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Exam 2 Chapters 8, 9, 10

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Macroeconomics

Question 1 of 103

1

If real GDP in a small country in 2005 is $8 billion and the real GDP in the same country in 2006 is $8.3 billion, the growth rate of real GDP between 2005 and 2006

Select one of the following:

  • is 3.75%

  • is 3.6%

  • is 3.0%

  • cannot be determined from the information given.

Explanation

Question 2 of 103

1

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%?

Select one of the following:

  • less than 1 year

  • 14 years

  • 5 years

  • 35 years

Explanation

Question 3 of 103

1

The quantity of goods and services that can be produced by one worker or by one hour of work is

Select one of the following:

  • labor productivity

  • technology

  • real GDP

  • human capital

Explanation

Question 4 of 103

1

What two factors are the keys to determining labor productivity?

Select one of the following:

  • technology and the quantity of capital per hour worked

  • the growth rate of real GDP and interest rate

  • the average level of education of the workforce and the price level

  • the business cycle and the growth rate of real GDP

Explanation

Question 5 of 103

1

Human capital refers to which of the following?

Select one of the following:

  • manufactured goods that are used to produce other goods and services

  • the accumulated knowledge and skills workers acquire from education and training or from their life experiences

  • the quality of good and services that can be produced by one worker or by one hour of work

  • physical that is made by human laborers, not machines

Explanation

Question 6 of 103

1

On difference between stocks and bonds is that

Select one of the following:

  • stocks represent ownership in companies, while bonds represent ownership in banks.

  • stocks usually issued in electronic form, while bonds are usually issued in paper form.

  • stocks so not involve a promise to repay the purchaser of the stock, while bonds represent a promise to repay the purchase price of the bond.

  • stocks are financial securities, while bonds are labor market securities.

Explanation

Question 7 of 103

1

In addition to matching households that have excess funds with firms that want to borrow funds, what three key services does the financial system provide for savers and borrowers?

Select one of the following:

  • risk-sharing, liquidity, and information

  • information, profit, and interest

  • high risk, high profit, and low savings

  • bonds, stocks, and mutual funds

Explanation

Question 8 of 103

1

In a closed economy, which of the following components of GDP is NOT included?

Select one of the following:

  • consumption

  • government spending

  • net exports

  • investment

Explanation

Question 9 of 103

1

In a closed economy, which of the following equations reflects investment? (Y=GDP, C= Consumption, G=Government purchases, T=Taxes, and TR=Transfers)

Select one of the following:

  • Y - C - G

  • C + G - T

  • Y - T + TR

  • Y - C - T

Explanation

Question 10 of 103

1

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

Select one of the following:

  • G= $7 trillion
    T= $10 trillion
    TR= $3 trillion

  • G= $7 trillion
    T= $7 trillion
    TR= $0

  • G= $5 trillion
    T= $7 trillion
    TR= $1 trillion

  • G= $5 trillion
    T= $5 trillion
    TR= $1 trillion

Explanation

Question 11 of 103

1

Inflation tends to________during the expansion phase of the business cycle and________during a recession phase of the business cycle.

Select one of the following:

  • increase; increase further

  • increase; decrease

  • decrease; decrease further

  • decrease; increase

Explanation

Question 12 of 103

1

Consider the following data for a simple economy:

Total Population 20,000
Working-Age Population 15,000
Employment 1,000
Unemployment 100

Select one of the following:

  • (100/1,000) X 100

  • (100/20,000) X 100

  • (100/15,000) X 100

  • (100/1,100) X 100

Explanation

Question 13 of 103

1

Total Population 20,000
Working-Age Population 15,000
Employment 1,000
Unemployment 100
Refer to the table above. The unemployment rate for this simple economy equals

Select one of the following:

  • (1,100/20,000) X 100

  • (1,000/15,000) X 100

  • (1,000/1,100) X 100

  • (1,100/15,000) X 100

Explanation

Question 14 of 103

1

Cyclical employment is the result of

Select one of the following:

  • a slowdown in the economy

  • the ups and downs in inflation

  • the search process of matching workers with jobs

  • frictional unemployment equals zero

Explanation

Question 15 of 103

1

Economist consider full employment to occur when

Select one of the following:

  • everyone who wants a job has a job

  • all existing unemployment is either frictional unemployment or structural unemployment

  • frictional unemployment and structural unemployment equals zero

  • frictional unemployment equals zero

Explanation

Question 16 of 103

1

Which of the following would be the best measure of the cost of living?

