Question 1

Which of the following best describes long-run economic growth?

Accepted Answer

The process by which rising productivity increases the average standard of living over time.

Question 2

Suppose real GDP in 2021 was $$21.4$$ trillion and in 2022 was $$21.8$$ trillion. What was the growth rate of real GDP from 2021 to 2022? Use the formula $$	ext{Growth Rate} = \frac{	ext{New Value} - 	ext{Old Value}}{	ext{Old Value}} 	imes 100\%.$$

Accepted Answer

$$1.87\%$$

Question 3

Which of the following is NOT a factor that directly increases labor productivity?

Accepted Answer

An increase in the price level.

Question 4

If the growth rate of an economic variable is $$5\%$$, approximately how many years will it take for the variable to double according to the Rule of 70? Use $$	ext{Years to double} = \frac{70}{	ext{Growth Rate}}.$$

Accepted Answer

$$14$$ years

Question 5

Which of the following best explains why property rights are important for economic growth?

Accepted Answer

They ensure that individuals and firms have the incentive to invest and innovate.

Question 6

In a closed economy, which equation correctly represents investment ($$I) in $$terms of GDP ($$Y$$), consumption ($$C$$), and government purchases ($$G$$)?

Accepted Answer

$$I = Y - C - G$$

Question 7

Which of the following is an example of a financial intermediary?

Accepted Answer

A commercial bank

Question 8

Suppose the government runs a budget deficit. What is the likely effect on the market for loanable funds?

Accepted Answer

The supply of loanable funds decreases, raising the equilibrium real interest rate.

Question 9

Which of the following best describes 'crowding out'?

Accepted Answer

A decline in private expenditure as a result of increases in government purchases.

Question 10

During which phase of the business cycle do interest rates and wages typically rise faster than other prices?

Accepted Answer

Near the end of an expansion

Question 11

Which of the following is a correct statement about the relationship between economic prosperity and health?

Accepted Answer

Richer nations can devote more resources to improving health, and healthier citizens are more productive.

Question 12

If the government increases its borrowing by $$1\% of $$GDP, what is the expected effect on the real interest rate according to the study cited in the text?

Accepted Answer

It increases by $$0.003$$ points.

Question 13

Which of the following is NOT a service provided by the financial system?

Accepted Answer

Setting the minimum wage

Question 14

Which of the following best describes the business cycle?

Accepted Answer

Alternating periods of economic expansion and recession.

Question 15

During a recession, what typically happens to the unemployment rate?

Accepted Answer

It rises, and often continues to rise even after the recession ends.

Question 16

Which of the following is a reason why economists have difficulty predicting recessions?

Accepted Answer

Business cycles are not uniform and leading indicators are unreliable.

Question 17

If a country wants to sustain rapid economic growth, which of the following policies would be LEAST effective?

Accepted Answer

Increasing trade barriers and restricting property rights.

Question 18

Which of the following equations correctly expresses total saving ($$S) in a $$closed economy, where $$Y is $$GDP, $$C is $$consumption, $$G is $$government purchases, and $$T is $$taxes?

Accepted Answer

$$S = Y - C - G$$

Question 19

Which of the following is a likely effect of the increasing importance of services in the U.S. economy on the business cycle?

Accepted Answer

It makes business cycles milder, as services are less affected by recessions than manufacturing.

Question 20

Suppose the average annual growth rates of real GDP for three years are $$-2.2\%$$, $$5.8\%$$, and $$1.9\%. $$What is the average annual growth rate over this period?

Accepted Answer

$$1.83\%$$

Economic Growth, the Financial System, and Business Cycles: Study Notes

Guida di studio - Domande di pratica

Study guide - Flashcard