Q&A Hero

Q: In a business cycle recession, which of the following occurs? A) Investment demand increases and the demand for loanable funds curve shifts rightward. B) Investment demand decreases and the demand for loanable funds curve shifts leftward. C) The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve but no shift in the curve. D) The quantity of investment demanded decreases increases and there is a movement up along the demand for loanable funds curve but no shift in the curve. E) The quantity of investment demanded decreases and there is a rightward shift of the demand for loanable funds curve.

Q: A fall in the real interest rate brings a A) movement down along the demand for loanable funds curve but no shift in the curve. B) rightward shift of the demand for loanable funds curve but no movement along the curve. C) movement up along the demand for loanable funds curve. D) leftward shift of the demand for loanable funds curve. E) movement down along the demand for loanable funds curve and a rightward shift of the demand for loanable funds curve.

Q: Which of the following occurs if the real interest rate falls? A) The demand for loanable funds increases and the demand for loanable funds curve shifts rightward. B) The demand for loanable funds decreases and the demand for loanable funds curve shifts leftward. C) The quantity of loanable funds demanded increases and there is a movement down along the demand for loanable funds curve. D) The quantity of loanable funds demanded decreases increases and there is a movement up along the demand for loanable funds curve. E) The quantity of loanable funds demanded increases and the demand for loanable funds curve shifts rightward.

Q: If the real interest rate falls, there is A) an upward movement along the demand for loanable funds curve. B) a downward movement along the demand for loanable funds curve. C) a rightward shift of the demand for loanable funds curve. D) a leftward shift of the demand for loanable funds curve. E) a leftward shift of the supply of loanable funds curve.

Q: The demand for loanable funds curve slopes downward because the A) higher the real interest rate, the lower the cost of investment. B) expected rate of profit is related positively to the real interest rate. C) price of bonds and stocks is not related to the real interest rate. D) real interest rate is the opportunity cost of investment. E) expected rate of profit is factor that "rewards" firms for their investment.

Q: The demand for loanable funds curve shows that the higher the real interest rate, the A) smaller the quantity of loanable funds demanded. B) smaller the demand for loanable funds. C) larger the quantity of loanable funds demanded. D) larger the demand for loanable funds. E) more the loanable funds demand curve shifts leftward.

Q: The demand for loanable funds curve illustrates A) the quantity of loanable funds demanded at any given level of disposable income. B) the quantity of loanable funds demanded at any given level of the real interest rate. C) the quantity of loanable funds supplied to the loanable funds market at any given level of disposable income. D) how the quantity of loanable funds demanded changes when the people's expectations about their future income changes. E) how the quantity of loanable funds demanded changes when wealth changes.

Q: The demand for loanable funds curve shows the A) negative relationship between the interest rate and the quantity of loanable funds demanded. B) positive relationship between the interest rate and the quantity of loanable funds demanded. C) negative relationship between the demand for loanable funds curve and the supply of loanable funds curve. D) positive relationship between the demand for loanable funds curve and the supply of loanable funds curve. E) U-shaped relationship between the interest rate and the quantity of loanable funds demanded.

Q: The demand for loanable funds curve shows the relationship between the quantity of loanable funds demanded and A) the real interest rate. B) the price level. C) the capital stock. D) depreciation. E) the expected rate of profit.

Q: The demand for loanable funds increases if A) technological growth slows. B) population growth slows. C) expected profit increases. D) firms fear a recession. E) wealth increases.

Q: The demand for loanable funds curve shifts in response to changes in A) the real interest rate. B) the amount of household savings. C) expected profits. D) the expected future disposable income. E) wealth.

Q: Technological change can increase the demand for loanable funds because it A) lowers the interest rate. B) can increase the expected profit. C) has little effect on production cost. D) decreases the need for additional equipment. E) increases people's expected future disposable income.

Q: Which of the following decreases the demand for loanable funds and shifts the demand for loanable funds curve leftward? A) The real interest rate rises. B) The economy experiences a recession. C) Technology that increases productivity is introduced. D) An economy experiences a rapid increase in population. E) Wealth decreases.

Q: The demand for loanable funds A) increases in an expansion and decreases in a recession. B) decreases in an expansion and increases in a recession. C) increases if population growth declines. D) increases if the expected rate of profit decreases. E) increases if wealth increases.