Select one of the following:

  • real GDP per person

  • GDP deflator

  • real GDP

  • Consumer Price Index

Explanation

Question 17 of 103

1

The consumer price index is the

Select one of the following:

  • ratio of the dollar amount necessary to buy the market basket of goods in that year divided by the dollar amount necessary to buy of goods in the base year.

  • ratio of the dollar amount necessary to buy a basket of goods typically consumed in the current period divided by the dollar amount necessary to buy the market basket of goods in the base year.

  • cost of a basket of goods typically consumed in the current period.

  • the cost of a basket of goods typically consumed in the base year.

Explanation

Question 18 of 103

1

Consider the following values of the consumer price index for 2002 and 2003.

Year CPI
2002 180
2003 184

The inflation rate for 2003 equals

Select one of the following:

  • 184 percent

  • 2.2 percent

  • 4.0 percent

  • 18.4 percent

Explanation

Question 19 of 103

1

The real interest rate equals the nominal interest rate_______the inflation rate.

Select one of the following:

  • times

  • divided by

  • minus

  • plus

Explanation

Question 20 of 103

1

Suppose you borrow $1,000 at an interest rate of 12 percent. If the expected real interest rate is 5 percent, then the rate of inflation over the upcoming year that would be most beneficial to you would be a rate inflation.

Select one of the following:

  • less than 7 percent

  • greater than 7 percent

  • equal to 7 percent

  • equal to 0 percent

Explanation

Question 21 of 103

1

Assume the market basket for the consumer price index has two products--meant and potatoes--with the following values in 2000 and 2006 for price and quality:

Base Year

Product Quality Price (2000) Product Quality Price (2006)
Meat 100 $10 Meat 120 $12
Potatoes 200 $2 Potatoes 180 $3

The Consumer Price Index for 2006 equals

Select one of the following:

  • 125

  • 141

  • 129

  • 135

Explanation

Question 22 of 103

1

Full employment is not considered to be zero unemployment, because

Select one of the following:

  • of cyclical unemployment

  • some people do not want a job

  • even though there are enough jobs, the search process of matching workers with jobs and the mismatch between skills and job requirements prevent individuals from immediately finding jobs.

  • there are not enough jobs for everyone who wants one.

Explanation

Question 23 of 103

1

Gross domestic product in the economy is measured by the

Select one of the following:

  • total number of goods and services produced in the economy

  • total number of services produced in the economy

  • dollar value of all final goods and services produced in the economy

  • total number of goods produced int eh economy

Explanation

Question 24 of 103

1

How are intermediate goods treated in the calculation of GDP?

Select one of the following:

  • Their value is not counted separately, but included as part of the value of the final good for.

  • Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input.

  • They are included only if they are imported.

  • Their value is counted separately, but not included as part of the value of the final good for which they are an input.

Explanation

Question 25 of 103

1

Investment spending includes spending on

Select one of the following:

  • transfer payments

  • food

  • changes in business inventories

  • stocks

Explanation

Question 26 of 103

1

In a small economy, gross investment in 2009 is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is the GDP for the economy in 2009?

Select one of the following:

  • $10,700

  • $10,300

  • $10,200

  • $10,000

Explanation

Question 27 of 103

1

GDP is not a perfect measure of well-being because

Select one of the following:

  • GDP is not adjusted for pollution.

  • GDP is adjusted for increases in drug addiction .

  • GDP is adjusted for changes in crime rates.

  • the value of leisure is included in GDP.

Explanation

Question 28 of 103

1

The underground economy can be described as

Select one of the following:

  • production of infrastructure that spurs growth in the rest of the economy.

  • production of intermediate goods and services.

  • economic production that includes mining.

  • economic activity that is hidden from the government to avoid taxed or because the activity is illegal.

Explanation

Question 29 of 103

1

The measure of production that values production using current prices is called

Select one of the following:

  • underground GDP

  • real GDP

  • nominal GDP

  • value-added GDP

Explanation

Question 30 of 103

1

Given the information, what can we say has happened in the economy from 2008 and 2009?

