Question 1

Which would be considered an investment according to economists?

Accepted Answer

The answer of Which would be considered an investment according...

Question 2

The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses.Which of the following correctly states this transfer?

Accepted Answer

Financial institutions, such as banks, collect the savings of individuals and reward them with interest and dividend payments. They then lend these funds to businesses who use them to buy equipment, factories, and other capital goods to expand their operations. This transfer of savings to businesses is essential for economic growth and development. The other options in the question (A, C, and D) do not accurately describe this process.

Question 3

Modern economic growth refers to:

Accepted Answer

Modern economic growth refers to an increase in output per person or per capita income. The other options do not accurately define modern economic growth. A is inflation, C is just an increase in output (which may or may not be accompanied by an increase in population), and D only refers to labour force participation and not necessarily economic growth.

Question 4

If the economy's output and income double in 35 years, we can:

Accepted Answer

The Rule of 70 states that to find the doubling time of an investment or economy, you divide 70 by the annual growth rate. If the economy doubles in 35 years, the growth rate is approximately 70/35 = 2 percent.

Question 5

The decisions about savings and investments are complicated because:

Accepted Answer

Savings and investments involve uncertainty about the future such as market fluctuations, inflation, interest rates, and so on. These factors can have a significant impact on the returns on savings or investments. Hence, making the best decisions requires thorough analysis and research about the various options available and their potential risks and rewards. The other options (B, C, and D) are not relevant or accurate in the context of savings and investments.

Question 6

In 2008-2009, the Canadian economy experienced:

Accepted Answer

The Canadian economy experienced the Great Recession in 2008-2009, which was a severe global economic downturn. This resulted in a decrease in economic activity, increased unemployment, and a decrease in job opportunities.

Question 7

Modern economic growth refers to the idea of experiencing:

Accepted Answer

Modern economic growth is characterized by an increase in output per person, which is also known as per capita output. This means that there is a higher level of economic efficiency and productivity, leading to an increase in real income and living standards for individuals in the economy. Option B describes a general increase in overall output, which may or may not result in an increase in per capita output, depending on population growth. Options C and D describe population growth, which is not necessarily indicative of modern economic growth.

Question 8

The higher is the current level of saving:

Accepted Answer

Higher savings can lead to more funds available for investment, which can boost future economic growth and consumption.

Question 9

Which would be considered an investment according to economists?

Accepted Answer

According to economists, investment refers to the purchase or construction of new physical assets (such as a factory) or financial assets (such as stocks or bonds) for the purpose of generating income or profit. Option A involves the purchase of bonds by the central bank, which is more of a monetary policy action than an investment. Option B involves the purchase of a laptop by a student, which is a personal consumption expenditure and not an investment. Option D involves the purchase of shares of stock by a mutual fund company, which is more of a financial transaction than an investment in the creation of new assets.

Question 10

Economists believe that most short-run fluctuations are the result of:

Accepted Answer

Economists believe that most short-run fluctuations in the economy are the result of demand shocks, which refers to unexpected changes in the level of demand for goods and services. This can be caused by factors such as changes in consumer spending habits, shifts in government spending or taxation policies, and changes in investment or export levels. While supply shocks can also impact short-run fluctuations, they are generally seen as less common and less impactful than demand shocks.

Question 11

To facilitate the international comparisons of living standards around the world, adjustments are supposed to be made to each country's GDP.These adjustments require:

Accepted Answer

Adjustments are made by converting each country's GDP to U.S. dollars (for ease of comparison) and then dividing it by the country's population to get per capita income. However, this alone does not account for differences in the cost of living, which is why the resulting figure is adjusted for purchasing power parity (PPP). This takes into account the differences in the cost of living between countries and provides a more accurate comparison of living standards.

Question 12

In economics, the term "investment" includes:

Accepted Answer

In economics, "investment" refers to the purchase of goods that will be used in the future to create wealth, such as business inventories, which are considered part of investment in GDP calculations.

