Question 1

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

Accepted Answer

Human capital is the accumulated knowled...

Question 2

Which of the following increases labor productivity?

Accepted Answer

A)   an increase in the aggregate hours of work
B)   decreases in the availability of computers and factory buildings
C)   inventions of new machinery, equipment, or software
D)   a decline in the health of the population

Question 3

Which of the following is an example of human capital?

Accepted Answer

A)   a computer
B)   a factory building
C)   a college education
D)   a software program

Question 4

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

Question 5

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Accepted Answer

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

Question 6

An increase in the demand for loanable funds will occur if there is

Accepted Answer

A)   an increase in the real interest rate.
B)   a decrease in the real interest rate.
C)   an increase in expected profits from firm investment projects.
D)   an increase in the nominal interest rate accompanied by an equal increase in inflation.

Question 7

At the end of an expansion,wages of workers are usually rising faster than prices.

Accepted Answer

A) True 
 B)False

Question 8

Explain how unemployment changes over the business cycle.Why do these changes occur?

Accepted Answer

Unemployment will fall during an expansi...

Question 9

Technological advances generally result in

Accepted Answer

A)   decreased incomes.
B)   increased life expectancy.
C)   increased infant mortality rates.
D)   increased average number of hours worked per day.

Question 10

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

Question 11

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.

Question 12

In a closed economy public saving plus private saving is equal to

Accepted Answer

A)   investment.
B)   taxes minus transfers.
C)   the budget surplus.
D)   the budget deficit.

Question 13

When potential GDP increases,is it necessarily the case that real GDP increases as well? Explain.

Accepted Answer

An increase in potential GDP is a result...

Question 14

During a recession,spending on ________ tends to fall more dramatically than spending on ________.

Accepted Answer

A)   necessities; luxuries
B)   durable goods; nondurable goods
C)   nondurable goods; durable goods
D)   food; cars

Question 15

Table 21-1
 
-Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2008 to 2011?

Accepted Answer

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

Question 16

If real GDP per capita measured in 2000 dollars was $6,000 in 1950 and $48,000 in 2010,we would say that in the year 2010,the average American could buy ________ times as many goods and services as the average American in 1950.

Accepted Answer

A)   1/8
B)   4
C)   8
D)   12

Question 17

Since 1900,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

Accepted Answer

A)   increased; understates
B)   increased; overstates
C)   decreased; understates
D)   decreased; overstates

Question 18

The effect of a recession on a company like Boeing Aircraft is such that

Accepted Answer

A)   sales decline more sharply for Boeing as compared to firms that do not produce durable goods.
B)   profits fall less sharply as compared to firms that do not produce durable goods.
C)   the decline in sales is more short-lived as compared to firms that do not produce durable goods.
D)   there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods.

Question 19

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.

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

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

Since 1900,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in the United States over this time.

Correct AnswerverifiedShow Answer

If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.

Correct AnswerverifiedShow Answer

During a recession,spending on ________ tends to fall more dramatically than spending on ________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedHuman capital is the accumulated knowled...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

If real GDP per capita measured in 2000 dollars was $6,000 in 1950 and $48,000 in 2010,we would say that in the year 2010,the average American could buy ________ times as many goods and services as the average American in 1950.

Correct AnswerverifiedShow Answer

Explain how unemployment changes over the business cycle.Why do these changes occur?

Correct AnswerverifiedUnemployment will fall during an expansi...View AnswerShow Answer

An increase in the demand for loanable funds will occur if there is

Correct AnswerverifiedShow Answer

During the recession phase of the business cycle,

Correct AnswerverifiedShow Answer

In a closed economy public saving plus private saving is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 21-1 -Refer to Table 21-1.Using the table above,what is the approximate average annual growth rate from 2008 to 2011?

Correct AnswerverifiedShow Answer

The effect of a recession on a company like Boeing Aircraft is such that

Correct AnswerverifiedShow Answer

At the end of an expansion,wages of workers are usually rising faster than prices.

Correct AnswerverifiedShow Answer

Which of the following increases labor productivity?

Correct AnswerverifiedShow Answer

Which of the following is an example of human capital?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Technological advances generally result in

Correct AnswerverifiedShow Answer

When potential GDP increases,is it necessarily the case that real GDP increases as well? Explain.

Correct AnswerverifiedAn increase in potential GDP is a result...View AnswerShow Answer

Since 1900,real GDP per capita has and this measure the actual growth in standards of living in the United States over this time.

Correct Answer
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If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to and the equilibrium quantity of loanable funds to .

Correct Answer
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During a recession,spending on tends to fall more dramatically than spending on .

Correct Answer
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Human capital is the accumulated knowled...
View Answer

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.

Correct Answer
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Unemployment will fall during an expansi...
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An increase in potential GDP is a result...
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