Question 1

Private saving is defined as

Accepted Answer

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

Question 2

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 3

________ 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 4

Which of the following statements describes the experiences of Corning,Inc.since it was established in 1851?

Accepted Answer

A) strong uninterrupted growth in demand 
B) long-run growth interrupted by periods of business cycle recession 
C) little or no growth in the long run,and unaffected by the business cycle 
D) little or no growth in the long run,but very vulnerable to the business cycle 
A) strong uninterrupted growth in demand 
B) long-run growth interrupted by periods of business cycle recession 
C) little or no growth in the long run,and unaffected by the business cycle 
D) little or no growth in the long run,but very vulnerable to the business cycle

Question 5

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 6

A period of expansion in the business cycle ends when

Accepted Answer

A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP. 
A) real GDP is equal to potential GDP. 
B) the business cycle reaches its peak. 
C) the business cycle reaches its trough. 
D) real GDP is less than potential GDP.

Question 7

Under which of the following circumstances would the government be running a deficit?

Accepted Answer

A) G = $5 trillion T = $5 trillion
TR = $1 trillion 
B) G = $5 trillion T = $7 trillion
TR = $1 trillion 
C) G = $7 trillion T = $7 trillion
TR = $0 
D) G = $7 trillion T = $10 trillion
TR = $3 trillion 
A) G = $5 trillion T = $5 trillion
TR = $1 trillion 
B) G = $5 trillion T = $7 trillion
TR = $1 trillion 
C) G = $7 trillion T = $7 trillion
TR = $0 
D) G = $7 trillion T = $10 trillion
TR = $3 trillion

Question 8

The U.S.economy has been more stable since 1950.

Accepted Answer

A) True 
 B)False

Question 9

Figure 10-6  
-Refer to Figure 10-6.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Accepted Answer

A) The real interest rate is 5 percent,and the quantity of loanable funds is $150 million. 
B) The real interest rate is 5 percent,and the quantity of loanable funds is $90 million. 
C) The real interest rate is 3 percent,and the quantity of loanable funds is $150 million. 
D) The real interest rate is 3 percent,and the quantity of loanable funds is $90 million. 
A) The real interest rate is 5 percent,and the quantity of loanable funds is $150 million. 
B) The real interest rate is 5 percent,and the quantity of loanable funds is $90 million. 
C) The real interest rate is 3 percent,and the quantity of loanable funds is $150 million. 
D) The real interest rate is 3 percent,and the quantity of loanable funds is $90 million.

Question 10

Recessions typically cause the unemployment rate to ________ and the inflation rate to ________.

Accepted Answer

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

Question 11

Purchases of Huggies diapers should

Accepted Answer

A) remain fairly constant over the business cycle. 
B) increase in recessions and decrease in expansions. 
C) decrease in recessions and increase in expansions. 
D) increase in recessions and remain constant in expansions. 
A) remain fairly constant over the business cycle. 
B) increase in recessions and decrease in expansions. 
C) decrease in recessions and increase in expansions. 
D) increase in recessions and remain constant in expansions.

Question 12

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 13

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 14

Which of the following would encourage economic growth through increases in the capital stock?

Accepted Answer

A) a change from an income tax to a consumption tax 
B) an increase in household saving 
C) a decrease in the government deficit 
D) all of the above 
A) a change from an income tax to a consumption tax 
B) an increase in household saving 
C) a decrease in the government deficit 
D) all of the above

Question 15

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.

Question 16

Refer to the Article Summary.________ depend on increases in labor productivity.

Accepted Answer

A) Advances in technology 
B) Decreases in the inflation rate 
C) Decreases in the unemployment rate 
D) Increases in real GDP per capita 
A) Advances in technology 
B) Decreases in the inflation rate 
C) Decreases in the unemployment rate 
D) Increases in real GDP per capita

Question 17

Figure 10-3  
-Refer to Figure 10-3.Which of the following is consistent with the graph depicted above?

Accepted Answer

A) Taxes are changed so that real interest income is taxed rather than nominal interest income. 
B) An expected recession decreases the profitability of new investment. 
C) The government runs a budget deficit. 
D) Technological change increases the profitability of new investment. 
A) Taxes are changed so that real interest income is taxed rather than nominal interest income. 
B) An expected recession decreases the profitability of new investment. 
C) The government runs a budget deficit. 
D) Technological change increases the profitability of new investment.

Question 18

Table 10-1
  
-Refer to Table 10-1.Using the table above,what is the approximate growth rate of real GDP from 2015 to 2016?

Accepted Answer

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

Question 19

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Accepted Answer

Private saving is equal to Y + TR - C -

Question 20

Table 10-2
  
-Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2014 to 2015?

Accepted Answer

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

Private saving is defined as

Actual real GDP will be above potential GDP if

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

Which of the following statements describes the experiences of Corning,Inc.since it was established in 1851?

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.

A period of expansion in the business cycle ends when

Under which of the following circumstances would the government be running a deficit?

The U.S.economy has been more stable since 1950.

Figure 10-6 -Refer to Figure 10-6.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Recessions typically cause the unemployment rate to and the inflation rate to .

Purchases of Huggies diapers should

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

Which of the following would encourage economic growth through increases in the capital stock?

The rule of 70 states that

Refer to the Article Summary.________ depend on increases in labor productivity.

Figure 10-3 -Refer to Figure 10-3.Which of the following is consistent with the graph depicted above?

Table 10-1 -Refer to Table 10-1.Using the table above,what is the approximate growth rate of real GDP from 2015 to 2016?

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Table 10-2 -Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2014 to 2015?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 10: Economic Growth, the Financial System, and Business Cycles

Private saving is defined as

Actual real GDP will be above potential GDP if

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

Which of the following statements describes the experiences of Corning,Inc.since it was established in 1851?

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.

A period of expansion in the business cycle ends when

Under which of the following circumstances would the government be running a deficit?

The U.S.economy has been more stable since 1950.

Figure 10-6 -Refer to Figure 10-6.The loanable funds market is in equilibrium,as shown in the figure above.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Recessions typically cause the unemployment rate to ________ and the inflation rate to ________.

Purchases of Huggies diapers should

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

Which of the following would encourage economic growth through increases in the capital stock?

The rule of 70 states that

Refer to the Article Summary.________ depend on increases in labor productivity.

Figure 10-3 -Refer to Figure 10-3.Which of the following is consistent with the graph depicted above?

Table 10-1 -Refer to Table 10-1.Using the table above,what is the approximate growth rate of real GDP from 2015 to 2016?

Use the equations for public and private saving to demonstrate how total saving in the economy equals investment.

Table 10-2 -Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2014 to 2015?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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.

Recessions typically cause the unemployment rate to and the inflation rate to .