Macro Final

Which of the situations is an example of the crowding-out effect on investments as it pertains to macroeconomics? A.) Candex, an eyeglass company, decides to cut the price on all of it's frames to $10, which successfully drives out all other firms from the market. B.) The government defecit is at an all-time high in the US. As such, people begin to save more money in fear that taxes will increase in the future. C.) Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However the government is running a defecit which has increased interest rates so much that Jack can no longer afford to borrow money. D.) The government of Walla Walla spent 3.4 billion dollars and collected $2.2 billion dollars in tax revenue.

C

The Average rate of growth for slow-growth countries is around 2% per year, and for fast-growth greater than 5% per year. If instead, the growth rate is 7%, the doubling time for the economy is... 20 years 5 years 50 years or more 35 years 10 years

10 years

The Average rate of growth for slow-growth countries is around 2% per year, and for fast-growth greater than 5% per year. Suppose the growth rate of the economy is 2%. The size of the economy doubles every... 10 years 35 years 50 years or more 5 years 20 years

35 years

In the stock market, there are buyers and sellers. One stock market hypothesis relates to how an investor cannot earn returns that outperform the overall stock market if they only have public stock market information. Which of these best represents this concept? A) efficient market hypothesis B.) ceteris paribus hypothesis C.) insider trading hypothesis D.) none of the abover

A

How do mutual funds reduce risks for the average individual investor? A.) each mutual fund guantees a specific return on investment. B.) Mutual funds increase an investor's return on investment, which reduces the risk an investor would have to bear. C.)Mutual funds reduces risk through portfolio diversifivation. D.) Mutual funds reduce risk by being more liquid than traditional stocks

C

The net amount of funds coming into a country is the...

Capital inflow

___________________ which is (are) a key contributor to economic growth, generally requires significant investment in __________________ and _________________.

Technological progress research development

Determine which financial asset is described in each scenario. Caleb has completed a prototype garlic-peeling device that he hopes to sell to the public. Caleb decides to have his startup issue securities that offer buyers the promise to pay a specified amount of interest each year plus the principal in five years.

bonds

The difference between the amount the government collects and how much it spends is known as the ____________________________.

budget balance

If the government spends more money than it takes in through taxes, it will experience a _______________.

budget defecit

If the government spends less money than it takes in through taxes, it will experience a.....

budget surplus

Complete the sentence on the roles of government in promoting economic growth. The government's direct role in the production of physical capital is primarily focused on _______________________.

developing infrastructure

Which of the terms acts as the "price" in the market for loanable funds? interest rate supply capital demand

interest rate

Determine which financial asset is described in each scenario. Rand Capital Corportaion, a financial industry conglomerate, pools together deveral hundred home mortages and sells shares in them to groups of investors. However, many investors decide against this option because of the risk involved and the difficulty of assessing the quality of such a large number of individual mortages.

loan-backed securities

Determine which financial asset is described in each scenario. Audrey wants to buy a new car but does not have enough cash. She gets funding from her local bank with the promise that she will make monthly payments for the next three years to repay the original amount lent to her plus 6%.

loans

When the preceeding term is combined with all of the privately held savings from across the country, it is know as the_________________.

national savings

Complete the sentence on the roles of government in promoting economic growth. Governments play an indirect role in private savings and investment through_____________________________.

regulating the financial system

Please decide whether each of the scenarios related to the loanable funds market will result in a shift in supply or a shift in demand. As a result of a stock market boom, individuals begin to feel richer and spend more while also saving less.

shift in supply

Please decide whether each of the scenarios related to the loanable funds market will result in a shift in supply or a shift in demand. China decides to reduce its capital investment in the US, as it expects low returns due to a weak US economy.

shift in supply

When considering economic growth, many policymakers focus on real GDP per capita because it takes into account the potentially distorting effects _______________ & __________________.

Inflation Population Change

Economic growth is important to understand because

It is closely tied to the standard of living

Is this an input in the aggregate production function for GDP? Contributions to Social security

No

Is this an input in the aggregate production function for GDP? bonds issued by an automaker

No

Which of the following best decribes a financial intermediary? A.) a collection of stocks and bonds issues to investors B.) a claim by a buyer to a future payment by a seller C.) an asset sold by a company which entitles the buyer to partial ownership D.) a financial institution that transforms investor funds into financial assets.

D

True or False? In the modern economy, countries that possess few domestic natural resources essentially have no chance to develop economically.

False

True or False? In the modern economy, human and physical capital are generally less important in productivity than natural resources.

False

True or False? Long-run economic growth is unlikely to be sustainable because of finite natural resources.

False

Is this an input in the aggregate production function for GDP? decreased property taxes

No

Is this an input in the aggregate production function for GDP? profits of a large investment company

No

Any large, sustainable increase in real GDP must be the result of increased __________________.That is a, sustanable increase in real GDP must be due to higher___________________.

Output per worker Labor productivity

As interest rate decreases, what happens to the quantity of loanable funds demanded?

Quantity demands will increase

What effect will an increase in interest rates have on quantity of loanable funds supplied?

Quantity supplied will increase

If the projected rate of return for a project is less than the interest rate for a loan that is necessary to complete the project, how will the borrowing business act?

The business will not take out the loan

True or False? Finding alternatives to natural resources will be very important to long-term economic growth.

True

True or False? In the 19th century, countries with the highest per capita GDP were nearly always abundant in minerals and productive farming land.

True

Is this an input in the aggregate production function for GDP? A significant amount of oil discovered in Texas

Yes

Is this an input in the aggregate production function for GDP? Upgrade if computers for Mikey's Motors

Yes

Is this an input in the aggregate production function for GDP? recent graduate with an engineering degree

Yes

Is this an input in the aggregate production function for GDP? unskilled migrant worker from Latin America

Yes

the fundamental relationship between saving and investment spending is that...

always equal

In many countries, growth has been achieved through high rates of ________________ and ___________________ spending.

saving investment

Countries' real GDP per capita growth rates differ largely due to disparities in the rates at which they accumulate ________________________, as well as the rate of _______________ change.

human and physical capital technilogical

Complete the sentence on the roles of government in promoting economic growth. The government's direct role in creating human capital is primarily focused on ___________________.

improving the education system

Please decide whether each of the scenarios related to the loanable funds market will result in a shift in supply or a shift in demand. Calopolis, a college town in Northern California, has for many years banned the presence of fast food retaurants in city limits. As of 2012, however the city will allow several fast food companies to open franchised locations.

shift in demand

Please decide whether each of the scenarios related to the loanable funds market will result in a shift in supply or a shift in demand. Due to an increase in revenues after a tax hike, the U.S. is able to eliminate the defecit and begins to maintain a balanced budget for the first time in several decades.

shift in demand

Determine which financial asset is described in each scenario. Lyle and Shane start a business selling pencil sharpeners to elementary schools. Their company becomes an instant success, and they decide to allow people to start buying a small share of their company. This gives individuals who buy shares the right to vote in company decisions and a small percentage of the profit.

stocks