Question 1

If you spend more of your income on consumption goods, which of the following will occur?

Accepted Answer

A)   The production of investment goods will fall.
B)   Economic growth will be stimulated.
C)   Investments in education will rise.
D)   For every dollar you spend on consumption, real GDP will fall by a dollar.

Question 2

Labor productivity will increase if the ________ increases and ________.

Accepted Answer

A)   quantity of capital per hour worked; technology improves
B)   quantity of labor per unit of capital; technology improves
C)   quantity of capital per hour worked; immigration increases while capital is fixed
D)   quantity of labor per unit of capital; immigration increases while capital is fixed

Question 3

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

Accepted Answer

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

Question 4

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Accepted Answer

A)   savers; borrower
B)   borrower; savers
C)   governments; households
D)   firms; insurance companies

Question 5

Scenario 21-1
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 21-1. 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

Question 6

What two factors are the keys to determining labor productivity?

Accepted Answer

A)   the business cycle and the growth rate of real GDP
B)   the growth rate of real GDP and the interest rate
C)   technology and the quantity of capital per hour worked
D)   the average level of education of the workforce and the price level

Question 7

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 8

Market economies tend to grow more quickly than centrally-planned economies.

Accepted Answer

A) True 
 B)False

Question 9

According to the National Bureau of Economic Research, the United States has experienced ________ recessions since 1950.

Accepted Answer

A)   4
B)   7
C)   10
D)   15

Question 10

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

Accepted Answer

A)   Stocks
B)   Bonds
C)   Treasury bills
D)   Certificates of deposit

Question 11

Figure 21-3 
-Refer to Figure 21-3. 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.

Question 12

Because Whirlpool produces durable goods, the demand for their goods

Accepted Answer

A)   is likely to increase during recession.
B)   declines when incomes in the economy are rising.
C)   is consistently high, regardless of the state of the economy.
D)   tends to follow the business cycle.

Question 13

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Accepted Answer

Potential GDP is the level of GDP attain...

Question 14

When the government runs a deficit, which of the following is true?

Accepted Answer

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

Question 15

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 16

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 17

Centrally-planned economies tend to grow more quickly than market economies.

Accepted Answer

A) True 
 B)False

Question 18

A firm can fund an expansion of its operations by

Accepted Answer

A)   issuing bonds.
B)   buying stock.
C)   paying dividends.
D)   loaning money.

Question 19

Figure 21-6 
-Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

Accepted Answer

A)   The quantity of loanable funds demanded by firms will rise above $120 million.
B)   The quantity of loanable funds demanded by firms will fall below $120 million.
C)   The budget deficit will have no impact on the quantity of loanable funds demanded by firms.
D)   The interest rate will fall below 4 percent.

Question 20

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Accepted Answer

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

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

Figure 21-6 -Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

Correct Answer
verified

When the government runs a deficit, which of the following is true?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
The prospects for this country's growth ...
View Answer

Scenario 21-1 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 21-1. Based on the information above, what is the level of private saving in the economy?

Correct Answer
verified

According to the National Bureau of Economic Research, the United States has experienced ________ recessions since 1950.

Correct Answer
verified

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

Correct Answer
verified

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

Correct Answer
verified

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.

Correct Answer
verified
Private saving is equal to Y + TR - C - ...
View Answer

If you spend more of your income on consumption goods, which of the following will occur?

Correct Answer
verified

What two factors are the keys to determining labor productivity?

Correct Answer
verified

Figure 21-3 -Refer to Figure 21-3. Which of the following is consistent with the graph depicted above?

Correct Answer
verified

An increase in the government budget surplus will shift the curve for loanable funds to the and the equilibrium real interest rate will .

Correct Answer
verified

Market economies tend to grow more quickly than centrally-planned economies.

Correct Answer
verified

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Correct Answer
verified
Potential GDP is the level of GDP attain...
View Answer

A financial intermediary's main function is to match with excess funds to with a shortage of funds.

Correct Answer
verified

A firm can fund an expansion of its operations by

Correct Answer
verified

Labor productivity will increase if the increases and .

Correct Answer
verified

Centrally-planned economies tend to grow more quickly than market economies.

Correct Answer
verified

Because Whirlpool produces durable goods, the demand for their goods

Correct Answer
verified

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

Figure 21-6 -Refer to Figure 21-6. The market is in equilibrium. If the government budget deficit rises, which of the following would you expect to see?

Correct AnswerverifiedShow Answer

When the government runs a deficit, which of the following is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe prospects for this country's growth ...View AnswerShow Answer

Scenario 21-1 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 21-1. Based on the information above, what is the level of private saving in the economy?

Correct AnswerverifiedShow Answer

According to the National Bureau of Economic Research, the United States has experienced ________ recessions since 1950.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If there is public dissaving, investment spending in the economy will decline, holding everything else constant.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedPrivate saving is equal to Y + TR - C - ...View AnswerShow Answer

If you spend more of your income on consumption goods, which of the following will occur?

Correct AnswerverifiedShow Answer

What two factors are the keys to determining labor productivity?

Correct AnswerverifiedShow Answer

Figure 21-3 -Refer to Figure 21-3. Which of the following is consistent with the graph depicted above?

Correct AnswerverifiedShow Answer

An increase in the government budget surplus will shift the ________ curve for loanable funds to the ________ and the equilibrium real interest rate will ________.

Correct AnswerverifiedShow Answer

Market economies tend to grow more quickly than centrally-planned economies.

Correct AnswerverifiedShow Answer

What factors increase potential GDP? Include a definition of potential GDP in your answer.

Correct AnswerverifiedPotential GDP is the level of GDP attain...View AnswerShow Answer

A financial intermediary's main function is to match ________ with excess funds to ________ with a shortage of funds.

Correct AnswerverifiedShow Answer

A firm can fund an expansion of its operations by

Correct AnswerverifiedShow Answer

Labor productivity will increase if the ________ increases and ________.

Correct AnswerverifiedShow Answer

Centrally-planned economies tend to grow more quickly than market economies.

Correct AnswerverifiedShow Answer

Because Whirlpool produces durable goods, the demand for their goods

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The prospects for this country's growth ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Private saving is equal to Y + TR - C - ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

An increase in the government budget surplus will shift the curve for loanable funds to the and the equilibrium real interest rate will .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Potential GDP is the level of GDP attain...
View Answer

A financial intermediary's main function is to match with excess funds to with a shortage of funds.

Correct Answer
verified

Correct Answer
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Labor productivity will increase if the increases and .

Correct Answer
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Correct Answer
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Correct Answer
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