Macro Exam 2 Questions

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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


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