Question

1. The defining characteristic of long-run economic growth is
   1. the business cycle.
   2. rising productivity.
   3. steady increases in living standards for everyone each year.
   4. high rates of inflation.
2. The computation of the average annual growth rate of real GDP
   1. is the same for shorter periods of time as for longer periods of time.
   2. is computed by simply averaging the growth rate for each year, but only if we use a lot of years.
   3. is more complex when a long period of time is involved than when only a few years are included.
   4. involves computing the percentage change in real GDP between the first year and the last year for the period we are interested in.
3. Which of the following terms refers to the accumulated knowledge and skills that workers acquire from education and training, or from their life experiences?
   1. capital
   2. financial capital
   3. human capital
   4. physical capital
4. Which of the following will not cause an economy to grow in the long run?
   1. a more productive labor force
   2. increases in capital per hour worked
   3. a low minimum-wage rate
   4. technological change
5. Potential GDP is
   1. always greater than actual real GDP.
   2. always less than actual real GDP.
   3. sometimes greater, sometimes less, and sometimes equal to actual real GDP.
   4. the level of GDP that would be produced when firms are operating at maximum capacity.
6. Which of the following is a financial intermediary?
   1. a bank
   2. the White House
   3. a company that develops an Internet search engine
   4. a real estate brokerage
7. What happens when government spending is greater than government tax revenues?
   1. There is negative public saving.
   2. There is dissaving by government and the national debt rises.
   3. The government issues more new bonds than the old bonds it pays off.
   4. All of the above occur.
8. Fill in the blanks. The             the interest rate, the more investment projects firms can profitably undertake, and the                    the quantity of loanable funds they will demand.
   1. lower; greater

8. 2. lower; smaller
   3. higher; greater
   4. higher; smaller
9. As the economy nears the end of an expansion, which of the following occurs?
   1. Interest rates are usually rising.
   2. Wages are usually rising faster than prices.
   3. The profits of firms will be falling.
   4. All of the above occur.
10. Which types of goods are most likely to be affected by the business cycle?
    1. durable goods
    2. nondurable goods
    3. services
    4. goods purchased by the government
11. Fill in the blanks. Recessions cause the inflation rate to     , and they cause the unemployment rate to              .
    1. increase; increase
    2. increase; decrease
    3. decrease; decrease
    4. decrease; increase

Answer 1

1) :-B is right option.

2) :-C is right option

is more complex when a long period of time is involved than when only a few years are included.

3) :-human capital.

The accumulated knowledge and skills that workers acquire from education, training, and their life

4) :--C is right optioni

A low minimum wages rate will not cause an economy to grow in the long run

a low minimum-wage rate

5):-C is right option

Potential GDP is sometimes greater, sometimes less, and sometimes equal to actual real GDP.

6):-A is right option

Abank is a financial intermediary

a bank

7):-D is right option

What happens when government spending is greater than government tax revenues?

All of the above occur.

8) :--A is right option

Which types of goods are most likely to be affected by the business cycle?

durable goods

9) :--D is right option

Fill in the blanks. Recessions cause the inflation rate to _________, and they cause the unemployment rate to _________.

decrease; increase

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