Question 1

The response of investment spending to an increase in the government budget deficit is called

Accepted Answer

A) expansionary investment. 
B) private dissaving. 
C) crowding out. 
D) income minus net taxes. 
A) expansionary investment. 
B) private dissaving. 
C) crowding out. 
D) income minus net taxes.

Question 2

Workers in high-income countries have ________ to work with than do workers in low-income countries.

Accepted Answer

A) less physical capital 
B) more physical capital 
C) more labor 
D) more labor and less physical capital 
A) less physical capital 
B) more physical capital 
C) more labor 
D) more labor and less physical capital

Question 3

Growth in potential GDP in the United States is estimated to be about

Accepted Answer

A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year. 
A) 8.25% per year. 
B) 5.0% per year. 
C) 3.2% per year. 
D) 1.5% per year.

Question 4

In a closed economy,what is the relationship between saving and investment?

Accepted Answer

A) Saving is greater than investment. 
B) Investment is greater than saving. 
C) Investment is equal to saving. 
D) Investment may be greater or smaller than saving. 
A) Saving is greater than investment. 
B) Investment is greater than saving. 
C) Investment is equal to saving. 
D) Investment may be greater or smaller than saving.

Question 5

Suppose you are a famous international economic advisor.You have been asked to asses the possibilities for growth in an African country.It is a country abundant in labor and some natural resources.The capital-to-labor ratio is low.It has a free market economy.You have found that this country does not have a very strong and healthy banking system,however the political system is stable and the government does a good job protecting property rights.Assess this country's prospects for growth.Recommend two things that would enhance the country's growth.

Accepted Answer

The prospects for this country's growth

Question 6

________ are financial securities that represent partial ownership of a firm.

Accepted Answer

A) Stocks 
B) Bonds 
C) Treasury bills 
D) Certificates of deposit 
A) Stocks 
B) Bonds 
C) Treasury bills 
D) Certificates of deposit

Question 7

Increases in real GDP since 1900 can actually underestimate growth in the standard of living for Americans since 1900 because

Accepted Answer

A) the level of pollution in 1900 was much higher than it is today. 
B) the crime rate was higher in 1900 than it is today. 
C) goods and services are more expensive today as compared to 1900. 
D) the quality of health care that exists today was not available in 1900. 
A) the level of pollution in 1900 was much higher than it is today. 
B) the crime rate was higher in 1900 than it is today. 
C) goods and services are more expensive today as compared to 1900. 
D) the quality of health care that exists today was not available in 1900.

Question 8

Technological advances generally result in

Accepted Answer

A) decreased incomes. 
B) increased life expectancy. 
C) increased infant mortality rates. 
D) increased average number of hours worked per day. 
A) decreased incomes. 
B) increased life expectancy. 
C) increased infant mortality rates. 
D) increased average number of hours worked per day.

Question 9

When production in an economy grows more quickly than the population in that economy,which of the following must be occurring?

Accepted Answer

A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling. 
A) Real GDP is falling. 
B) Incomes are growing at a slower rate than the population. 
C) Real GDP per capita is rising. 
D) Living standards are falling.

Question 10

Since 1950,the average length of a recession in the United States has been

Accepted Answer

A) such that recessions barely exist. 
B) less than a year. 
C) between 1 and 2 years. 
D) greater than 2 years. 
A) such that recessions barely exist. 
B) less than a year. 
C) between 1 and 2 years. 
D) greater than 2 years.

Question 11

There is public dissaving if

Accepted Answer

A) G + TR > T. B) G + TR G + T. D) TR < G + T. A) G + TR > T. B) G + TR G + T. D) TR < G + T.

Question 12

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

Accepted Answer

A) rise;rapidly 
B) rise;slowly 
C) fall;rapidly 
D) fall;slowly 
A) rise;rapidly 
B) rise;slowly 
C) fall;rapidly 
D) fall;slowly

Question 13

The NBER's Business Cycle Dating Committee defines a recession as at least two consecutive quarters of falling real GDP.

Accepted Answer

A) True 
 B)False

Question 14

What type of consumer goods are most affected by the business cycle: durable goods or nondurable goods? Why?

