Economic II_chapter.10

When the government runs a budget deficit, we would expect to see that

public saving is positive.(X) G + TR < T.(X) investment will fall.(O) private saving will fall.(X)

If labor productivity growth slows down in a country, this will

slow down the increase in real GDP per capita.(O) accelerate the increase in real GDP per capita.(X) accelerate the increase in nominal GDP.(X) slow down the increase in nominal GDP.(X)

If net taxes fall by $80 billion, we would expect

the government deficit to fall by $80 billion.(X) household saving to rise by $80 billion.(X) household saving to fall by more than $80 billion.(X) household saving to rise by less than $80 billion.(O)

If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from

23.3 years to 17.5 years

Typically, as an economy begins to emerge from a recessionary phase of the business cycle,

Inflation begins to fall.(X) unemployment falls immediately.(X) investment begins to fall.(X) unemployment continues to rise.(O)

How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes) affect private saving in the economy?

Private saving will decrease by less than the amount of increase in the budget surplus. (O) Private saving will decrease by the amount of increase in the budget surplus.(X) Private saving will increase by the amount of increase in the budget surplus.(X) Private saving will be unaffected by the increase in the budget surplus.(X)

In a closed economy, public saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

T - G - TR

Which of the following will increase investment spending in the economy, holding everything else constant?

an increase in the federal government surplus(O) an increase in consumer dissavings(X) an increase in the budget deficit(X) an increase in transfer payments(X)

In comparison to a government that runs a balanced budget, when the government runs a budget deficit,

business investment will fall.(O) the equilibrium interest rate will fall.(X) household savings will fall.(X)

As the economy nears the end of a recession, which of the following do we typically see?

further decreases in consumer spending(X) increasing interest rates(X) increased spending on capital goods by firms(O)

Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?

increases in labor force participation rates as workers who are out of the labor force pursue rising wages(X) an influx of immigrant labor into an economy without any accompanying technological change(X) a shift of workers in the economy from the agricultural sector to the nonagricultural sector(X) growth in capital per hour accompanied by technological change(O)

The demand for loanable funds is downward sloping because the ________ the interest rate, the ________ the number of profitable investment projects a firm can undertake, and the ________ the quantity demanded of loanable funds.

lower; greater; greater