Question 1

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.

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.

Question 3

When the government runs a budget deficit,we would expect to see that

Accepted Answer

A)  private saving will fall.
B)  investment will fall.
C)  G + TR 
D)  public saving is positive.

Question 4

Potential GDP refers to

Accepted Answer

A)  the level of GDP attained when all firms are producing at capacity.
B)  the level of GDP attained by the country with the highest growth in real GDP in a given year.
C)  the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year.
D)  the extent to which real GDP is above or below nominal GDP.

Question 5

Long-run economic growth requires all of the following except

Accepted Answer

A)  technological change.
B)  increases in capital per hour worked.
C)  government provision of secure property rights.
D)  political instability.

Question 6

Table 10-2
 
-Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2016 to 2017?

Accepted Answer

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

Question 7

What is human capital?

Accepted Answer

A)  a slang term for the underground labor market
B)  manufactured goods that are used to produce other goods
C)  accumulated knowledge and skills acquired by a worker
D)  the manager or owner of a business

Question 8

During the expansion phase of the business cycle

Accepted Answer

A)  production increases.
B)  employment decreases.
C)  income decreases.
D)  unemployment increases.

Question 9

What is one difference between stocks and bonds?

Accepted Answer

A)  Bonds earn a higher rate of return than stocks.
B)  Stocks earn a higher rate of return than bonds.
C)  Bonds are purchased at a bank,while stocks are purchased through the federal government.
D)  Stocks represent partial ownership in a firm,while bonds do not.

Question 10

According to the National Bureau of Economic Research,the recession that began in December 2007

Accepted Answer

A)  lasted 12 months.
B)  lasted 18 months.
C)  lasted 27 months.
D)  did not end until December 2011.

Question 11

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 12

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 13

Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

Accepted Answer

A)  avoid playing any role in developing communication systems.
B)  provide secure rights to private property.
C)  establish an independent court system that enforces contracts.
D)  facilitate the development of an efficient financial system.

Question 14

If real GDP per capita measured in 2009 dollars was $6,000 in 1950 and $48,000 in 2018,we would say that in 2018,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 15

Potential GDP is the maximum output a firm is capable of producing.

Accepted Answer

A) True 
 B)False

Question 16

Scenario 10-1
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 10-1.Based on the information above,what is the level of public saving?

Accepted Answer

A)  $0
B)  $1 trillion
C)  $2 trillion
D)  negative $1 trillion (a deficit of $1 trillion)

Question 17

If real GDP in a small country in 2017 is $8 billion and real GDP in the same country in 2018 is $8.3 billion,the growth rate of real GDP between 2017 and 2018

Accepted Answer

A)  is 3.0%.
B)  is 3.6%.
C)  is 3.75%.
D)  cannot be determined from the information given.

Question 18

Explain why a centrally-planned economy might not grow as rapidly as a market economy.

Accepted Answer

Technological change is very important f...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Briefly explain how the miserliness of Ebenezer Scrooge might actually be beneficial for economic growth.

Accepted Answer

Ebenezer Scrooge is known for his unwill...

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

What is human capital?

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When the government runs a budget deficit,we would expect to see that

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A firm can fund an expansion of its operations by

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Scenario 10-1 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 10-1.Based on the information above,what is the level of public saving?

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Potential GDP refers to

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Explain why a centrally-planned economy might not grow as rapidly as a market economy.

Correct AnswerverifiedTechnological change is very important f...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

According to the National Bureau of Economic Research,the recession that began in December 2007

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

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Briefly explain how the miserliness of Ebenezer Scrooge might actually be beneficial for economic growth.

Correct AnswerverifiedEbenezer Scrooge is known for his unwill...View AnswerShow Answer

Long-run economic growth requires all of the following except

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If real GDP per capita measured in 2009 dollars was $6,000 in 1950 and $48,000 in 2018,we would say that in 2018,the average American could buy ________ times as many goods and services as the average American in 1950.

Correct AnswerverifiedShow Answer

Actual real GDP will be above potential GDP if

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During the expansion phase of the business cycle

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Which of the following does not describe governmental policy actions that are helpful in supporting growth in an economy? Governmental policies that

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What is one difference between stocks and bonds?

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If real GDP in a small country in 2017 is $8 billion and real GDP in the same country in 2018 is $8.3 billion,the growth rate of real GDP between 2017 and 2018

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Which of the following increases labor productivity?

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Table 10-2 -Refer to Table 10-2.Using the table above,what is the approximate growth rate of real GDP from 2016 to 2017?

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Potential GDP is the maximum output a firm is capable of producing.

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Technological change is very important f...
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Ebenezer Scrooge is known for his unwill...
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