2008 2009
Nominal GDP $10,000 $12,000
Real GDP $9,500 $10,500

Select one of the following:

  • The price level has risen.

  • The price level has remained constant.

  • The price level has fallen.

  • Not enough information is available to determine what has happened to prices.

Explanation

Question 31 of 103

1

If real GDP increases we know for sure that

Select one of the following:

  • prices have risen

  • output has risen

  • prices have remained constant

  • prices have risen but output has remained constant

Explanation

Question 32 of 103

1

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years.

Select one of the following:

  • 270%

  • 50%

  • 5%

  • 2.7%

Explanation

Question 33 of 103

1

Gross national product is defined as

Select one of the following:

  • the value of final goods and services produced within the United States, by United States residents.

  • the value of final goods and services produced outside of the United States.

  • the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States.

  • the value of final goods and services produced within the United States.

Explanation

Question 34 of 103

1

Disposable personal income is

Select one of the following:

  • national income minus depreciation.

  • personal income minus indirect business taxes.

  • national income minus personal taxes.

  • personal income minus personal taxes.

Explanation

Question 35 of 103

1

National income is

Select one of the following:

  • NNP minus income taxes.

  • GDP minus depreciation.

  • GNP plus depreciation.

  • GDP minus sales taxes.

Explanation

Question 36 of 103

1

What are the four major categories of expenditure?

Select one of the following:

  • Labor, capital, natural resources, and entrepreneurship.

  • Final goods, intermediate goods, production, and income.

  • Wages, interest, rent, and profit.

  • Consumption, investment, government purchases, and net exports.

Explanation

Question 37 of 103

1

What is GDP an imperfect measurement of total production in the economy?

Select one of the following:

  • GDP does not include household production or production form the underground economy.

  • The official measure of GDP does not include intermediate goods and services.

  • GDP measures total income paid to the factors of production, not production

  • The BEA does not include the value of new houses in GDP

Explanation

Question 38 of 103

1

What are the four categories of income?

Select one of the following:

  • wages, salaries, interest, and dividends

  • consumption, investment, government purchases, and net exports

  • wages, interest, rent, and profit

  • labor , capital, natural resources, and entrepreneurship

Explanation

Question 39 of 103

1

Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?

Select one of the following:

  • RGDP = NGDP because prices are stable.

  • RGDP < NGDP because prices are rising.

  • RGDP > NGDP because prices are falling.

  • The relationship is uncertain without more information on prices.

Explanation

Question 40 of 103

1

Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?

Select one of the following:

  • The costs of pollution are not included.

  • The value of leisure is not included

  • GDP does not include crime rates or income distribution

  • All of the above

Explanation

Question 41 of 103

1

Personal income is

Select one of the following:

  • national income minus retained corporate earnings plus government transfer payments and interest on government bonds.

  • national income minus income taxes.

  • equal to the value of all final goods and services produced within a country's borders during one year.

  • national income plus government transfer payments.

Explanation

Question 42 of 103

1

The largest component of gross domestic income is

Select one of the following:

  • rent.

  • profits.

  • wages.

  • interests.

Explanation

Question 43 of 103

1

Coffee beans purchased by a coffee shop are a

Select one of the following:

  • intermediate good.

  • neither.

  • final good.

Explanation

Question 44 of 103

1

Johnny is currently "in-between" jobs. What type of unemployment fits Johnny's status?

Select one of the following:

  • Structurally unemployed

  • Seasonally unemployed

  • Cyclically unemployed

  • Fictionally unemployed

Explanation

Question 45 of 103

1

Which of the following makes changes in the CPI overstate the true inflation rate?

Select one of the following:

  • Increase in quality bias

  • New product bias

  • Substitution bias

  • All of the above

Explanation

Question 46 of 103

1

Which of the following best describes a current trend in the labor force participation rate?

Select one of the following:

  • It is increasing for men and decreasing for women.

  • It is decreasing for both men and women.

  • It is increasing for both men and women.

  • It is decreasing for men and increasing for women.

Explanation

Question 47 of 103

1

How does the U.S. economy create and destroy millions of jobs each year? (Mark all that apply.)

Select one or more of the following:

  • Some businesses are expanding, while others are contracting

  • In the market system, new firms are constantly entering and exiting various industries.

  • The federal government determines that certain industries are obsolete and closes firms.

