Chapter 26 - 29 Cowen 3 Macro

B) False

A recession can be as short as one or two months. A) True B) False

increase.

If the supply of loanable funds decreases, ceteris paribus, interest rates will:

A) True

Spillovers cause the social benefits of research and development to be greater than the private benefits. A) True B) False

GDP but not GNP

When a German firm produces a vehicle in the United States, the production is part of:

Angola

Which country was among the top 10 most-corrupt countries in the year 2000?

D) They desire to have equal income and spending every period

Which of the following is NOT a reason firms and individuals borrow? A) They want to smooth consumption. B) Debt is often necessary for large purchases. C)They believe their return will be greater than the interest rate. D) They desire to have equal income and spending every period

an increase in steady-state output

According to the Solow model, a higher investment rate leads to:

a negative

Conditional convergence implies that there is _______ relationship between real GDP per capita and subsequent growth.

protecting intellectual property

Governments can play a role in supporting the production of new ideas by:

ideas

In the Solow model production function, Y = F(A, K, eL). A stands for:

C) political instability

Which of the following does NOT lead to economic growth? A) property rights B) a dependable legal system C) political instability D) competitive and open markets

10%

(Table: iPhones) Refer to figure. This table shows data for a country producing only iPhones. The growth rate of real GDP between 2000 and 2010 (in 2000 dollars) is:

The price of the bond falls to $9,082.

A $10,000 face value bond costs $9250 and matures in one year. If the interest rate on similar bonds rises by 2%, what is the approximate price change for this bond?

B) False

A country that grows at an average rate of 5% will double its living standard every 10 years. A) True B) False

A) True

A farmer's purchase of a new tractor counts as investment in the national spending approach to measuring GDP. A) True B) False

two or more people can consume it at the same time

A good is not rivalrous if:

B) False

A patient with a rare disease has the same chance of survival as one with a common disease, thanks to the spillover effect. A) True B) False

technological knowledge

A rural village in a developing country has an economy based on agriculture. Then the government of the country provides the village with newly developed hybrid seeds that more than double the agricultural yield per acre. This story illustrates the growth of per capita GDP in the village through with factor(s) production?

B) False

According to the national spending approach, net exports must be subtracted from all other spending in the economy in the calculation of GDP. A) True B) False

B) the development of new technology in production

Assume that a country's production function changes from Y = 2√K to Y = 3√K. Which of the following events could explain the change in this production function? A) the disappearance of diminishing returns form the production function B) the development of new technology in production C) greater capital accumulation D) less depreciation due to better capital stock maintenance.

100 years

At an annual growth rate of 0.7% approximately how long does it take for real GDP per capita to increase form $30,000 to $60,000 in a country?

$1,500,000

Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000. Winston sells its golf clubs to Academy Sports for $1,000,000. Academy Sports sells Winston golf clubs for $1,500,000. How much is added to GDP?

A) True

Collateral is something of value that by agreement becomes the property of the lender if the borrower defaults. A) True B) False

Increase and borrowing to decrease.

During a financial crisis in the early 2000s, the government of Argentina partially froze bank accounts for a year. Given the supply of saving and the demand to borrow functions, we would expect this action to cause the interest rate to:

practice consumption smoothing by borrowing and saving

Economist Franco Modigliani's lifecycle theory of savings proposes that in order to maximize lifetime satisfaction, consumers:

The marginal product of capital is the increase in output from an increase in capital when all other inputs (such as labor) are held constant. When more and more capital is used with a fixed amount of labor, each worker has more and more capital to work with. For a time, the addition of capital makes workers more productive and marginal product rises. However, at some point, additional units of capital can no longer be used efficiently and each worker has so much capital that it goes unused. At this point, marginal product begins to fall.

Explain why the marginal product of capital diminishes as more and more capital is used.

A) True

For most of recorded human history, there was no long-run growth in real per capita GDP A) True B) False

B) False

GDP is meant to measure spending, so sales of used goods are included in GDP. A) True B) False

A) Strengthen and enforce private property laws

If a developing country wanted to increase its level of investment, which actions would directly lead to this goal? A) Strengthen and enforce private property laws B) Provide a minimum level of food to all people in the country C) Increase taxes to prevent corporations from keeping excess profits. D) Nationalize all foreign manufacturing facilities in the country

there will be shortage of savings, and demanders will bid the interest rate up as they compete to borrow.

If the interest rate in the market for loanable funds is below he market-clearing rate, then:

history, culture and geography

Institutions ultimately come from:

are the rules of the game that structure economic incentives

Institutions:

A) True

Money is not what economists typically consider capital. A) True B) False

GDP undercounts some software production

Programmers produce a large amount of software on an unpaid, open-source basis. As a result:

A) True

Real GDP is equal to nominal GDP adjusted for changes in prices over time. A) True B) False

A) True

Saving occurs when a person's income exceeds her spending on consumption goods. A) True B) False

B) False

Social Security benefits paid to current retirees is an example of government purchases that would be included in GDP. A) True B) False

B) False

The Solow growth model predicts that China and other developing countries will eventually surpass the leading economies of the world in terms of their level of real GDP per capita. A) True B) False

are not included in GDP

The cost of negative externalities that harm the environment, such as pollution costs:

A) True

The interest rate is the cost of borrowing: A) True B) False

A) True

The lower the interest rate, the higher the quantity of funds demanded. A) True B) False

the Democratic Republic of the Congo

The world's poorest country is

B) False

Time preference is the same from person to person. A) True B) False

B) a calculator

Which is NOT an example of human capital? A) an understanding of mathematics B) a calculator C) computer programming skills D) experience using computers

C) communal resources

Which is NOT likely an ultimate cause of economic growth around the world? A) historical differences B) geographical locations C) communal resources D) luck

C) Sandra purchases a certificate of deposit from a bank

Which of the following can be defined as saving according to economics? A) General Motors issues corporate bonds. B) Microsoft sells stock at an initial public offering. C) Sandra purchases a certificate of deposit from a bank D) Andrea finances her new car through an auto loan.

C) GDP does not include goods and services produced privately inside the home

Which of the following is TRUE in the calculation of GDP? A) GDP is positively adjusted to include production in the underground economy B) GDP is negatively adjusted to account for environmental damage caused by businesses. C) GDP does not include goods and services produced privately inside the home D) GDP includes a positive adjustment for leisure activities, even if no purchase is required.

A) China began with very little capital, so its marginal product of capital was very high.

Which statement best explains why growth in China has been so rapid recently? A) China began with very little capital, so its marginal product of capital was very high. B) China began with very little capital, so its marginal product of capital was very low. C) China began with very high capital, so its marginal product of capital was very high. D) China began with very high capital, so its marginal product of capital was very low.