ECON 104 Exam 3 Actual Exam Study
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1. You can expect there to be a close relationship between productivity gains
and increases in real wages because - ANSWER unit costs fall when more
goods are produced per worker, so prices can fall, thereby increasing the
value of real wages
2. Education and health care are important for economic growth because -
ANSWER a well-educated and healthy workforce has higher productivity
3. India has been able to experience rapid economic growth since 1991 despite
poor educational and health care systems because - ANSWER the
government scaled back central planning, reduced regulations, and
introduced market-based reforms
4. Y = - ANSWER C + I + G + NX
5. G = - ANSWER Y - C - I
6. Budget Balance = - ANSWER T - G - TR
7. I = - ANSWER Y - C - G
8. TR = - ANSWER T - G - Spub
,9. Now suppose that government purchases increase from $2 trillion to $2.60
trillion but the values of Y and C are unchanged. What must happen to the
values of S and I? - ANSWER S and I drop by $0.60 trillion
10.Only when demand increases and the demand curve shifts to the right with
supply curve remaining unchanged, equilibrium _______________ as well
as equilibrium _______________ increases - ANSWER interest rate,
quantity of loanable funds
11.Holding all else constant, a federal government budget deficit will -
ANSWER decrease the supply of loanable funds and increase the
equilibrium real interest rate
12.Which of the following describes the effect of the business cycle on the
inflation rate and the unemployment rate? - ANSWER The unemployment
rate increases and the inflation rate falls during recessions
13.Why might the unemployment rate continue to rise during the early stages of
a recovery? - ANSWER Employment growth may be slow relative to the
growth in the labor force AND some firms continue to operate well below
their capacity even after a recession has ended
14.Recessions were more severe and lasted longer in the ____________ half of
the twentieth century and became shorter and milder in the ______________
half - ANSWER first, second
15.T or F: Since the 1950s, people have become more rational and control their
spending behavior counter cyclically - ANSWER False
,16.Ford F-150 trucks. Production of this good is likely to fluctuate __________
fluctuations of real GDP during the business cycle - ANSWER more than
17.McDonald's Big Macs. Production of this good is likely to fluctuate
_____________ fluctuations of real GDP during the business cycle -
ANSWER less than
18.The increase in real GDP per capita is likely to be ____________ than the
true increase in living standards - ANSWER smaller
19.The two key factors that cause labor productivity to increase over time are -
ANSWER 1. Quantity of capital per hour worked
2. Level of technology
20.India's labor force has been gradually shifting out of the low-productivity
agricultural sector into the higher-productivity service and industrial sectors.
This shift is - ANSWER increasing India's real GDP per capita because the
shift is towards higher-productivity sectors
21.Economists and policymakers think that India's growth rates may -
ANSWER not be sustainable because of poor education, poor medical care,
and poor infrastructure
22.Which of the following is the best measure of the standard of living of the
typical person in a country? - ANSWER real GDP per person
23.The computation of the average annual growth rate of real GDP - ANSWER
is more complex when examining data for a long period of time than when
examining data for only a few years
, 24.Which of the following changes DOES NOT cause an increase in the
quantity of goods and services than can be produced by one worker, or in
one hour of work? - ANSWER an increase in the number of workers
25.Which of the following changes will ensure that an economy experiences
sustained economic growth? - ANSWER technological change
26.Potential GDP is - ANSWER sometimes greater, sometimes less, and
sometimes equal to actual real GDP
27.The financial system of a country is important for long-run economic growth
because - ANSWER firms need the financial system to acquire funds from
households
28.Which one of the following expressions shows the investment-saving
equality? - ANSWER S = Y - C - G
29.Which of the following is not a "loanable fund"? - ANSWER Real estate
30.Households supply loanable funds because of the - ANSWER interest
income received from the borrowers
31.S = - ANSWER Y - C - G
32.Sprivate = - ANSWER Y + TR - C - T
33.Spublic = - ANSWER T - G - TR
Questions with Already Graded A+
Answers | Guarantee Pass!
