Macro Exam 2 Questions
If $100 is saved at an annual interest rate of 10&, the return in one year will be...
$110
As the baby boomers retire, the US labor force participation rate will
Decrease
What institution channels loanable funds from savers to borrowers?
Financial Intermediaries
Heather recently graduated with her doctorate in economics . She is searching for a job that matches her skills. This is an example of what kind of employment?
Frictional
What variable determines the market for loanable funds?
Interest Rates
Financial Intermediaries can break down as a result of:
bank panics
In financial markets, which group best represents the demand side of the market?
borrowers
When workers loose their jobs and become officially unemployed, the labor force participation rate remains...
constant
"Crowding Out" occurs when the government increase the demand for loanable funds, drives up interest rates, and cause:
consumption and investment to fall
If supply of loanable funds increases (ceteris paribus), interest rates will
decrease
If the demand for loanable funds decreases, the quantity of loanable funds exchanged will
decrease
An increase in government borrowing will cause
demand for borrowing to shift outward
The loanable funds market is the market where:
equilibrium interest rates are determined by the actions of borrowers and lenders
Countries with a higher GDP per capita tend to have:
high levels of all the factors of production
Increases in minimum wage will most likely lead to
higher unemployment
Savings are
income not spent on consumption goods
If the demand for loanable funds increases, interest rates will:
increase
What is NOT an example of physical capital
money
Property rights are important institutions for encouraging investment because:
people won't invest if they feel their property is at risk and that they may not realize a return on their investment
A Fed Ex Truck is an example of
physical capital
When governments freeze bank accounts they fail to:
promote consumption and spending
Flucuations in income cause most people to
save
the buyer of a bond is a:
stockholder
Individuals who lost their jobs are a result of the US moving from a manufacturing economy to a service economy are experiencing ______ unemployment
structural
Shocks in the economy and new technologies usually results in ______ unemployment
structural
time preference
the desire to have goods and services sooner rather than later
The lifecycle theory predicts individuals will save during:
the early years of life
The demand to borrow function shows the relationship between borrowing money and
the interest rate
Businesses will take out additional loans only if:
the interest rate is less than the expected rate of return on their investment
The unemployment rate is:
the percent of the labor force without a job
Individual savings contribute to
the supply of loanable funds
When individuals become more willing to save
the supply of savings shift outward
The presence of discouraged workers causes the measured employment rate to be"
understated
Population categories included in the unemployment rate:
unemployed and employed
Discourage workers and underemployed workers are not included in that:
unemployment rates
The supply curve is
upward sloping
Countries with a high GDP per capital have institutions that make it in people's self interest to invest in:
all the factors of production
What causes an increase in the demand for loanable funds?
an increase in government borrowing