Accepted Answer

Some workers lose income during a recess

Question 15

A recession begins with a(n)________ in spending by firms on capital goods and a(n)________ in spending on durable goods by households.

Accepted Answer

A) increase;decrease 
B) increase;increase 
C) decrease;increase 
D) decrease;decrease 
A) increase;decrease 
B) increase;increase 
C) decrease;increase 
D) decrease;decrease

Question 16

What is one difference between stocks and bonds?

Accepted Answer

A) Bonds earn a higher rate of return than stocks. 
B) Stocks earn a higher rate of return than bonds. 
C) Bonds are purchased at a bank,while stocks are purchased through the federal government. 
D) Stocks represent partial ownership in a firm,while bonds do not. 
A) Bonds earn a higher rate of return than stocks. 
B) Stocks earn a higher rate of return than bonds. 
C) Bonds are purchased at a bank,while stocks are purchased through the federal government. 
D) Stocks represent partial ownership in a firm,while bonds do not.

Question 17

If,between 2006 and 2016,the economy's real GDP grew from $20 billion to $40 billion,what was the average annual growth rate in the economy?

Accepted Answer

A) 3% 
B) 7% 
C) 20% 
D) 100% 
A) 3% 
B) 7% 
C) 20% 
D) 100%

Question 18

When the economy reaches a trough in a business cycle,which of the following will occur?

Accepted Answer

A) Income,production,and employment will continue to fall. 
B) Income,production,and employment will begin to rise. 
C) Income and production will rise,but employment will continue to fall. 
D) Employment rises,but income and production will continue to fall. 
A) Income,production,and employment will continue to fall. 
B) Income,production,and employment will begin to rise. 
C) Income and production will rise,but employment will continue to fall. 
D) Employment rises,but income and production will continue to fall.

Question 19

The effect of a recession on a company like Whirlpool Corporation is such that

Accepted Answer

A) sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. 
B) profits fall less sharply as compared to firms that do not produce durable goods. 
C) the decline in sales is more short-lived as compared to firms that do not produce durable goods. 
D) there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods. 
A) sales decline more sharply for Whirlpool as compared to firms that do not produce durable goods. 
B) profits fall less sharply as compared to firms that do not produce durable goods. 
C) the decline in sales is more short-lived as compared to firms that do not produce durable goods. 
D) there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods.

Question 20

Which of the following is a correct statement?

Accepted Answer

A) Inflation is measured as the percentage change in the CPI. 
B) The CPI is a widely used measure of the inflation rate. 
C) Real GDP is our best measure of economic growth. 
D) The PPI measures inflation as experienced by producers. 
A) Inflation is measured as the percentage change in the CPI. 
B) The CPI is a widely used measure of the inflation rate. 
C) Real GDP is our best measure of economic growth. 
D) The PPI measures inflation as experienced by producers.

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

The response of investment spending to an increase in the government budget deficit is called

Workers in high-income countries have ________ to work with than do workers in low-income countries.

Growth in potential GDP in the United States is estimated to be about

In a closed economy,what is the relationship between saving and investment?

________ are financial securities that represent partial ownership of a firm.

Increases in real GDP since 1900 can actually underestimate growth in the standard of living for Americans since 1900 because

Technological advances generally result in

When production in an economy grows more quickly than the population in that economy,which of the following must be occurring?

Since 1950,the average length of a recession in the United States has been

There is public dissaving if

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

The NBER's Business Cycle Dating Committee defines a recession as at least two consecutive quarters of falling real GDP.

What type of consumer goods are most affected by the business cycle: durable goods or nondurable goods? Why?

A recession begins with a(n)________ in spending by firms on capital goods and a(n)________ in spending on durable goods by households.

What is one difference between stocks and bonds?

If,between 2006 and 2016,the economy's real GDP grew from $20 billion to $40 billion,what was the average annual growth rate in the economy?

When the economy reaches a trough in a business cycle,which of the following will occur?

The effect of a recession on a company like Whirlpool Corporation is such that

Which of the following is a correct statement?

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

As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

A recession begins with a(n) in spending by firms on capital goods and a(n) in spending on durable goods by households.