Question 1

In a closed economy,private saving is equal to which of the following? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Accepted Answer

A)  Y - C - T
B)  Y - G - T
C)  Y - G - T + TR
D)  Y + TR - C - TE) A) and B)
F) B) and D)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following financial securities is most liquid?

Accepted Answer

A)  a savings account
B)  a share of stock
C)  a cashier's check
D)  a $20 billE) A) and B)
F) A) and D)

Question 4

From 1991 until 2001,the United States was in a period of

Accepted Answer

A)  expansion.
B)  recession.
C)  business cycle troughs.
D)  business cycle peaks.E) A) and C)
F) All of the above

Question 5

There is a federal budget deficit when

Accepted Answer

A)  the government spends less that it collects in taxes.
B)  the government spends more that it collects in taxes.
C)  the government spends the same amount it collects in taxes.
D)  taxes are too high.E) A) and B)
F) A) and C)

Question 6

The Business Cycle Dating Committee defines a recession as

Accepted Answer

A)  two consecutive quarters of declining real GDP.
B)  two consecutive quarters of declining nominal GDP.
C)  a significant decline in activity visible in industrial production,employment,real income,and wholesale/retail trade lasting more than a few months.
D)  a significant decline in inflation and unemployment lasting more than a few months.E) A) and B)
F) C) and D)

Question 7

In a closed economy,what is the relationship between saving and investment?

Accepted Answer

A)  Saving is greater than investment.
B)  Investment is greater than saving.
C)  Investment is equal to saving.
D)  Investment may be greater or smaller than saving.E) B) and C)
F) A) and B)

Question 8

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 9

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Accepted Answer

A)  about 15 years
B)  about 17 years
C)  about 25 years
D)  about 30 yearsE) B) and C)
F) All of the above

Question 10

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 programE) None of the above
F) All of the above

Question 11

________ is the ease with which a financial security can be exchanged for money.

Accepted Answer

A)  Risk
B)  The face value
C)  Liquidity
D)  The rate of returnE) None of the above
F) A) and D)

Question 12

If real GDP in a closed economy is $40 billion,consumption is $20 billion,and government purchases are $10 billion,what is investment?

Accepted Answer

A)  $10 billion
B)  $30 billion
C)  $40 billion
D)  $70 billionE) All of the above
F) A) and C)

Question 13

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)  firmsE) A) and B)
F) All of the above

Question 14

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

Question 15

When a recession ends

Accepted Answer

A)  interest rates decrease.
B)  households decrease spending on durable goods.
C)  the household sector decreases spending substantially.
D)  firms increase the amount of borrowing.E) None of the above
F) B) and D)

Question 16

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 fixedE) All of the above
F) C) and D)

Question 17

In a closed economy

Accepted Answer

A)  I = Y - C - G.
B)  I = Y + C - G.
C)  I = Y - C + G.
D)  I = Y + C + G.E) C) and D)
F) B) and C)

Question 18

Financial markets and financial intermediaries comprise the financial system.

Accepted Answer

A) True 
 B)False

Question 19

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; carsE) A) and B)
F) A) and C)

Question 20

If labor productivity growth slows down in a country,this will

Accepted Answer

A)  accelerate the increase in real GDP per capita.
B)  accelerate the increase in nominal GDP.
C)  slow down the increase in real GDP per capita.
D)  slow down the increase in nominal GDP.E) A) and C)
F) B) and C)

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

In a closed economy,what is the relationship between saving and investment?

Correct Answer
verified

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

Correct Answer
verified

The Business Cycle Dating Committee defines a recession as

Correct Answer
verified

Which of the following is an example of human capital?

Correct Answer
verified

From 1991 until 2001,the United States was in a period of

Correct Answer
verified

Which of the following financial securities is most liquid?

Correct Answer
verified

There is a federal budget deficit when

Correct Answer
verified

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Correct Answer
verified

In a closed economy,private saving is equal to which of the following? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Correct Answer
verified

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

Financial markets and financial intermediaries comprise the financial system.

Correct Answer
verified

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

Correct Answer
verified

In a closed economy

Correct Answer
verified

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

Correct Answer
verified

If real GDP in a closed economy is $40 billion,consumption is $20 billion,and government purchases are $10 billion,what is investment?

Correct Answer
verified

If labor productivity growth slows down in a country,this will

Correct Answer
verified

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Correct Answer
verified

Labor productivity will increase if the increases and .

Correct Answer
verified

________ is the ease with which a financial security can be exchanged for money.

Correct Answer
verified

When a recession ends

Correct Answer
verified

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

In a closed economy,what is the relationship between saving and investment?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Business Cycle Dating Committee defines a recession as

Correct AnswerverifiedShow Answer

Which of the following is an example of human capital?

Correct AnswerverifiedShow Answer

From 1991 until 2001,the United States was in a period of

Correct AnswerverifiedShow Answer

Which of the following financial securities is most liquid?

Correct AnswerverifiedShow Answer

There is a federal budget deficit when

Correct AnswerverifiedShow Answer

Which of the following is a true statement about the length of recessions and expansions in the United States economy?

Correct AnswerverifiedShow Answer

In a closed economy,private saving is equal to which of the following? (Y = GDP,C = Consumption,G = Government purchases,T = Taxes,and TR = Transfers)

Correct AnswerverifiedShow Answer

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

Financial markets and financial intermediaries comprise the financial system.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a closed economy

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If real GDP in a closed economy is $40 billion,consumption is $20 billion,and government purchases are $10 billion,what is investment?

Correct AnswerverifiedShow Answer

If labor productivity growth slows down in a country,this will

Correct AnswerverifiedShow Answer

If GDP is currently $13 trillion and is growing at a rate of 2.3% per year,how long will it take GDP to reach $26 trillion?

Correct AnswerverifiedShow Answer

Labor productivity will increase if the ________ increases and ________.

Correct AnswerverifiedShow Answer

________ is the ease with which a financial security can be exchanged for money.

Correct AnswerverifiedShow Answer

When a recession ends

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

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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