Question 1

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

Accepted Answer

A) After 1950,the length of expansions equaled the length of recessions. 
B) After 1950,the length of expansions were much less than the length of recessions. 
C) After 1950,the length of expansions were much longer than the length of recessions. 
D) After 1950,the length of expansions were brief and almost nonexistent. 
A) After 1950,the length of expansions equaled the length of recessions. 
B) After 1950,the length of expansions were much less than the length of recessions. 
C) After 1950,the length of expansions were much longer than the length of recessions. 
D) After 1950,the length of expansions were brief and almost nonexistent.

Question 2

Potential GDP is always greater than real GDP in an economy.

Accepted Answer

A) True 
 B)False

Question 3

If real GDP in a closed economy is $40 billion,consumption is $20 billion,and government purchases are $10 billion,what is investment?

Accepted Answer

A) $10 billion 
B) $30 billion 
C) $40 billion 
D) $70 billion 
A) $10 billion 
B) $30 billion 
C) $40 billion 
D) $70 billion

Question 4

Consider the following data for a closed economy:
a.Y = $12 trillion
b.C = $8 trillion
c.I = $3 trillion
d.TR = $2 trillion
e.T = $3 trillion
Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

Accepted Answer

Private saving is equal to Y + TR - C -

Question 5

The total amount of physical capital available in a country is know as the country's

Accepted Answer

A) labor productivity. 
B) savings. 
C) investment. 
D) capital stock. 
A) labor productivity. 
B) savings. 
C) investment. 
D) capital stock.

Question 6

If real GDP in a small country in 2015 is $8 billion and real GDP in the same country in 2016 is $8.3 billion,the growth rate of real GDP between 2015 and 2016

Accepted Answer

A) is 3.0%. 
B) is 3.6%. 
C) is 3.75%. 
D) cannot be determined from the information given. 
A) is 3.0%. 
B) is 3.6%. 
C) is 3.75%. 
D) cannot be determined from the information given.

Question 7

Liquidity refers to

Accepted Answer

A) the ease with a stock can be traded for a bond. 
B) the ease with which a financial security can be traded for cash. 
C) the number of times a dollar changes hands in the creation of GDP in an economy. 
D) the number of shares of stock a corporation issues. 
A) the ease with a stock can be traded for a bond. 
B) the ease with which a financial security can be traded for cash. 
C) the number of times a dollar changes hands in the creation of GDP in an economy. 
D) the number of shares of stock a corporation issues.

Question 8

A decrease in the real interest rate will

Accepted Answer

A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment. 
A) increase consumption and reduce investment. 
B) increase saving and investment. 
C) decrease investment and government spending. 
D) increase consumption and investment.

Question 9

How are unemployment,inflation,and the business cycle related?

Accepted Answer

A recessionary phase of a business cycle

Question 10

Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?

Accepted Answer

A) It has decreased. 
B) It has increased by more than eight times. 
C) It has doubled. 
D) It has increased twenty times. 
A) It has decreased. 
B) It has increased by more than eight times. 
C) It has doubled. 
D) It has increased twenty times.

Question 11

The sum of public and private saving in an economy is equal to

Accepted Answer

A) Y - C - T. 
B) T - TR - G. 
C) Y - C - G. 
D) I - C - G. 
A) Y - C - T. 
B) T - TR - G. 
C) Y - C - G. 
D) I - C - G.

Question 12

For the recessions in the United States since the 1950s

Accepted Answer

A) cyclical unemployment has been non-existent. 
B) unemployment rises on average by about 1.2 percentage points during the 12 months after a recession begins. 
C) unemployment falls on average by 2 percentage points during the 12 months after a recession begins. 
D) unemployment rises on average about 5 percentage points during the 12 months after a recession begins. 
A) cyclical unemployment has been non-existent. 
B) unemployment rises on average by about 1.2 percentage points during the 12 months after a recession begins. 
C) unemployment falls on average by 2 percentage points during the 12 months after a recession begins. 
D) unemployment rises on average about 5 percentage points during the 12 months after a recession begins.

Question 13

In a closed economy,which of the following equations reflects investment? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Accepted Answer

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

Question 14

Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.

Accepted Answer

When government spending decreases,gover

Question 15

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

Accepted Answer

Government programs like unemployment in

Question 16

What is human capital?

Accepted Answer

A) a slang term for the underground labor market 
B) manufactured goods that are used to produce other goods 
C) accumulated knowledge and skills acquired by a worker 
D) the manager or owner of a business 
A) a slang term for the underground labor market 
B) manufactured goods that are used to produce other goods 
C) accumulated knowledge and skills acquired by a worker 
D) the manager or owner of a business

Question 17

Suppose that real GDP for 2015 was $10,000 billion and real GDP for 2016 was $11,000 billion.What is the rate of growth of real GDP between 2015 and 2016?

Accepted Answer

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

Question 18

Which one of the following is not considered a financial intermediary?

Accepted Answer

A) a bank 
B) a pension fund 
C) an insurance company 
D) a credit counselor 
A) a bank 
B) a pension fund 
C) an insurance company 
D) a credit counselor

Question 19

In a closed economy,public 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) T - G - TR 
D) Y - C - T + TR 
A) Y - C - T 
B) Y - G - T 
C) T - G - TR 
D) Y - C - T + TR

Question 20

The rule of 70 states that

Accepted Answer

A) it takes an economy 70 years to double its real GDP. 
B) the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C) the number of years it takes an economy to double in size is the growth rate times 70. 
D) the number of years it takes an economy to double in size is the growth rate divided by 70. 
A) it takes an economy 70 years to double its real GDP. 
B) the number of years it takes an economy to double in size is 70 divided by the growth rate. 
C) the number of years it takes an economy to double in size is the growth rate times 70. 
D) the number of years it takes an economy to double in size is the growth rate divided by 70.

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

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

Potential GDP is always greater than real GDP in an economy.

If real GDP in a closed economy is $40 billion,consumption is $20 billion,and government purchases are $10 billion,what is investment?

Consider the following data for a closed economy: a.Y = $12 trillion b.C = $8 trillion c.I = $3 trillion d.TR = $2 trillion e.T = $3 trillion Use the data provided to calculate the level of private saving and the level of public saving and demonstrate their relationship to investment.

The total amount of physical capital available in a country is know as the country's

If real GDP in a small country in 2015 is $8 billion and real GDP in the same country in 2016 is $8.3 billion,the growth rate of real GDP between 2015 and 2016

Liquidity refers to

A decrease in the real interest rate will

How are unemployment,inflation,and the business cycle related?

Which of the following describes the growth in real GDP per person in the United States from 1900 to the present?

The sum of public and private saving in an economy is equal to

For the recessions in the United States since the 1950s

In a closed economy,which of the following equations reflects investment? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.

How have government policies and programs affected the volatility of the business cycle in the United States since 1950? Explain and provide at least two specific examples of policies or programs that may have had an impact.

What is human capital?

Suppose that real GDP for 2015 was $10,000 billion and real GDP for 2016 was $11,000 billion.What is the rate of growth of real GDP between 2015 and 2016?

Which one of the following is not considered a financial intermediary?

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

The rule of 70 states that

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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