Chapter 10 Econ
Use the graph to help determine which one of the following statements regarding flucuations in real GDP is true:
In the first half of the twentieth century, real GDP had much more severe swings than in the second half of the twentieth century.
Use the graph to help determine which one of the following statements regarding unemployment and business cycles is true.
The unemployment rate usually continues to rise even after the recession has ended.
Use the graph to help determine which one of the following statements regarding inflation and business cycles is true. Note: The points on the figure represent the annual inflation rate measured by the change in the consumer price index (CPI) for the year ending in the indicated month.
Toward the end of the 1991-2001 expansion, the inflation rate began to rise.
What would be expected to happen to each of the following variables during a recession?
Unemployment would be expected to increase Durable goods production, such as automobiles, would be expected to decrease The inflation rate would be expected to decrease
Evaluate the following statement: "Saving money is not lending. How can it be? When I save my money, I put it in a bank. I don't loan it out to someone else." The statement is
incorrect. The supply of loanable funds is determined by household saving.
Potential GDP
increases over time as the labor force grows. increases over time as technological change occurs.
If real GDP equals $11,567 billion in 2006 and $11,916 billion in 2007, and assuming population is constant over those two years, how many years will it take for real GDP per capita to double? ____ years. (Enter your response as a real number rounded to one decimal place.)
23.2
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? (Mark all that apply.)
Collects and communicates information about borrowers to savers Allows savers to spread their money among many financial investments. Provides an easy method of exchanging a financial security for money.
What is the general relationship between the business cycle and unemployment and inflation?
During an expansion, unemployment falls and inflation increases.
During the expansion phase of the business cycle, production, employment, and income increase
During the recession phase of the business cycle, production, employment, and income decrease
Panel (a) above shows an idealized business cycle. Panel (b) shows an actual business cycle by plotting fluctuations in real GDP during the period from 1999 to 2002. Use the graphs to help determine which one of the following statements is NOT true:
Inconsistent movements in real GDP around the business cycle peak can mean that the beginning and ending of a recession are clear-cut.
Which of the following does NOT lead to long-run economic growth LOADING...?
Increase in average wages
Click on the graph in the window on the right and select Multiple Time Series to graph the volume of actual and potential GDP for the years 1950 and 2006. For Y1 select Real GDP and for Y2 select Potential GDP. Roll your cursor over the plotted data to identify each series. Use the graph to help determine which one of the following statements regarding real and potential GDP is true.
Potential real GDP increases every year.
In a closed economy, the values for GDP, consumption spending, investment spending, transfer payments, and taxes are as follows: Y = $15 trillion C = $10 trillion I = $4 trillion TR = $1 trillion T = $4 trillion Using the information above, what is the value of private saving and public saving?
Private savings equals $2 trillion and public savings equals $2 trillion
Use the graph to help determine which one of the following statements is true:
The average American in the year 2006 could buy nearly eight times as many goods and services as the average American in the year 1900.