Question 1

An increase in public saving has what impact on the market for loanable funds?

Accepted Answer

A) The supply of loanable funds increases. 
B) The demand for loanable funds increases. 
C) The supply of loanable funds decreases. 
D) The demand for loanable funds decreases. 
A) The supply of loanable funds increases. 
B) The demand for loanable funds increases. 
C) The supply of loanable funds decreases. 
D) The demand for loanable funds decreases.

Question 2

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Accepted Answer

A) True 
 B)False

Question 3

Public saving in the economy can be increased by

Accepted Answer

A) lowering taxes. 
B) raising government spending. 
C) raising taxes. 
D) raising transfer payments. 
A) lowering taxes. 
B) raising government spending. 
C) raising taxes. 
D) raising transfer payments.

Question 4

A government budget surplus from reduced government spending (no change in net taxes)will ________ the level of investment in the economy and ________ the level of saving (private plus public)in the economy.

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 5

Table 21-2
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Real GDP (billions } \
\text { of 2000 dollars) }
\end{array} \
\hline 2013 & \$ 10,100 \
\hline 2014 & 10,950 \
\hline 2015 & 11,425 \
\hline 2016 & 11,300 \
\hline
\end{array}$$
-Refer to Table 21-2.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

Accepted Answer

A) -1% 
B) 1% 
C) 2% 
D) 4% 
A) -1% 
B) 1% 
C) 2% 
D) 4%

Question 6

If Ebenezer Scrooge spends rather than saves his vast wealth,he will

Accepted Answer

A) slow economic growth because he is reducing the amount of funds available for investment. 
B) slow economic growth because he is increasing the amount of funds available for investment. 
C) promote economic growth because he is increasing the amount of funds available for investment. 
D) promote economic growth because he is decreasing the amount of funds available for investment. 
A) slow economic growth because he is reducing the amount of funds available for investment. 
B) slow economic growth because he is increasing the amount of funds available for investment. 
C) promote economic growth because he is increasing the amount of funds available for investment. 
D) promote economic growth because he is decreasing the amount of funds available for investment.

Question 7

In an open economy,there is interaction with other economies in terms of both trading of goods and services and borrowing and lending.

Accepted Answer

A) True 
 B)False

Question 8

A good measure of the standard of living is

Accepted Answer

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

Question 9

Which of the following would increase public saving?

Accepted Answer

A) an increase in taxes 
B) an increase in transfers 
C) an increase in government purchases 
D) All of the above would increase public saving. 
A) an increase in taxes 
B) an increase in transfers 
C) an increase in government purchases 
D) All of the above would increase public saving.

Question 10

Because ________ in the government budget deficit increase the real interest rate,budget deficits can ________ firm investment.

Accepted Answer

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

Question 11

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

Accepted Answer

A) 23.3 years to 17.5 years. 
B) 28.0 years to 21.0 years. 
C) 11.2 years to 10.8 years. 
D) 23.3 years to 20.6 years. 
A) 23.3 years to 17.5 years. 
B) 28.0 years to 21.0 years. 
C) 11.2 years to 10.8 years. 
D) 23.3 years to 20.6 years.

Question 12

Figure 21-5  
-Refer to Figure 21-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

Accepted Answer

A) A to B 
B) B to A 
C) B to C 
D) C to A 
A) A to B 
B) B to A 
C) B to C 
D) C to A

Question 13

According to the National Bureau of Economic Research,the United States has experienced ________ recessions since 1950.

Accepted Answer

A) 4 
B) 7 
C) 10 
D) 15 
A) 4 
B) 7 
C) 10 
D) 15

Question 14

Inflation tends to ________ during the expansion phase of the business cycle and ________ during the recession phase of the business cycle.

Accepted Answer

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

Question 15

Economist Robert Fogel has estimated that by the year 2040,individuals in the United States will be spending

Accepted Answer

A) more time in the workforce and more time in leisure activities than they do today. 
B) less time in the workforce and less time in leisure activities than they do today. 
C) less time in the workforce and more time in leisure activities than they do today. 
D) more time in the workforce and less time in leisure activities than they do today. 
A) more time in the workforce and more time in leisure activities than they do today. 
B) less time in the workforce and less time in leisure activities than they do today. 
C) less time in the workforce and more time in leisure activities than they do today. 
D) more time in the workforce and less time in leisure activities than they do today.

Question 16

According to the National Bureau of Economic Research,the recession that began in December 2007

Accepted Answer

A) lasted 12 months. 
B) lasted 18 months. 
C) lasted 27 months. 
D) did not end until December 2011. 
A) lasted 12 months. 
B) lasted 18 months. 
C) lasted 27 months. 
D) did not end until December 2011.

Question 17

Explain what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

Accepted Answer

Inflation will rise during an expansion

Question 18

If you invest $10,000 in a bond that earns 8% interest per year,how many years will it take to double your money?

Accepted Answer

A) 1 year and 3 months 
B) 2 years and 6 months 
C) 8 years 
D) 8 years and 9 months 
A) 1 year and 3 months 
B) 2 years and 6 months 
C) 8 years 
D) 8 years and 9 months

Question 19

Use the rule of 70 to illustrate how small differences in growth rates can have a large impact on how rapidly the standard of living in a country increases.

Accepted Answer

The rule of 70 refers to a calculation t

Question 20

Purchases of which of the following goods would be dramatically reduced during a recession?

Accepted Answer

A) tomatoes 
B) ink pens 
C) gasoline 
D) refrigerators 
A) tomatoes 
B) ink pens 
C) gasoline 
D) refrigerators

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

An increase in public saving has what impact on the market for loanable funds?

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Public saving in the economy can be increased by

A government budget surplus from reduced government spending (no change in net taxes)will ________ the level of investment in the economy and ________ the level of saving (private plus public)in the economy.

Table 21-2 Year Real GDP (billions of 2000 dollars) 2013 \ 10,100 2014 10,950 2015 11,425 2016 11,300 -Refer to Table 21-2.Using the table above,what is the approximate average annual growth rate from 2013 to 2016?

If Ebenezer Scrooge spends rather than saves his vast wealth,he will

In an open economy,there is interaction with other economies in terms of both trading of goods and services and borrowing and lending.

A good measure of the standard of living is

Which of the following would increase public saving?

Because ________ in the government budget deficit increase the real interest rate,budget deficits can ________ firm investment.

If the growth rate of real GDP rises from 3% to 4% per year,then the number of years required to double real GDP will decrease from

Figure 21-5 -Refer to Figure 21-5."Crowding out" of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

According to the National Bureau of Economic Research,the United States has experienced ________ recessions since 1950.

Inflation tends to ________ during the expansion phase of the business cycle and ________ during the recession phase of the business cycle.

Economist Robert Fogel has estimated that by the year 2040,individuals in the United States will be spending

According to the National Bureau of Economic Research,the recession that began in December 2007

Explain what happens to inflation during the business cycle.Give an intuitive explanation as to why inflation changes the way it does over the business cycle.

If you invest $10,000 in a bond that earns 8% interest per year,how many years will it take to double your money?

Use the rule of 70 to illustrate how small differences in growth rates can have a large impact on how rapidly the standard of living in a country increases.

Purchases of which of the following goods would be dramatically reduced during a recession?

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 government budget surplus from reduced government spending (no change in net taxes)will the level of investment in the economy and the level of saving (private plus public)in the economy.

Because in the government budget deficit increase the real interest rate,budget deficits can firm investment.

Inflation tends to during the expansion phase of the business cycle and during the recession phase of the business cycle.