  • When unemployment is high, the federal government hires more workers to offset the effects of unemployment.

Explanation

Question 48 of 103

1

IF a 3-month Treasury bill pays 5.5% and the change in the consumer price index (CPI) is 4.7%, what is the real interest rate (the true return to lending)?

Select one of the following:

  • 4.7%

  • 10.2%

  • 5.5%

  • 0.8%

Explanation

Question 49 of 103

1

Your father earned $34,000 per year in 1984. To the nearest dollar, what is that equivalent to in 2008 if the CPI in 2008 is 215 and the CPI in 1984 is 104?

Select one of the following:

  • $34,000

  • $70,288

  • $16,447

  • $73,100

Explanation

Question 50 of 103

1

Having happy workers increases business. This is an example of

Select one of the following:

  • Structural unemployment

  • Union contracts

  • Market strategies

  • Efficiency wages

Explanation

Question 51 of 103

1

Even perfectly anticipated inflation imposes costs. Why?

Select one of the following:

  • A)Some wages will fail to keep up with the anticipated inflation.

  • B)Menu costs

  • C)Paper money loses it purchasing power by the rate of inflation.

  • A and C only.

  • All of the above

Explanation

Question 52 of 103

1

Consider the following table:

Nominal Average
Year Hourly Earnings CPI
2008 $16 202
2009 $17 207
2010 $18 209

What is the real average hourly wage in 2009?

Select one of the following:

  • $8.61

  • $7.92

  • $8.21

  • $17.42

Explanation

Question 53 of 103

1

Consider the following table:

Nominal Average
Year Hourly Earnings CPI
2008 $16 202
2009 $17 207
2010 $18 209

What can be said about real average hourly earnings and nominal average hourly earnings between 2008 and 2010?

Select one of the following:

  • Real average hourly earnings decreased and nominal average hourly earnings increased.

  • Both real and nominal average hourly earnings decreased.

  • Real average hourly earnings increased and nominal average hourly earnings decreased.

  • Both real and nominal average hourly earnings increased.

Explanation

Question 54 of 103

1

Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."

Select one of the following:

  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.

  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.

  • False. A higher wage decreases purchasing power regardless of inflation.

  • False. A higher wage increases purchasing power regardless of inflation.

Explanation

Question 55 of 103

1

Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."

Select one of the following:

  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.

  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.

  • False. A higher wage decreases purchasing power regardless of inflation.

  • False. A higher wage increases purchasing power regardless of inflation.

Explanation

Question 56 of 103

1

Indicate whether the following statement is true or false and why. "A wage rising slower than the rate of inflation is actually falling."

Select one of the following:

  • True. If wages are increasing slower that the average price of goods and services, purchasing power increases.

  • True. If wages are increasing slower that the average price of goods and services, purchasing power falls.

  • False. A higher wage decreases purchasing power regardless of inflation.

  • False. A higher wage increases purchasing power regardless of inflation.

Explanation

Question 57 of 103

1

When the economy is at full employment,

Select one of the following:

  • all remaining unemployment is either frictional or structural.

  • the nature rate of unemployment prevails.

  • the unemployment rate is greater than zero.

  • All of the above.

Explanation

Question 58 of 103

1

Which of the following formulas does the Bureau of Labor Statistics use to calculate the unemployment rate?

Select one of the following:

  • Number of unemployed
    ________________________ x 100
    Working-age population

  • Number of unemployed
    ________________________ x 100
    Number of employed

  • Number in labor force
    ________________________ x 100
    Number of unemployed

  • Number of unemployed
    ________________________ x 100
    Number in labor force

Explanation

Question 59 of 103

1

The true cost of borrowing and lending is best measured by

Select one of the following:

  • the inflation rate.

  • the three-month U.S. Treasury bill rate.

  • the nominal interest rate.

  • the real interest rate.

Explanation

Question 60 of 103

1

Which of the following can give an early warning of future increases in the price level?

Select one of the following:

  • Consumer price index

  • Producer price index

  • GDP deflator

  • All of the above

Explanation

Question 61 of 103

1

Which of the following can give an early warning of future increases in the price level

Select one of the following:

  • Consumer price index

  • Producer price index

  • GDP deflator

  • All of the above

Explanation

Question 62 of 103

1

As of September 2011, which of the following demographics groups has the highest unemployment rate?