Question 13

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

Accepted Answer

The main reason for the vast differences in living standards between rich and poor countries is due to the fact that rich countries have experienced modern economic growth while poor countries have not. This has led to differences in productivity, technology, education, and infrastructure, which all contribute to differences in GDP per capita. Nominal GDP levels may not accurately reflect the true economic growth and development of a country. Population levels also do not fully explain differences in living standards as some densely populated countries have high levels of development and vice versa.

Question 14

The inequality of saving and planned investment:

Accepted Answer

The inequality of saving and planned investment can have significant effects on the economy, such as changes in income, employment, and the price level. This is because when there is a gap between saving and planned investment, it can result in a decrease in consumption and ultimately reduced economic growth. It cannot be compensated by tax collections and government spending, nor will it always result in actual investment equaling saving.

Question 15

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

Accepted Answer

To keep track of both long-run growth and short-run fluctuations, economists look at a range of statistics that include real and nominal GDP, unemployment, and inflation rates. These indicators provide essential information about the health of the economy and help policymakers make informed decisions about how to manage it. Interest rates and stock market prices can also be useful indicators, but they are only part of the larger economic picture.

Question 16

________ shocks are unexpected changes in the demand for goods and services While, _________ shocks are unexpected changes in the supply of goods and services.

Accepted Answer

The statement clearly refers to demand and supply shocks, and since the first blank talks about unexpected changes in demand, the second blank is expected to be about unexpected changes in supply. Choice (D) Demand; supply is the correct option in this case.

Question 17

Economic growth is best defined as the:

Accepted Answer

Economic growth is typically measured by the percentage increase in real GDP (gross domestic product) over time. Real GDP is adjusted for inflation, so it reflects the changes in the quantity of goods and services produced, rather than changes in prices. Hence, option B is the best choice for the definition of economic growth. Choice A is incorrect because an increase in consumption level does not necessarily imply economic growth, as it could result from inflation or unsustainable borrowing. Choice C is incorrect because nominal GDP includes changes in both prices and quantity, making it less useful for measuring actual economic growth. Choice D is incorrect because a decrease in overall price levels could result from deflation, which can actually harm economic growth by reducing demand and potentially increasing unemployment.

Question 18

The Flamingo Corporation issued $30 million in new common stock in 2008.It used $22 million of the proceeds to replace obsolete equipment in its factory and $8 million to repay bank loans.As a result, investment:

Accepted Answer

Investment refers to the use of the newly acquired funds for productive purposes. In this case, $22 million was used to replace obsolete equipment, indicating investment has occurred. The remaining $8 million was used to repay bank loans, which is not considered investment.

Question 19

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

Accepted Answer

The answer of  Refer to the above diagram.Curve (a)...

Question 20

Which of the following is not an economic investment?

Accepted Answer

The purchase of shares is considered a financial investment, not an economic investment, which typically involves the creation of new capital goods or infrastructure.

Quiz 6: B: an Introduction to Macroeconomics

Which would be considered an investment according to economists?

The financial institutions play an important role in transferring the savings of the individuals to the investments by businesses.Which of the following correctly states this transfer?

Modern economic growth refers to:

If the economy's output and income double in 35 years, we can:

The decisions about savings and investments are complicated because:

In 2008-2009, the Canadian economy experienced:

Modern economic growth refers to the idea of experiencing:

The higher is the current level of saving:

Which would be considered an investment according to economists?

Economists believe that most short-run fluctuations are the result of:

To facilitate the international comparisons of living standards around the world, adjustments are supposed to be made to each country's GDP.These adjustments require:

In economics, the term "investment" includes:

Today, the vast differences in the living standard between rich and poor countries are mainly the result of:

The inequality of saving and planned investment:

To keep track of long-run growth and short-run fluctuations, economists will look at statistics such as:

shocks are unexpected changes in the demand for goods and services While, _ shocks are unexpected changes in the supply of goods and services.

Economic growth is best defined as the:

The Flamingo Corporation issued $30 million in new common stock in 2008.It used $22 million of the proceeds to replace obsolete equipment in its factory and $8 million to repay bank loans.As a result, investment:

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

Which of the following is not an economic investment?