1. You can expect there to be a close relationship between productivity gains
and increases in real wages because - ANSWER unit costs fall when more
goods are produced per worker, so prices can fall, thereby increasing the
value of real wages
2. Education and health care are important for economic growth because -
ANSWER a well-educated and healthy workforce has higher productivity
3. India has been able to experience rapid economic growth since 1991 despite
poor educational and health care systems because - ANSWER the
government scaled back central planning, reduced regulations, and
introduced market-based reforms
4. Y = - ANSWER C + I + G + NX
5. G = - ANSWER Y - C - I
6. Budget Balance = - ANSWER T - G - TR
7. I = - ANSWER Y - C - G
8. TR = - ANSWER T - G - Spub
,9. Now suppose that government purchases increase from $2 trillion to $2.60
trillion but the values of Y and C are unchanged. What must happen to the
values of S and I? - ANSWER S and I drop by $0.60 trillion
10.Only when demand increases and the demand curve shifts to the right with
supply curve remaining unchanged, equilibrium _______________ as well
as equilibrium _______________ increases - ANSWER interest rate,
quantity of loanable funds
11.Holding all else constant, a federal government budget deficit will -
ANSWER decrease the supply of loanable funds and increase the
equilibrium real interest rate
12.Which of the following describes the effect of the business cycle on the
inflation rate and the unemployment rate? - ANSWER The unemployment
rate increases and the inflation rate falls during recessions
13.Why might the unemployment rate continue to rise during the early stages of
a recovery? - ANSWER Employment growth may be slow relative to the
growth in the labor force AND some firms continue to operate well below
their capacity even after a recession has ended
14.Recessions were more severe and lasted longer in the ____________ half of
the twentieth century and became shorter and milder in the ______________
half - ANSWER first, second
15.T or F: Since the 1950s, people have become more rational and control their
spending behavior counter cyclically - ANSWER False
,16.Ford F-150 trucks. Production of this good is likely to fluctuate __________
fluctuations of real GDP during the business cycle - ANSWER more than
17.McDonald's Big Macs. Production of this good is likely to fluctuate
_____________ fluctuations of real GDP during the business cycle -
ANSWER less than
18.The increase in real GDP per capita is likely to be ____________ than the
true increase in living standards - ANSWER smaller
19.The two key factors that cause labor productivity to increase over time are -
ANSWER 1. Quantity of capital per hour worked
2. Level of technology
20.India's labor force has been gradually shifting out of the low-productivity
agricultural sector into the higher-productivity service and industrial sectors.
This shift is - ANSWER increasing India's real GDP per capita because the
shift is towards higher-productivity sectors
21.Economists and policymakers think that India's growth rates may -
ANSWER not be sustainable because of poor education, poor medical care,
and poor infrastructure
22.Which of the following is the best measure of the standard of living of the
typical person in a country? - ANSWER real GDP per person
23.The computation of the average annual growth rate of real GDP - ANSWER
is more complex when examining data for a long period of time than when
examining data for only a few years
, 24.Which of the following changes DOES NOT cause an increase in the
quantity of goods and services than can be produced by one worker, or in
one hour of work? - ANSWER an increase in the number of workers
25.Which of the following changes will ensure that an economy experiences
sustained economic growth? - ANSWER technological change
26.Potential GDP is - ANSWER sometimes greater, sometimes less, and
sometimes equal to actual real GDP
27.The financial system of a country is important for long-run economic growth
because - ANSWER firms need the financial system to acquire funds from
households
28.Which one of the following expressions shows the investment-saving
equality? - ANSWER S = Y - C - G
29.Which of the following is not a "loanable fund"? - ANSWER Real estate
30.Households supply loanable funds because of the - ANSWER interest
income received from the borrowers
31.S = - ANSWER Y - C - G
32.Sprivate = - ANSWER Y + TR - C - T
33.Spublic = - ANSWER T - G - TR