Select one of the following:

  • Asians

  • African Americans

  • Hispanics

  • Whites

Explanation

Question 63 of 103

1

What effect do labor unions have on the unemployment rate?

Select one of the following:

  • By increasing the wage above market equilibrium, labor unions considerably increase the unemployment rate.

  • By increasing the wage above market equilibrium, labor unions considerably decrease the unemployment rate.

  • Labor unions can significantly increase the unemployment rate when members go on strike.

  • Since few non-government workers are unionized, there is no significant effect on the unemployment rate.

Explanation

Question 64 of 103

1

What factors would cause the U.S. labor productivity to be nearly six times higher than Russian labor productivity?

Select one of the following:

  • The size of the civilian labor force in larger in Russia, causing diminishing returns to set in.

  • The size of the civilian labor force is larger in the U.S.

  • The U.S. has more capital available per worker and higher levels of technology.

  • Russia overall has a smaller capital stock

Explanation

Question 65 of 103

1

During a recession, unemployment would be expected to

Select one of the following:

  • increase

  • decrease

  • stay the same

Explanation

Question 66 of 103

1

during a recession, durable goods production, such as automobiles, would be expected to

Select one of the following:

  • increase

  • decrease

  • stay the same

Explanation

Question 67 of 103

1

During a recession, the inflation rate would be expected to

Select one of the following:

  • stay the same

  • decrease

  • increase

Explanation

Question 68 of 103

1

The most important factor in explaining increases in real GDP per capita in the long run is increase in productivity.

Select one of the following:

  • True
  • False

Explanation

Question 69 of 103

1

When tax revenue exceeds government spending (government purchases and transfer payment) there is a

Select one of the following:

  • budget surplus

  • balanced budget

  • budget deficit

Explanation

Question 70 of 103

1

When tax revenue equals government spending there is a

Select one of the following:

  • balanced budget

  • budget surplus

  • budget deficit

Explanation

Question 71 of 103

1

When tax revenue is less than government spending there is a

Select one of the following:

  • budget deficit

  • a balanced budget

  • budget surplus

Explanation

Question 72 of 103

1

Which of the following expressions shows the investment-saving equality?

Select one of the following:

  • S=Y+T-TR-G

  • S=Y+T-C-G

  • S=Y-C-G

  • S=Y+TR-C-T

Explanation

Question 73 of 103

1

Which of the following is not a loanable fund?

Select one of the following:

  • Real estate

  • Bank certificates of deposit

  • Bonds

  • Mutual fund shares

Explanation

Question 74 of 103

1

Households supply loanable funds because of the

Select one of the following:

  • wage income earned from working in the financial markets.

  • rent income they receive as resource owner.

  • interest income received from the borrowers

  • profit income earned from running a money-lending business

Explanation

Question 75 of 103

1

Businesses demand loanable funds because

Select one of the following:

  • firms need to borrow funds for new projects, such as building new factories or carrying out new projects

  • households charge a much higher rate of interest than the going rate of interest in the loanable funds market.

Explanation

Question 76 of 103

1

What is the general relationship between the business cycle and unemployment and inflation?

Select one of the following:

  • During an expansion, unemployment and inflation increase.

  • During an expansion, unemployment falls and inflation increase.

  • During an recession, unemployment and inflation increase.

  • During an recession, unemployment and inflation decrease.

Explanation

Question 77 of 103

1

The rule of 70 is a mathematical formula that is used to calculate the number of years it takes real GDP per capita or any other variable to double.

Select one of the following:

  • True
  • False

Explanation

Question 78 of 103

1

Crowding out occurs when governments must borrow funds which cause interest rates to rise and thus private investment is reduced.

Select one of the following:

  • True
  • False

Explanation

Question 79 of 103

1

Two key factors that cause labor productivity to increase over time are

Select one or more of the following:

  • quantity of capital per hour worked

  • level of technology

  • quantity of labor per hour worked

  • decline in unionization

  • slacking of labor laws

Explanation

Question 80 of 103

1

Which of the following will NOT lead to economic growth?

Select one of the following:

  • Technological change

  • Increase in the capital stock

  • Increase in average wages

  • Improved labor productivity

Explanation

Question 81 of 103

1

Which of the following is most likely to lead to sustained long-run growth?