Q: Ford Motor Corporation is considering purchasing new technology that will increase productivity by twenty percent. If Ford Motor Corporation decides to make this investment at the going real interest rate, then A) the quantity of loanable funds demanded increases. B) the supply of loanable funds increases. C) the demand for loanable funds increases. D) Ford's profits will decline. E) saving increases.

Q: As the economy enters a strong expansion, then firms' demand for loanable funds A) increases because expected profit increases. B) decreases because expected profit decreases. C) increases because the nominal interest rate rises. D) decreases because the nominal interest rate falls. E) increases because the real interest rate rises.

Q: The quantity of loanable funds demanded increases if the real interest rate falls, all other things remaining the same, because the real interest rate A) determines the cost of living. B) is the opportunity cost of investment. C) affects the quantity of saving supplied. D) is not related to the price of bonds and stocks. E) affects the supply of saving which, in turn, determines the quantity of investment.

Q: An increase in the quantity of loanable funds demanded occurs when A) the real interest rate falls. B) the real interest rate rises. C) the supply of loanable funds decreases. D) the expected profit rises. E) wealth decreases.

Q: If the real interest rate rises, A) the quantity of loanable funds demanded increases. B) the quantity of loanable funds demanded decreases. C) there is is movement down along the demand for loanable funds curve. D) the demand for loanable funds curve shifts leftward. E) the demand for loanable funds curve shifts rightward.

Q: Suppose the real interest rate increases from 4 percent to 6 percent. As a result, A) governments decrease the quantity supplied of loanable funds. B) firms increase their demand for loanable funds. C) governments decrease their demand for loanable funds. D) firms decrease the quantity demanded of loanable funds. E) governments increase the supply of loanable funds.

Q: Other things remaining the same, the ________ the real interest rate, the ________. A) lower; greater the quantity of loanable funds demanded B) lower; greater the demand for loanable funds C) higher; greater the quantity of loanable funds demanded D) higher; greater the demand for loanable funds E) lower; greater the quantity of loanable funds supplied

Q: Other things remaining the same, as the real interest rate increases, A) firms will borrow more funds. B) firms will borrow less funds. C) firms' demand for funds will not change. D) firms will purchase new capital with its own funds instead of taking a loan. E) the demand for loanable funds curve shifts leftward.

Q: If a firm wants to borrow $10 million and the real interest rate increases from 5 percent to 6 percent, then the cost of the investment has increased by A) $1 million per year. B) $100,000 per year. C) $6 million per year. D) $600,000 per year. E) nothing because the real interest rate is the return the firm will earn on its investment.

Q: ________ reflects a use of loanable funds, while ________ reflects a supply of loanable funds. A) Business investment; the government budget deficit. B) International investment; business investment. C) The government budget deficit; private saving. D) A government budget surplus; a government budget deficit. E) International borrowing; a government budget deficit.

Q: The opportunity cost of the financial resources used to finance the purchase of capital is A) the real interest rate. B) the supply of investment. C) capital investment. D) the quantity of investment demanded. E) the price of the capital goods purchased.

Q: In the loanable funds market, which of the following is an example of investment demand? A) Mary buying stocks for her retirement portfolio B) George purchasing United States savings bonds for his son's college fund C) Scott purchasing a rookie-year baseball card for last year's World Series MVP D) Brian, owner of Bryan Games, purchasing computers to enhance the production of games E) Mark buying rare gold coins

Q: In the loanable funds market, demanders of funds are ________ and suppliers of funds are ________. A) firms and the government if it has a budget surplus; households and the government if it has a budget deficit B) firms and the government if it has a budget deficit; households and the government if it has a budget surplus C) households and the government if it has a budget surplus; firms and the government if it has a budget deficit D) households and the government if it has a budget deficit; firms and the government if it has a budget surplus E) households and firms; the government if it has a budget deficit

Q: The demand for loanable funds includes demand for i. loans. ii. stocks. iii. bonds. A) i, ii and iii B) i only C) i and ii D) iii only E) ii and iii

Q: One type of demander in the loanable funds market A) wants funds to purchase financial capital. B) wants funds to purchase physical capital. C) lends funds to purchase financial capital. D) lends funds to purchase physical capital. E) wants physical capital in order to purchase financial capital.

Q: A bond's price is $80 and the bond pays $8 in interest every year. The bond's interest rate is ________. A) 8 percent B) 10 percent C) 4 percent D) 80 percent E) None of the above are correct.

