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.

Question 2

Table 14-1
 $\begin{array}{|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Real GDP (billions } \
\text { of } 2000 \text { dollars) }
\end{array} \
\hline 2015 & \$ 8,700 \
\hline 2016 & 8,875 \
\hline 2017 & 9,000 \
\hline 2018 & 9,280 \
\hline
\end{array}$
-Refer to Table 14-1.Using the table above,what is the approximate average annual growth rate from 2015 to 2018?

Accepted Answer

A)  1% 
B)  1.5% 
C)  2% 
D)  3%

Question 3

The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.

Accepted Answer

A)  government 
B)  households 
C)  banks 
D)  firms

Question 4

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.

Question 5

Give three reasons why the U.S.economy was more stable from 1950-2007 than it was prior to 1950.

Accepted Answer

The answer of Give three reasons why the U.S.economy was...

Question 6

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

The answer of Consider the following data for a closed...

Question 7

If technological change increases the profitability of new investments for firms,then the ________ curve for loanable funds will shift to the ________.

Accepted Answer

A)  supply; right 
B)  supply; left 
C)  demand; right 
D)  demand; left

Question 8

Explain and show graphically how an increase in government spending affects the equilibrium interest rate in the market for loanable funds.

Accepted Answer

The answer of Explain and show graphically how an increase...

Question 9

Potential GDP in the United States

Accepted Answer

A)  does not change over time. 
B)  grows as the economy grows. 
C)  changes over a given business cycle. 
D)  declines over time.

Question 10

Figure 14-6
 
-Refer to Figure 14-6.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.

Question 11

Which of the following is not one of the key services provided by the financial system?

Accepted Answer

A)  decreasing taxes 
B)  risk sharing 
C)  liquidity 
D)  generating information

Question 12

If,in a closed economy,real GDP is $30 billion,consumption is $20 billion,and government purchases are $5 billion,what is total saving in the economy?

Accepted Answer

A)  $5 billion 
B)  $15 billion 
C)  $45 billion 
D)  $55 billion

Question 13

The demand for loanable funds has a ________ slope because the lower the interest rate,the ________ number of investment projects are profitable,and the ________ the quantity of loanable funds demanded.

Accepted Answer

A)  negative; greater; greater 
B)  negative; greater; lesser 
C)  negative; lesser; greater 
D)  positive; lesser; lesser

Question 14

Since 1900,real GDP in the United States has grown

Accepted Answer

A)  more rapidly than the population. 
B)  more slowly than the population. 
C)  as rapidly as the population. 
D)  in a random unpredictable manner relative to the population.

Question 15

In a closed economy,which of the following components of GDP is not included?

Accepted Answer

A)  investment 
B)  government spending 
C)  net exports 
D)  consumption

Question 16

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.

Question 17

In terms of economic growth,the key measure of the standard of living is

Accepted Answer

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

Question 18

Table 14-2
 $\begin{array}{|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Real GDP (billions of } \
2000 \text { dollars) }
\end{array} \
\hline 2015 & \$ 10,100 \
\hline 2016 & 10,950 \
\hline 2017 & 11,425 \
\hline 2018 & 11,300 \
\hline
\end{array}$
-Refer to Table 14-2.Using the table above,what is the approximate average annual growth rate from 2015 to 2018?

Accepted Answer

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

Question 19

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.

Question 20

There is a government budget surplus if

Accepted Answer

A)  T - TR > G. 
B)  G > T. 
C)  G > TR. 
D)  TR < T.

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