Select one of the following:

  • increases in labor productivity

  • increases in the labor participation rate

  • exploitation of natural resources

  • transfer of workers from agricultural to industrial sectors

Explanation

Question 82 of 103

1

During the expansion phase of the business cycle, production, employment, and income

Select one of the following:

  • increase

  • decrease

Explanation

Question 83 of 103

1

During the recession phase of the business cycle, production, employment, and income

Select one of the following:

  • increase

  • decrease

Explanation

Question 84 of 103

1

Firms that act as financial intermediaries match households that have excess funds with firms that want to borrow funds. What other key services does the financial system provide to savers and lenders?

Select one or more of the following:

  • allows savers to spread their money among many financial investments.

  • provides an easy method of exchanging a financial security for money.

  • collects and communicates information about borrowers to savers.

  • insures investments against decreasing in value.

Explanation

Question 85 of 103

1

Long-run growth in GDP is determined by

Select one of the following:

  • capital, labor productivity, and technology

  • capital, labor productivity, and government expenditures

  • consumption, investment, and government expenditures

  • consumption, investment, and technology

Explanation

Question 86 of 103

1

Technological progress is affected by

Select one or more of the following:

  • private property rights

  • new software developments

  • population growth

  • investment in capital

  • entrepreneurship

Explanation

Question 87 of 103

1

Potential GDP

Select one or more of the following:

  • measures the maximum that a firm is capable of producing

  • increases over time as the labor force grows.

  • increases over time as technological change occurs

Explanation

Question 88 of 103

1

Which of the following contribute(s) to shorter recessions,longer expansions, and less severe fluctuations in real GDP?

Select one or more of the following:

  • monetary policy

  • unemployment insurance

  • a service-based economy

Explanation

Question 89 of 103

1

Business cycle: alternating periods of economics expansion and economic recession.

Select one of the following:

  • True
  • False

Explanation

Question 90 of 103

1

Long-run economic growth: the process by which rising productivity increases the average standard of living.

Select one of the following:

  • True
  • False

Explanation

Question 91 of 103

1

The best measurement for the standard of living is

Select one or more of the following:

  • GDP per person

  • real GDP per capita

Explanation

Question 92 of 103

1

This is the equation of growth of real GDP:

Real GDP 2012 - Real GDP 2011
--------------------------------------------- x 100
Real GDP 2011

Select one of the following:

  • True
  • False

Explanation

Question 93 of 103

1

Rule of 70= the number of years to double.

70
----------------
Growth rate

Select one of the following:

  • True
  • False

Explanation

Question 94 of 103

1

The quantity of goods and services that can be produced in one hour of work or by one worker

Select one of the following:

  • labor productivity

  • capital

  • potential GDP

Explanation

Question 95 of 103

1

The quantity of goods and services that can be produced in one hour of work or by one worker

Select one of the following:

  • labor productivity

  • capital

  • potential GDP

Explanation

Question 96 of 103

1

Manufactured goods that are used to produce goods and services.

Select one of the following:

  • capital

  • Financial markets

Explanation

Question 97 of 103

1

The level of real GDP attained when all firms are producing at capacity.

Select one of the following:

  • Potential GDP

  • Labor productivity

Explanation

Question 98 of 103

1

Markets where financial securities such as stocks and bonds are bought and sold.

Select one of the following:

  • financial markets

  • financial intermediaries

Explanation

Question 99 of 103

1

The system of financial markets and financial intermediaries through which firms gain funds from households.

Select one of the following:

  • Financial system

  • Financial market

Explanation

Question 100 of 103

1

Firms such as banks, mutual funds, pension funds, and insurance companies, that barrow funds from savers and lend then to borrowers.

Select one of the following:

  • Financial intermediaries

  • Financial advisors

Explanation

Question 101 of 103

1

The interaction of borrowers and lenders that determines the market interest rate and quantity of loanable funds exchanged.

Select one of the following:

  • Market for loanable funds

  • Crowding out

Explanation

Question 102 of 103

1

A decline in private expenditures as a result of an increase in Government purchases.

Select one of the following:

  • Crowding out

  • Crowding in

Explanation

Question 103 of 103

1

During a recession, durable goods decrease and undurable goods don't change because they are essential.

Select one of the following:

  • True
  • False

Explanation

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