Q: If the market value of what it has lent is less than the market value of what it has borrowed, a financial institution's net worth is ________ and it is ________. A) negative; illiquid but not necessarily insolvent B) negative; insolvent but not necessarily illiquid C) positive; illiquid and insolvent D) negative; illiquid and insolvent E) positive; insolvent but not necessarily illiquid

Q: Which of the following is NOT a financial institution? A) an insurance company B) a pension fund C) Freddie Mac D) a commercial bank E) None of the above is correct because they are all financial institutions.

Q: When a student uses a credit card to buy an iPod, the student is A) borrowing in the bond market. B) lending in the bond market. C) lending in the loan market. D) borrowing in the loan market. E) lending in the stock market.

Q: Economists use the term "financial markets" to mean the markets in which A) firms purchase their physical capital. B) firms supply their goods and services. C) households supply their labor services. D) firms get the funds that they use to buy physical capital. E) the government borrows to fund any budget surplus.

Q: Intel's capital at the end of the year equals Intel's capital at the beginning of the year A) minus its stock dividends. B) plus net investment. C) minus depreciation. D) plus gross investment. E) plus depreciation.

Q: Which of the following formulas is correct? A) Net investment = gross investment + depreciation B) Net investment = gross investment + capital C) Net investment = gross investment - depreciation D) Net investment = gross investment - saving E) Net investment = gross investment - wealth

Q: The decrease in the value of the capital that results from its use and obsolescence is A) appreciation. B) deconstruction. C) depreciation. D) gross investment. E) net investment.

Q: Which of the following is NOT an example of physical capital? A) a building B) a bond C) a dump truck D) a lawn mower E) a computer

Q: What do Fannie Mae and Freddie Mac have in common? A) They are both government-sponsored mortgage lenders. B) They are both investment banks. C) They are both pension funds. D) Both firms went out of business in the 2008 financial crisis. E) Both firms issue bonds on behalf of the government.

Q: Investment banks differ from commercial banks in the fact that A) investment banks help other financial institutions and governments engage in financial markets while commercial banks work with individuals. B) investment banks work only with wealthy customers while commercial banks work only with private firms. C) commercial banks service the needs of local governments while investment banks work with the federal government. D) commercial banks issue stocks and bonds while investment banks do not. E) commercial banks sell stocks on behalf of their customers while investment banks just finance loans.

Q: The Rule of 70, as applied to real GDP growth, can be used to find the A) real GDP growth rate necessary to double growth. B) number of years it takes for the level of real GDP to double. C) growth rate of real GDP. D) number of years it takes for the growth rate of real GDP to double. E) population growth rate necessary to double the GDP growth rate.

Q: The Rule of 70 states that the level of a variable will double in A) 70 years. B) the number of years equal to the variable's annual rate of growth divided by 70. C) the number of years equal to 70 divided by the variable's annual growth rate. D) the number of years equal to the variable's annual growth rate minus 70. E) the number of years equal to 70 multiplied by the variable's annual growth rate expressed as a decimal.

Q: The Rule of ________ can be used to calculate the number of years that it takes for the level of a variable to ________. A) 20; double B) 70; triple C) 70; double D) 20; triple E) thumb; double

Q: According to the data in the table above, real GDP per person grew at a rate of ________ between year 1 and year 2.A) 10 percentB) 0 percentC) 1 percentD) 5 percentE) 50 percent

Q: According to the data in the table above, real GDP grew at a rate of ________ between year 1and year 2.A) 10 percentB) 1 percentC) 50 percentD) 5 percentE) 55 percent

Q: According to the data in the table above,A) the standard of living improved between year 1 and year 2.B) the standard of living worsened between year 1 and year 2.C) as measured by real GDP per person, the standard of living remained the same between year 1 and year 2.D) real GDP grew more rapidly than population between year 1 and year 2.E) real GDP grew more slowly than population between year 1 and year 2.

Q: If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent, thenA) the standard of living is higher in Country A.B) the standard of living is higher in Country B.C) the standard of living is growing more rapidly in Country A.D) We cannot say whose standard of living is growing more rapidly without knowing the population growth rate.E) We cannot say whose standard of living is growing more rapidly without knowing the growth rate of real GDP.

