Question 1

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 2

Table 14-1
  
-Refer to Table 14-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?

Accepted Answer

A) 1% 
B) 2% 
C) 3% 
D) 4% 
A) 1% 
B) 2% 
C) 3% 
D) 4%

Question 3

During the recession phase of the business cycle,

Accepted Answer

A) production is usually rising. 
B) interest rates are usually falling. 
C) unemployment is usually falling. 
D) income is usually rising. 
A) production is usually rising. 
B) interest rates are usually falling. 
C) unemployment is usually falling. 
D) income is usually rising.

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

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 6

Botswana's rapid growth can be explained by

Accepted Answer

A) protection of private property and avoiding political instability. 
B) investment in human capital from 1960 through 2009. 
C) the movement of workers from the agricultural sector to the manufacturing sector. 
D) an increase in labor force participation. 
A) protection of private property and avoiding political instability. 
B) investment in human capital from 1960 through 2009. 
C) the movement of workers from the agricultural sector to the manufacturing sector. 
D) an increase in labor force participation.

Question 7

An increase in the real interest rate will decrease consumption and investment.

Accepted Answer

A) True 
 B)False

Question 8

Explain and show graphically how government deficits can "crowd out" private investment.

Accepted Answer

When the government runs a deficit publi

Question 9

According to the "Rule of 70",it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

Accepted Answer

A) 4 percent. 
B) 12.25 percent. 
C) 17.5 percent. 
D) 28 percent. 
A) 4 percent. 
B) 12.25 percent. 
C) 17.5 percent. 
D) 28 percent.

Question 10

Scenario 14-1
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 14-1.Based on the information above,what is the level of private saving in the economy?

Accepted Answer

A) $3 trillion 
B) $4 trillion 
C) $5 trillion 
D) $8 trillion 
A) $3 trillion 
B) $4 trillion 
C) $5 trillion 
D) $8 trillion

Question 11

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 12

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

Accepted Answer

A) The equilibrium quantity of loanable funds would rise. 
B) The equilibrium quantity of loanable funds would fall. 
C) The equilibrium quantity of loanable funds would be unaffected. 
D) The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax. 
A) The equilibrium quantity of loanable funds would rise. 
B) The equilibrium quantity of loanable funds would fall. 
C) The equilibrium quantity of loanable funds would be unaffected. 
D) The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax.

Question 13

According to the "Rule of 70",how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

Accepted Answer

A) less than 1 year 
B) 5 years 
C) 14 years 
D) 35 years 
A) less than 1 year 
B) 5 years 
C) 14 years 
D) 35 years

Question 14

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

Accepted Answer

Private saving is equal to Y - C - T,so

Question 15

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 16

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 17

What is "human capital," and how does human capital affect labor productivity and economic growth?

Accepted Answer

Human capital is the accumulated knowled

Question 18

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 19

The period of expansion ends with a ________ and the period of recession ends with a ________.

Accepted Answer

A) business cycle peak;business cycle trough 
B) business cycle trough;business cycle peak 
C) business cycle peak;business cycle peak 
D) business cycle trough;business cycle trough 
A) business cycle peak;business cycle trough 
B) business cycle trough;business cycle peak 
C) business cycle peak;business cycle peak 
D) business cycle trough;business cycle trough

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

Actual real GDP will be above potential GDP if

Table 14-1 -Refer to Table 14-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?

During the recession phase of the business cycle,

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

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.

Botswana's rapid growth can be explained by

An increase in the real interest rate will decrease consumption and investment.

Explain and show graphically how government deficits can "crowd out" private investment.

According to the "Rule of 70",it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

Scenario 14-1 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 14-1.Based on the information above,what is the level of private saving in the economy?

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

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

According to the "Rule of 70",how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

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

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?

What is "human capital," and how does human capital affect labor productivity and economic growth?

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

The period of expansion ends with a and the period of recession ends with a .

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

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 14: Economic Growth, the Financial System, and Business Cycles

Actual real GDP will be above potential GDP if

Table 14-1 -Refer to Table 14-1.Using the table above,what is the approximate growth rate of real GDP from 2010 to 2011?

During the recession phase of the business cycle,

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

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.

Botswana's rapid growth can be explained by

An increase in the real interest rate will decrease consumption and investment.

Explain and show graphically how government deficits can "crowd out" private investment.

According to the "Rule of 70",it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is

Scenario 14-1 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 14-1.Based on the information above,what is the level of private saving in the economy?

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

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

According to the "Rule of 70",how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

If net taxes rise by $150 billion would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?

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

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?

What is "human capital," and how does human capital affect labor productivity and economic growth?

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

The period of expansion ends with a ________ and the period of recession ends with a ________.

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

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

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.

The period of expansion ends with a and the period of recession ends with a .