Question 1

Carefully define the two categories of saving in the economy.

Accepted Answer

There are two categories of saving in th

Question 2

Market economies tend to grow more quickly than centrally-planned economies.

Accepted Answer

A) True 
 B)False

Question 3

There is a government budget surplus if

Accepted Answer

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

Question 4

The federal budget deficit can be reduced by

Accepted Answer

A) raising taxes. 
B) raising government spending. 
C) raising transfer payments. 
D) higher interest rates. 
A) raising taxes. 
B) raising government spending. 
C) raising transfer payments. 
D) higher interest rates.

Question 5

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?

Accepted Answer

A) Services have become a smaller fraction of GDP since the 1950s. 
B) Unemployment insurance and other government transfer programs are more prevalent since the 1950s. 
C) The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s. 
D) both B and C 
A) Services have become a smaller fraction of GDP since the 1950s. 
B) Unemployment insurance and other government transfer programs are more prevalent since the 1950s. 
C) The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s. 
D) both B and C

Question 6

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Accepted Answer

A) savers;borrower 
B) borrower;savers 
C) governments;households 
D) firms;insurance companies 
A) savers;borrower 
B) borrower;savers 
C) governments;households 
D) firms;insurance companies

Question 7

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 8

The Business Cycle Dating Committee defines a recession as

Accepted Answer

A) two consecutive quarters of declining real GDP. 
B) two consecutive quarters of declining nominal GDP. 
C) a significant decline in activity visible in industrial production,employment,real income,and wholesale/retail trade lasting more than a few months. 
D) a significant decline in inflation and unemployment lasting more than a few months. 
A) two consecutive quarters of declining real GDP. 
B) two consecutive quarters of declining nominal GDP. 
C) a significant decline in activity visible in industrial production,employment,real income,and wholesale/retail trade lasting more than a few months. 
D) a significant decline in inflation and unemployment lasting more than a few months.

Question 9

Scenario 21-1
Consider the following data for a closed economy:
Y = $12 trillion
C = $8 trillion
I = $2 trillion
G = $2 trillion
TR = $2 trillion
T = $3 trillion
-Refer to Scenario 21-1.Based on the information above,what is the level of public saving?

Accepted Answer

A) $0 
B) $1 trillion 
C) $2 trillion 
D) negative $1 trillion (a deficit of $1 trillion) 
A) $0 
B) $1 trillion 
C) $2 trillion 
D) negative $1 trillion (a deficit of $1 trillion)

Question 10

If,in a closed economy,real GDP is $30 billion,consumption is $20 billion,and government purchases are $5 billion,what is total saving in the economy?

Accepted Answer

A) $5 billion 
B) $15 billion 
C) $45 billion 
D) $55 billion 
A) $5 billion 
B) $15 billion 
C) $45 billion 
D) $55 billion

Question 11

A country with no trade and no borrowing and lending relationships with other countries is known as a(n)

Accepted Answer

A) planned economy. 
B) market economy. 
C) open economy. 
D) closed economy. 
A) planned economy. 
B) market economy. 
C) open economy. 
D) closed economy.

Question 12

An increase in government purchases,ceteris paribus,will

Accepted Answer

A) increase public saving. 
B) increase the supply of loanable funds. 
C) reduce investment. 
D) reduce real GDP. 
A) increase public saving. 
B) increase the supply of loanable funds. 
C) reduce investment. 
D) reduce real GDP.

Question 13

Suppose you are an advisor to the Business Cycle Dating Committee.You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year.Which data do you look at? How does the economy behave at the onset of a recession?

Accepted Answer

Since a recession is defined as signific

Question 14

When a recession ends

Accepted Answer

A) interest rates decrease. 
B) households decrease spending on durable goods. 
C) the household sector decreases spending substantially. 
D) firms increase the amount of borrowing. 
A) interest rates decrease. 
B) households decrease spending on durable goods. 
C) the household sector decreases spending substantially. 
D) firms increase the amount of borrowing.

Question 15

An increase in the demand for loanable funds will occur if there is

Accepted Answer

A) an increase in the real interest rate. 
B) a decrease in the real interest rate. 
C) an increase in expected profits from firm investment projects. 
D) an increase in the nominal interest rate accompanied by an equal increase in inflation. 
A) an increase in the real interest rate. 
B) a decrease in the real interest rate. 
C) an increase in expected profits from firm investment projects. 
D) an increase in the nominal interest rate accompanied by an equal increase in inflation.

Question 16

An increase in the government budget deficit will shift the ________ curve for loanable funds 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 17

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 18

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 19

If net taxes fall by $80 billion,we would expect

Accepted Answer

A) the government deficit to fall by $80 billion. 
B) household saving to rise by $80 billion. 
C) household saving to rise by less than $80 billion. 
D) household saving to fall by more than $80 billion. 
A) the government deficit to fall by $80 billion. 
B) household saving to rise by $80 billion. 
C) household saving to rise by less than $80 billion. 
D) household saving to fall by more than $80 billion.

Question 20

Which of the following is an example of human capital?

Accepted Answer

A) a computer 
B) a factory building 
C) a college education 
D) a software program 
A) a computer 
B) a factory building 
C) a college education 
D) a software program

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

Carefully define the two categories of saving in the economy.

Market economies tend to grow more quickly than centrally-planned economies.

There is a government budget surplus if

The federal budget deficit can be reduced by

Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

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

The Business Cycle Dating Committee defines a recession as

Scenario 21-1 Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion I = $2 trillion G = $2 trillion TR = $2 trillion T = $3 trillion -Refer to Scenario 21-1.Based on the information above,what is the level of public saving?

If,in a closed economy,real GDP is $30 billion,consumption is $20 billion,and government purchases are $5 billion,what is total saving in the economy?

A country with no trade and no borrowing and lending relationships with other countries is known as a(n)

An increase in government purchases,ceteris paribus,will

Suppose you are an advisor to the Business Cycle Dating Committee.You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year.Which data do you look at? How does the economy behave at the onset of a recession?

When a recession ends

An increase in the demand for loanable funds will occur if there is

An increase in the government budget deficit will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

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?

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

If net taxes fall by $80 billion,we would expect

Which of the following is an example of human capital?

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 financial intermediary's main function is to match with excess funds to with a shortage of funds.

An increase in the government budget deficit will shift the curve for loanable funds to the and the equilibrium real interest rate will .