Q: If Country A's real GDP is growing at 6 percent per year and Country B's real GDP is growing at 6 percent per year, then the standard of living is A) growing more rapidly in Country A. B) higher in Country B. C) changing at the same rate in Country A and Country B. D) growing more slowly in Country A. E) changing at the same rate in Country A and Country B only if the rate of population growth is the same in both countries.

Q: Belgium's real GDP per person is $33,000 and Austria's is $34,700. The population growth rate in Belgium is 0.13 percent and the growth rate of real GDP is 3.0 percent. The population growth rate in Austria is 0.08 percent and the growth rate of real GDP is 3.3 percent. If these growth rates continue, how many years will it take for Belgium's real GDP per person to equal Austria's real GDP per person? A) Belgium's standard of living will never equal Austria's. B) just over 23 years C) just over 24 years D) just over 21 years E) over 230 years

Q: In India last year, the growth rate of real GDP was 3.5 percent and the population grew from 1,000 million people to 1,100 million. Real GDP per person A) increased by 13.5 percent. B) decreased by 6.5 percent. C) increased by 6.5 percent. D) decreased by 13.5 percent. E) increased by 3.5 percent.

Q: During 2008, Swaziland had a real GDP growth rate of 1.8 percent and a real GDP growth rate per person of -1.3 percent. These rates indicate that in Swaziland A) there was an error when calculating the growth rates because the growth rate of real GDP per person cannot be negative. B) the population growth rate was negative. C) the population grew at a faster rate than real GDP. D) poverty levels are declining. E) real GDP grew more rapidly than did the population.

Q: If a country experiences a real GDP growth rate of 1 percent and population growth of 2 percent, then the growth rate of real GDP per person is A) 3 percent. B) 2 percent. C) 1 percent. D) -1 percent. E) 0 percent.

Q: In 2009, U.S. real GDP decreased by 3 percent and the population grew by 1 percent. Thus, real GDP per person A) increased 2 percent. B) decreased 2 percent. C) increased 4 percent. D) decreased 4 percent. E) decreased 3 percent.

Q: If an economy's growth rate of real GDP is 3 percent per year and the growth rate of the population is 2.5 percent per year, the growth rate of real GDP per person is A) 3 + 2.5 = 5.5 percent per year. B) [(3 - 2.5) 2.5] 100 = 20 percent per year. C) [(2.5 - 3) 3] 100 = 16.6 percent per year. D) 3 - 2.5 = 0.5 percent per year. E) 2.5 - 3 = -0.5 percent per year.

Q: Iceland's real GDP grows at a rate of 2.6 percent and population grows at a rate of 0.8 percent. Iceland's real GDP per person grows at a rate of A) 1.8 percent. B) 2.6 percent. C) 3.4 percent. D) 3.0 percent. E) 3.2 percent.

Q: If real GDP grows at a rate of 6 percent and population grows at a rate of 2 percent, then real GDP per person grows at a rate of A) 4 percent. B) 2 percent. C) 0.5 percent. D) -3 percent. E) 8 percent.

Q: If the U.S. population grew at a 0.9 percent and real GDP grew at a 4.4 percent during the same period, what was the growth rate of real GDP per person? A) 3.5 percent B) 5.3 percent C) 4.0 percent D) -3.5 percent E) 4.4 percent

Q: Real GDP in the country of Oz is growing at 5 percent and its population is growing at 2 percent. In the country of Lilliput, real GDP is growing at 4 percent and its population is growing at 0.5 percent. Thus, A) real GDP per person in Oz is growing at a faster rate than in Lilliput. B) real GDP per person in Lilliput is growing at a faster rate than in Oz. C) real GDP per person in Lilliput is growing at the same rate as in Oz. D) real GDP per person in Lilliput is growing at a rate that is not comparable to that in Oz. E) We need more information to determine if real GDP per person in Lilliput is growing faster or slower than real GDP per person in Oz.

Q: Assume the population growth rate is 2 percent and the real GDP growth rate is 5 percent. The change in standard of living, as measured by the growth rate in real GDP per person, is A) 7 percent. B) 2.5 percent. C) 5 percent. D) 3 percent. E) -3 percent.

Q: The population in the current year is 31.5 million and the real GDP is $814 million. The previous year's statistics were a population of 31 million and a real GDP of $800 million. The change in the standard of living, measured by growth in real GDP per person, is A) 1.6 percent. B) 7.75 percent. C) 0.13 percent. D) 6 percent. E) 0 percent.

