question
Financial markets have the basic function of
answer
getting people with excess capital who are willing to lend together with people who have productive uses of capital.
assuring that the swings in the business cycle are less pronounced.
assuring that governments need never resort to printing money.
providing a risk-free repository of spending power
A.
assuring that the swings in the business cycle are less pronounced.
assuring that governments need never resort to printing money.
providing a risk-free repository of spending power
A.
question
Financial markets improve economic welfare because
answer
they prevent speculators from hedging risk.
they allow consumers to time their purchases better.
they weed out inefficient firms.
they minimize the potential for pooling risk in risky insurance contracts.
B.
they allow consumers to time their purchases better.
they weed out inefficient firms.
they minimize the potential for pooling risk in risky insurance contracts.
B.
question
The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as
answer
inflation rate
exchange rate
interest rate
real gross domestic product (GDP)
C.
exchange rate
interest rate
real gross domestic product (GDP)
C.
question
Which of the following is not a goal of financial regulation?
answer
A. ensuring the soundness of the financial system by minimizing fraud
B. creating a regulator system that forces transparency on the system
C. ensuring that investors (savers) never suffer losses
D. ensuring that capital flows to where it can earn the highest return
C.
B. creating a regulator system that forces transparency on the system
C. ensuring that investors (savers) never suffer losses
D. ensuring that capital flows to where it can earn the highest return
C.
question
Country A has a real GDP of $200,000 and a population of 2000. Country B has a real GDP of $400,000 and a population of 4000. Which of the following is true?
answer
Living standards are higher in Country A.
Living standards are higher in Country B.
Living standards are the same in both countries.
Real GDP per capita is higher in Country B.
C.
Living standards are higher in Country B.
Living standards are the same in both countries.
Real GDP per capita is higher in Country B.
C.
question
Real GDP is adjusted for changes in:
answer
overall employment levels.
overall price levels.
the level of the interest rate.
the level of unemployment.
B.
overall price levels.
the level of the interest rate.
the level of unemployment.
B.
question
A shortcoming of nominal GDP is that:
answer
an increase in nominal GDP can be caused by changes in either prices or production of final goods and services.
it does not measure changes in employment.
it does not measure changes in price.
it does not measure changes in inflation.
A.
it does not measure changes in employment.
it does not measure changes in price.
it does not measure changes in inflation.
A.
question
A shortcoming of using real GDP as a measure of economic well-being is that it does not measure changes in:
answer
leisure time.
environmental quality.
the underground economy.
income disparity.
all of these options are correct.
E.
environmental quality.
the underground economy.
income disparity.
all of these options are correct.
E.
question
Which of the following statements about historical unemployment in the United States is true?
answer
Since 1960 the average unemployment rate has been about 2%.
Since 1960 the average unemployment rate has been about 6%.
The unemployment rate has never fallen below 6%.
The unemployment rate during the Great Recession reached above 12%.
The unemployment rate during the 2001 recession was higher than during the Great Recession.
B.
Since 1960 the average unemployment rate has been about 6%.
The unemployment rate has never fallen below 6%.
The unemployment rate during the Great Recession reached above 12%.
The unemployment rate during the 2001 recession was higher than during the Great Recession.
B.
question
The difference between the official unemployment rate and the alternate measure of unemployment (see graph in power point slides!) that includes discouraged workers and underemployed workers:
answer
shows that there are no shortcomings with the official unemployment rate.
grows when the economy enters a recession.
grows when the economy enters an expansion.
is constant over the course of the business cycle.
B.
grows when the economy enters a recession.
grows when the economy enters an expansion.
is constant over the course of the business cycle.
B.
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