Question 1

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) C) and D)

Question 2

The period between a business cycle peak and a business cycle trough is called

Accepted Answer

A)  expansion.
B)  recession.
C)  diffusion.
D)  recalculation.E) C) and D)
F) All of the above

Question 3

The period of expansion ends with a ________ and the period of recession ends with a ________.

Accepted Answer

A)  business cycle peak;business cycle trough
B)  business cycle trough;business cycle peak
C)  business cycle peak;business cycle peak
D)  business cycle trough;business cycle troughE) All of the above
F) B) and D)

Question 4

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

Accepted Answer

A)  tomatoes
B)  ink pens
C)  gasoline
D)  refrigeratorsE) A) and B)
F) B) and C)

Question 5

The sum of public and private saving in an economy is equal to

Accepted Answer

A)  Y - C - T.
B)  T - TR - G.
C)  Y - C - G.
D)  I - C - G.E) A) and C)
F) A) and D)

Question 6

Suppose you are an advisor to the Business Cycle Dating Committee.You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year.Which data do you look at? How does the economy behave at the onset of a recession?

Accepted Answer

Since a recession is defined as signific...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Because Corning 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.E) B) and D)
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Increases in capital per hour worked cannot sustain high rates of economic growth unless accompanied by technological change.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is most liquid?

Accepted Answer

A)  a mutual fund share
B)  a government bond
C)  a corporate bond
D)  a dollar billE) None of the above
F) A) and D)

Question 12

Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel and responded by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

Accepted Answer

A)  continue expanding and was able to maintain or enhance the company's market share.
B)  continue expanding and the company ended up losing significant market share.
C)  curtail expansion plans,and by significantly cutting back on expansion was able to maintain the company's market share.
D)  curtail expansion plans and the company ended up losing significant market share.E) C) and D)
F) B) and D)

Question 13

Human capital refers to which of the following?

Accepted Answer

A)  the quantity of goods and services that can be produced by one worker or by one hour of work
B)  the accumulated knowledge and skills workers acquire from education and training or from their life experiences
C)  manufactured goods that are used to produce other goods and services
D)  physical equipment that is made by human laborers,not machinesE) B) and D)
F) A) and D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a reason why the U.S.economy has been more stable since 1950?

Accepted Answer

A)  Goods have become a larger fraction of GDP and services have become a smaller fraction of GDP.
B)  The government has actively pursued policy to combat recessions and prolong expansions.
C)  Unemployment insurance and other government programs curtail the decline in spending that occurs during a recession.
D)  Services have become a larger fraction of GDP and goods have become a smaller fraction of GDP.E) A) and D)
F) A) and B)

Question 16

The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________.

Accepted Answer

A)  production;population
B)  population;GDP per capita
C)  population;production
D)  population;incomeE) A) and B)
F) All of the above

Question 17

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.E) A) and D)
F) All of the above

Question 18

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 private saving in the economy?

Accepted Answer

A)  $3 trillion
B)  $4 trillion
C)  $5 trillion
D)  $8 trillionE) B) and C)
F) None of the above

Question 19

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

Accepted Answer

A)  rise;rapidly
B)  rise;slowly
C)  fall;rapidly
D)  fall;slowlyE) A) and B)
F) A) and C)

Question 20

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

Accepted Answer

A)  less than 1 year
B)  5 years
C)  14 years
D)  35 yearsE) A) and D)
F) B) and C)

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

The period between a business cycle peak and a business cycle trough is called

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According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%?

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

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Human capital refers to which of the following?

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Increases in capital per hour worked cannot sustain high rates of economic growth unless accompanied by technological change.

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Which of the following is most liquid?

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

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The sum of public and private saving in an economy is equal to

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Suppose you are an advisor to the Business Cycle Dating Committee.You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year.Which data do you look at? How does the economy behave at the onset of a recession?

Correct AnswerverifiedSince a recession is defined as signific...View AnswerShow Answer

As the economy nears the end of an expansion,interest rates usually ________ and wages rise more ________ than prices.

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The period of expansion ends with a ________ and the period of recession ends with a ________.

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

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Which of the following is not a reason why the U.S.economy has been more stable since 1950?

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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 private saving in the economy?

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

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Because Corning produces durable goods,the demand for their goods

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________.

Correct AnswerverifiedShow Answer

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

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Following the September 11,2001,terrorist attacks,the managers of many hotels expected a prolonged period of reduced travel and responded by laying off workers and postponing or canceling new construction.Isadore Sharp,the chairman and CEO of Four Seasons Hotels,decided to

Correct AnswerverifiedShow Answer

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Since a recession is defined as signific...
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As the economy nears the end of an expansion,interest rates usually and wages rise more than prices.

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The period of expansion ends with a and the period of recession ends with a .

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The only way the standard of living of the average person in a country can increase is if increases faster than .

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