
A) further decreases in consumer spending 
B) increased spending on capital goods by firms 
C) increasing interest rates 
D) all of the above

Question 12

Actual real GDP will be above potential GDP if

Accepted Answer

A) firms are producing below capacity. 
B) firms are producing at capacity. 
C) firms are producing above capacity. 
D) inflation is rising. 
A) firms are producing below capacity. 
B) firms are producing at capacity. 
C) firms are producing above capacity. 
D) inflation is rising.

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

Between 1950 and 2009,the average length of recessions in the United States was

Accepted Answer

A) 11 months. 
B) two years. 
C) three months. 
D) eighteen months. 
A) 11 months. 
B) two years. 
C) three months. 
D) eighteen months.

Question 15

Figure 21-6  
-Refer to Figure 21-6.The market is in equilibrium.If the government budget deficit rises,which of the following would you expect to see?

Accepted Answer

A) The quantity of loanable funds demanded by firms will rise above $120 million. 
B) The quantity of loanable funds demanded by firms will fall below $120 million. 
C) The budget deficit will have no impact on the quantity of loanable funds demanded by firms. 
D) The interest rate will fall below 4 percent. 
A) The quantity of loanable funds demanded by firms will rise above $120 million. 
B) The quantity of loanable funds demanded by firms will fall below $120 million. 
C) The budget deficit will have no impact on the quantity of loanable funds demanded by firms. 
D) The interest rate will fall below 4 percent.

Question 16

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Table 21-1
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Real GDP (billions } \
\text { of 2000 dollars) }
\end{array} \
\hline 2013 & \$ 8,700 \
\hline 2014 & 8,875 \
\hline 2015 & 9,000 \
\hline 2016 & 9,280 \
\hline
\end{array}$$
-Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

Accepted Answer

A) 1% 
B) 1.5% 
C) 2% 
D) 3% 
A) 1% 
B) 1.5% 
C) 2% 
D) 3%

Question 19

Equilibrium in the loanable funds market determines

Accepted Answer

A) the nominal interest rate. 
B) the current interest rate. 
C) the real interest rate. 
D) the expected interest rate. 
A) the nominal interest rate. 
B) the current interest rate. 
C) the real interest rate. 
D) the expected interest rate.

Question 20

Since 1900,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

Accepted Answer

A) increased;understates 
B) increased;overstates 
C) decreased;understates 
D) decreased;overstates 
A) increased;understates 
B) increased;overstates 
C) decreased;understates 
D) decreased;overstates

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

A(n)________ comes to an end with a business cycle ________.

Suppose that real GDP for 2015 was $10,000 billion and real GDP for 2016 was $9,500 billion.What is the rate of growth of real GDP between 2015 and 2016?

Labor productivity is

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

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

If technological change increases the profitability of new investments for firms,then the ________ curve for loanable funds will shift to the ________.

The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as

Potential GDP is defined as

What two factors are the keys to determining labor productivity?

Which of the following is not a reason why the U.S.economy has been more stable since 1950?

As the economy nears the end of a recession,which of the following do we typically see?

Actual real GDP will be above potential GDP if

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.

Between 1950 and 2009,the average length of recessions in the United States was

Figure 21-6 -Refer to Figure 21-6.The market is in equilibrium.If the government budget deficit rises,which of the following would you expect to see?

The lengths of the recession and expansion phases and which sectors of the economy are most affected will rarely be the same in any two business cycles.

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.

Table 21-1 Year Real GDP (billions of 2000 dollars) 2013 \ 8,700 2014 8,875 2015 9,000 2016 9,280 -Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

Equilibrium in the loanable funds market determines

Since 1900,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

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

A(n) comes to an end with a business cycle .

If technological change increases the profitability of new investments for firms,then the curve for loanable funds will shift to the .

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.

Since 1900,real GDP per capita has and this measure the actual growth in standards of living in the United States over this time.