Question 1

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 trillionE) B) and C)
F) A) and D)

Question 2

Economic growth depends more on technological change than on increases on capital per hour worked.

Accepted Answer

A) True 
 B)False

Question 3

If an economy is growing at a rate of 2.5% per year,how long will it take the economy to double in size?

Accepted Answer

A)  60 years
B)  43 years
C)  36 years
D)  28 yearsE) C) and D)
F) All of the above

Question 4

Borrowers are ________ of loanable funds,and lenders are ________ of loanable funds.

Accepted Answer

A)  demanders;suppliers
B)  suppliers;demanders
C)  suppliers;suppliers
D)  demanders;demandersE) None of the above
F) C) and D)

Question 5

Using equations for public and private saving,show that saving must equal investment in a closed economy.Begin with the expression for total saving in the economy.

Accepted Answer

Start with the expression of total savin...

Question 6

A period of economic expansion ends with a business cycle trough.

Accepted Answer

A) True 
 B)False

Question 7

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.E) C) and D)
F) A) and B)

Question 8

Inflation is measured

Accepted Answer

A)  using the level of the consumer price index.
B)  as the percentage change in the consumer price index.
C)  using the level of real GDP.
D)  as the percentage change in real GDP.E) None of the above
F) All of the above

Question 9

Inflation usually increases during a recession and decreases during an expansion.

Accepted Answer

A) True 
 B)False

Question 10

Retained earnings are always sufficient to finance a firm's rapid expansion in a high-growth economy.

Accepted Answer

A) True 
 B)False

Question 11

Countries without well-developed financial systems are able to sustain high levels of economic growth.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following indicates that the U.S.economy has become more stable since 1950?

Accepted Answer

A)  longer recessions
B)  shorter expansions
C)  less severe fluctuations in real GDP
D)  All of the above indicate that the U.S.economy has become more stable since 1950.E) A) and B)
F) C) and D)

Question 13

As the economy nears the end of an expansion,which of the following do we typically see?

Accepted Answer

A)  rising firm profits
B)  rising levels of firm investment
C)  rising interest rates
D)  falling wages relative to output pricesE) A) and B)
F) A) and C)

Question 14

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

Accepted Answer

Ebenezer Scrooge is known for his unwill...

Question 15

Explain and show graphically how government deficits can "crowd out" private investment.

Accepted Answer

When the government runs a deficit publi...

Question 16

A firm can fund an expansion of its operations by

Accepted Answer

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

Question 17

Figure 21-6 
-Refer to Figure 21-6.The loanable funds market is given in the figure above.If the current real interest rate is 5 percent,which of the following is true?

Accepted Answer

A)  The loanable funds market is in equilibrium.
B)  There is a surplus of loanable funds in the market.
C)  There is a shortage of loanable funds in the market.
D)  The quantity of loanable funds being demanded in the market is less than $90 million.E) A) and D)
F) B) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What is productivity? How does a country's standard of living relate to productivity?

Accepted Answer

Productivity refers to the amount of goo...

Question 20

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.E) A) and B)
F) A) and C)

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

Retained earnings are always sufficient to finance a firm's rapid expansion in a high-growth economy.

Correct AnswerverifiedShow Answer

Inflation is measured

Correct AnswerverifiedShow Answer

A firm can fund an expansion of its operations by

Correct AnswerverifiedShow Answer

Using equations for public and private saving,show that saving must equal investment in a closed economy.Begin with the expression for total saving in the economy.

Correct AnswerverifiedStart with the expression of total savin...View AnswerShow Answer

Economic growth depends more on technological change than on increases on capital per hour worked.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If an economy is growing at a rate of 2.5% per year,how long will it take the economy to double in size?

Correct AnswerverifiedShow Answer

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

A period of economic expansion ends with a business cycle trough.

Correct AnswerverifiedShow Answer

As the economy nears the end of an expansion,which of the following do we typically see?

Correct AnswerverifiedShow Answer

Countries without well-developed financial systems are able to sustain high levels of economic growth.

Correct AnswerverifiedShow Answer

Which of the following indicates that the U.S.economy has become more stable since 1950?

Correct AnswerverifiedShow Answer

What is productivity? How does a country's standard of living relate to productivity?

Correct AnswerverifiedProductivity refers to the amount of goo...View AnswerShow Answer

Inflation usually increases during a recession and decreases during an expansion.

Correct AnswerverifiedShow Answer

Potential GDP refers to

Correct AnswerverifiedShow Answer

Borrowers are ________ of loanable funds,and lenders are ________ of loanable funds.

Correct AnswerverifiedShow Answer

Explain and show graphically how government deficits can "crowd out" private investment.

Correct AnswerverifiedWhen the government runs a deficit publi...View AnswerShow Answer

Long-run economic growth requires all of the following except

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 21-6 -Refer to Figure 21-6.The loanable funds market is given in the figure above.If the current real interest rate is 5 percent,which of the following is true?

Correct AnswerverifiedShow Answer

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Start with the expression of total savin...
View Answer

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Correct Answer
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Ebenezer Scrooge is known for his unwill...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Productivity refers to the amount of goo...
View Answer

Correct Answer
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Borrowers are of loanable funds,and lenders are of loanable funds.

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When the government runs a deficit publi...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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