Q: If real GDP grows at a faster rate than does population, then the standard of living, as measured by real GDP per person, A) improves. B) worsens. C) remains the same. D) cannot be measured. E) either improves, worsens, or stays the same, depending on the size of the population and the actual level of real GDP.

Q: The growth rate of real GDP per person equals the A) population growth rate plus the growth rate of real GDP. B) change in the economic growth rate divided by the change in the population growth rate. C) the economic growth rate per person divided by the change in the population growth rate. D) growth rate of real GDP minus the growth rate of the population. E) population growth rate plus the growth rate of real GDP then divided by the initial level of real GDP.

Q: Growth in the standard of living is measured by the increase in A) real GDP. B) the Rule of 70. C) employment. D) real GDP per person. E) consumption.

Q: A measure of growth in the standard of living is the growth in A) real GDP. B) population. C) real GDP minus the growth in population. D) population minus the growth in real GDP. E) employment.

Q: In growth theory, the change in a country's standard of living is measured by the change in A) real GDP per person. B) real GDP. C) the nation's capital stock. D) wages per person. E) employment.

Q: To measure the change in the standard of living, it is best to use the growth rate A) from the Rule of 70. B) of real GDP. C) of the population. D) of real GDP per person. E) of the price level.

Q: Suppose India wants to measure how much the standard of living has changed over the last decade. Which piece of data should India use? A) population B) real GDP per person C) real GDP D) wages E) inflation

Q: Using the data in the table above, the growth rate of real GDP hasA) increased from year to year.B) increased more rapidly from year to year.C) remained constant from year to year.D) slowed from year to year.E) probably changed, but more information is needed about the price level to determine by how much it has changed.

Q: Using the data in the table above, real GDP per person in 2009 isA) $70,000.B) $71,429.C) $75,000.D) $70 trillion.E) 7 percent.

Q: Using the data in the table above, the growth rate of real GDP for 2010 is equal toA) 9.09 percent.B) 7.00 percent.C) 5.00 percent.D) 4.76 percent.E) 10.0 percent.

Q: In 2008, real GDP in the United States was $13,312 billion. In 2009, real GDP in the United States was $13,112 billion. What was the U.S. economic growth rate from 2008 to 2009?A) -1.5 percentB) 1.5 percentC) 0.98 percentD) 0.12 percentE) $200 million

Q: If real GDP in year 1 is $72 million and real GDP in year 2 is $87 million, then the growth rate of real GDP is A) 15 percent. B) $15 million. C) 20.8 percent. D) 17 percent. E) 83 percent.

Q: U.S. real GDP in 2007 was $13.25 trillion and U.S. real GDP in 2008 was $13.31 trillion. What was the economic growth rate of the United States during this period? A) 18 percent B) -1.36 percent C) 0.45 percent D) 6.9 percent E) $1.8 trillion

Q: Suppose France's real GDP grew from $750 billion in 2010 to $821 billion in 2011. What was the growth rate of France's real GDP? A) 10 percent B) 9.5 percent C) 9.1 percent D) 8.6 percent E) $71 billion

Q: If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate? A) 15.0 percent B) -1.5 percent C) 1.5 percent D) $0.2 trillion E) 2.1 percent

Q: The growth rate of real GDP equals A) [(employment in the current year - employment in previous year)/employment in previous year] 100. B) [(real GDP in current year - real GDP in previous year) real GDP in previous year] 100. C) [(real GDP in previous year - real GDP in current year) real GDP in previous year] 100. D) [(real GDP in current year - real GDP in previous year) real GDP in current year] 100. E) (real GDP in current year - real GDP in previous year) 100.

Q: Which of the following variables is used to determine a country's economic growth? i. real GDP ii. wages iii. inflation A) i and ii only B) i, ii and iii C) ii and iii D) i only E) i and iii

Q: Economic growth is defined as equal to the increase in A) employment. B) population. C) real GDP. D) the price level. E) the inflation rate.

Q: A country will likely experience an increase in poverty if A) its population decreases over time. B) its real GDP growth rate decreases or slows over time. C) its inflation rate decreases or slows over time. D) its real GDP per person growth rate increases over time. E) it does not receive foreign aid.

Q: Economic growth is a sustained expansion of production possibilities, as measured by the increase in ________ over time. A) real GDP B) population C) inflation D) the price level E) employment