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CB2402 Week 3 Part 1

This document contains a self-study exercise with 10 multiple choice questions about economic growth, the financial system, and business cycles from Chapter 21. The questions cover topics like calculating interest on bonds, factors that increase labor productivity, the effects of slowing labor productivity growth, the definition of liquidity, calculating real GDP growth rates from a table, identifying a government budget surplus, the order of business cycle phases, interpreting a graph about investment profitability over the business cycle, what typically increases as an economy exits a recession, and what the CPI measures. The answers to each question are provided at the end.

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121 views4 pages

CB2402 Week 3 Part 1

This document contains a self-study exercise with 10 multiple choice questions about economic growth, the financial system, and business cycles from Chapter 21. The questions cover topics like calculating interest on bonds, factors that increase labor productivity, the effects of slowing labor productivity growth, the definition of liquidity, calculating real GDP growth rates from a table, identifying a government budget surplus, the order of business cycle phases, interpreting a graph about investment profitability over the business cycle, what typically increases as an economy exits a recession, and what the CPI measures. The answers to each question are provided at the end.

Uploaded by

RoyChung
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CB2402 Macroeconomics

Self-study Exercise - Week 3 Part 1

Chapter 21 Economic Growth, the Financial System, and Business Cycles

1) If you invest $10,000 in a bond that earns 8% interest per year, how many years
will it take to double your money?
A) 1 year and 3 months
B) 2 years and 6 months
C) 8 years
D) 8 years and 9 months

2) Which of the following increases labor productivity?


A) an increase in the aggregate hours of work
B) decreases in the availability of computers and factory buildings
C) inventions of new machinery, equipment, or software
D) a decline in the health of the population

3) If labor productivity growth slows down in a country, this will


A) accelerate the increase in real GDP per capita.
B) accelerate the increase in nominal GDP.
C) slow down the increase in real GDP per capita.
D) slow down the increase in nominal GDP.

4) Liquidity refers to
A) the ease with a stock can be traded for a bond.
B) the ease with which a financial security can be traded for cash.
C) the number of times a dollar changes hands in the creation of GDP in an economy.
D) the number of shares of stock a corporation issues.
Table 21-1
Real GDP (billions
Year of 2000 dollars)
2013 $8,700
2014 8,875
2015 9,000
2016 9,280

5) Refer to Table 21-1. Using the table above, what is the approximate growth rate of
real GDP from 2015 to 2016?
A) 1%
B) 2%
C) 3%
D) 4%

6) There is a government budget surplus if


A) T - TR > G.
B) G > T.
C) G > TR.
D) TR < T.

7) The period of expansion ends with a ________ and the period of recession ends
with a ________.
A) business cycle peak; business cycle trough
B) business cycle trough; business cycle peak
C) business cycle peak; business cycle peak
D) business cycle trough; business cycle trough
Figure 21-1

8) Refer to Figure 21-1. Which of the following is consistent with the graph depicted
above?
A) An expected recession decreases the profitability of new investment.
B) Technological change increases the profitability of new investment.
C) The government runs a budget surplus.
D) Households become spendthrifts and begin to save less.

9) As the economy nears the end of a recession, which of the following do we


typically see?
A) further decreases in consumer spending
B) increased spending on capital goods by firms
C) increasing interest rates
D) all of the above

10) If the CPI is currently 202, what does this tell you about inflation between last
year and this year?
A) There was deflation in the economy between this year and last year.
B) Inflation in the economy between this year and last year was 2%.
C) Inflation in the economy between this year and last year was 102%.
D) The CPI measures only the level of prices in a given year, not the percentage
change in prices from one year to the next.
Answer to Self-study Exercise – Week 3 Part 1

Chapter 21

MCQ Answer

1 D

2 C

3 C

4 B

5 C

6 A

7 A

8 B

9 B

10 D

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