Question 1

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

Question 2

How are unemployment,inflation,and the business cycle related?

Accepted Answer

A recessionary phase of a business cycle...

Question 3

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Accepted Answer

A) True 
 B)False

Question 4

The total amount of physical capital available in a country is know as the country's

Accepted Answer

A)  labour productivity.
B)  savings.
C)  investment.
D)  capital stock.
E)  technology.F) C) and D)
G) A) and C)

Question 5

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

Accepted Answer

A)  Y - C - T
B)  Y - G - T
C)  Y - G - T + TR
D)  Y + TR - C - T
E)  C + I + GF) B) and D)
G) All of the above

Question 6

Since 1961,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in Canada over this time.

Accepted Answer

A)  increased; understates
B)  increased; overstates
C)  decreased; understates
D)  decreased; overstatesE) All of the above
F) A) and B)

Question 7

The demand for durable goods

Accepted Answer

A)  has decreased over time.
B)  declines by a greater percentage than does GDP during a recession.
C)  declines by a smaller percentage than does GDP during a recession.
D)  rises by a greater percentage than does GDP during a recession.
E)  rises by a smaller percentage than does GDP during a recession.F) A) and B)
G) D) and E)

Question 8

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)  the level of GDP that would be achieved if government spending did not crowd out private sector spending.F) A) and C)
G) All of the above

Question 9

The budget deficit is defined as

Accepted Answer

A)  T - (G + TR) ,and this is negative.
B)  T - (G + TR) ,and this is positive.
C)  T + (G - TR) ,and this is negative.
D)  T + (G + TR) ,and this is negative.
E)  T + (G × TR) ,and this is positive.F) None of the above
G) B) and C)

Question 10

There is public dissaving if

Accepted Answer

A)  G + TR > T.
B)  G + TR 
C)  TR > G + T.
D)  TR 
E)  TR - G < T.F) B) and C)
G) A) and C)

Question 11

An increase in the government budget deficit 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
E)  supply; right; riseF) A) and B)
G) B) and E)

Question 12

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)  Saving is greater than investment,but they both grow at the same rate.F) All of the above
G) A) and B)

Question 13

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

Accepted Answer

A)  The equilibrium quantity of loanable funds would rise.
B)  The equilibrium quantity of loanable funds would fall.
C)  The equilibrium quantity of loanable funds would be unaffected.
D)  The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax.
E)  The equilibrium quantity of loanable funds will initially fall and then return to its initial value.F) A) and B)
G) A) and C)

Question 14

According to the commonly used definition,Canada has experienced ________ recession(s) since 1980.

Accepted Answer

A)  1
B)  2
C)  3
D)  4
E)  5F) A) and C)
G) A) and E)

Question 15

Which of the following would increase public saving?

Accepted Answer

A)  an increase in taxes
B)  an increase in transfers
C)  an increase in government purchases
D)  an increase in consumption
E)  All of the above would increase public saving.F) C) and E)
G) A) and C)

Question 16

If the CPI is currently 202,what does this tell you about inflation between last year and this year?

Accepted Answer

A)  There was deflation in the economy between this year and last year.
B)  Inflation in the economy between this year and last year was 2%.
C)  Inflation in the economy between this year and last year was 102%.
D)  The CPI measures only the level of prices in a given year,not the percentage change in prices from one year to the next.
E)  This economy is suffering from deflation.F) B) and D)
G) A) and C)

Question 17

Which of the following is a correct statement?

Accepted Answer

A)  Inflation is measured as the percent change in the CPI.
B)  The CPI is a widely used measure of the inflation rate.
C)  Real GDP is our best measure of economic growth.
D)  The PPI measures inflation as experienced by producers.
E)  Inflation is measured as changes in the unemployment rate.F) B) and E)
G) B) and D)

Question 18

________ are financial securities that represent promises to repay a fixed amount of funds.

Accepted Answer

A)  Stocks
B)  Bonds
C)  Interest rates
D)  Mutual funds
E)  Index tracking fundsF) B) and E)
G) A) and B)

Question 19

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.
E)  Stocks represent a guarantee of future payment,while bonds do not.F) None of the above
G) A) and B)

Question 20

Financial markets and financial intermediaries comprise the financial system.

Accepted Answer

A) True 
 B)False

Exam 6: Economic Growth, the Financial System, and Business Cycles

How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

Correct AnswerverifiedShow Answer

Since 1961,real GDP per capita has ________ and this measure ________ the actual growth in standards of living in Canada over this time.

Correct AnswerverifiedShow Answer

How are unemployment,inflation,and the business cycle related?

Correct AnswerverifiedA recessionary phase of a business cycle...View AnswerShow Answer

Which of the following is a correct statement?

Correct AnswerverifiedShow Answer

The demand for durable goods

Correct AnswerverifiedShow Answer

Accumulating a greater number of inputs will ensure that an economy will experience economic growth.

Correct AnswerverifiedShow Answer

What is one difference between stocks and bonds?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the CPI is currently 202,what does this tell you about inflation between last year and this year?

Correct AnswerverifiedShow Answer

Which of the following would increase public saving?

Correct AnswerverifiedShow Answer

________ are financial securities that represent promises to repay a fixed amount of funds.

Correct AnswerverifiedShow Answer

Potential GDP refers to

Correct AnswerverifiedShow Answer

According to the commonly used definition,Canada has experienced ________ recession(s) since 1980.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The total amount of physical capital available in a country is know as the country's

Correct AnswerverifiedShow Answer

There is public dissaving if

Correct AnswerverifiedShow Answer

Financial markets and financial intermediaries comprise the financial system.

Correct AnswerverifiedShow Answer

The budget deficit is defined as

Correct AnswerverifiedShow Answer

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Since 1961,real GDP per capita has and this measure the actual growth in standards of living in Canada over this time.

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A recessionary phase of a business cycle...
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The period of expansion ends with a and the period of recession ends with a .

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

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