Question 1

Which of the following is NOT one of Lawrence Summers determinants of growth?&#10;A) Maintaining sustainable government finances and sound money.&#10;B) Having a workforce with high levels of education and literacy.&#10;C) Having an institutional environment in which contracts can be enforced and property rights established.&#10;D) Integrating with the global economy through trade and investment.

Accepted Answer

Lawrence Summers' determinants of growth typically include maintaining sustainable government finances, sound money, enforceable contracts, property rights, and global economic integration, but not specifically high levels of education and literacy.

Question 2

&#10;&#10;-Refer to Table 17 -1. Calculate the growth rate of real GDP from 2004 to 2005.&#10;A) 4%&#10;B) 1%&#10;C) 3%&#10;D) 2%

Accepted Answer

The growth rate of real GDP is calculated using the formula [(Real GDP in later year - Real GDP in earlier year) / Real GDP in earlier year] * 100. Without the specific values from Table 17-1, the correct answer cannot be determined from the information provided. However, based on the question's context, if C is the correct answer, it implies a 3% growth rate was calculated from the given data in Table 17-1.

Question 3

&#10;&#10;-Refer to Table 17 -1. Calculate the average annual growth rate from 2002 to 2005.&#10;A) 1.5%&#10;B) 1%&#10;C) 2%&#10;D) 3%

Accepted Answer

The average annual growth rate over a period can be calculated using the formula: [(Ending Value/Beginning Value)^(1/Number of Years)] - 1. Without the specific values from Table 17-1, we can't perform the exact calculation. However, given the options provided and assuming this question is based on a hypothetical or specific dataset, the correct answer is chosen as C) 2%, indicating that it is the expected growth rate based on the information that would have been in Table 17-1.

Question 4

Increases in real GDP over the past 60 years can actually underestimate growth in the standard of living for Arabs since the mid of the 20^thcentury because A) the level of pollution in the mid of the 20^thcentury was much higher than it is today. B) goods and services are more expensive today as compared to the mid of the 20^thcentury. C) the quality of health care that exists today was not available in the mid of the 20^thcentury. D) the crime rate was higher in the mid of the 20^thcentury than it is today.

Accepted Answer

Improvements in healthcare quality over time contribute to a better standard of living, which may not be fully captured by real GDP figures.

Question 5

In 2009, countries in the Arab world suffered from a decline in the economic growth rate due to the global recession caused by the financial crisis. What effect did this have on inflation on the Arab world?

A) Inflation was increased in the Arab world.
B) Inflation was unaffected in the Arab world.
C) Inflation was decreased in the Arab world.
D) None of the above.

Accepted Answer

The global recession led to a decrease in demand for goods and services, which in turn reduced inflationary pressures in the Arab world, leading to decreased inflation.

Question 6

When a mutual fund company issues mutual fund shares that it will buy back at a price that reflects the underlying value of the financial securities owned by the fund, this kind of mutual fund is called a(n) ________ mutual fund.

A) liquid
B) open -end
C) closed -end
D) stock and bond

Accepted Answer

Open-end mutual funds issue shares that can be bought back by the fund at the net asset value (NAV), which reflects the underlying value of the securities in the fund. This allows investors to enter and exit the fund at the current NAV, unlike closed-end funds, which have a fixed number of shares traded on exchanges.

Question 7

Under which of the following circumstances would the government be running a deficit?&#10;A)  &#10;B)  &#10;C)  &#10;D)

Accepted Answer

The answer of Under which of the following circumstances would...

Question 8

Under which of the following circumstances would private saving be positive in a closed economy?&#10;A)  &#10;B)  &#10;C)  &#10;D)

Accepted Answer

The answer of Under which of the following circumstances would...

Question 9

&#10;&#10;-Refer to Figure 17 -1. Which of the following is consistent with the graph depicted above?&#10;A) Technological change increases the profitability of new investment.&#10;B) An expected recession decreases the profitability of new investment.&#10;C) The government runs a budget surplus.&#10;D) Households become spendthrifts and begin to save less.

Accepted Answer

Technological change can lead to increased efficiency and productivity, making new investments more profitable.

Question 10

What reason did the IMF give for predicting that Gulf States would recover to 4.5 percent in 2010 after being only 0.4 percent in 2009?&#10;A) Lower levels of inflation in the US and Europe&#10;B) A rebound in crude oil prices and production.&#10;C) Reduced inflation throughout the region.&#10;D) A fall in non -oil prices in the region

Accepted Answer

The IMF predicted that Gulf States would recover to 4.5 percent in 2010, up from only 0.4 percent in 2009, primarily due to a rebound in crude oil prices and production, which are critical components of the Gulf States' economies.

Deck 17: Unemployment and Inflation