Exam 7: Finance, Saving, and Investment

In the market for loanable funds, the supply comes from

If foreigners spend more on U.S.- made goods and services than we spend on theirs,

This year Pizza Hut makes a total investment of $1.3 billion in new stores. Its depreciation in this year is $300 million. Pizza Hut's gross investment is and its net investment is .

In 2007, France's GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in each year was $357 billion (2007) and $335 billion (2006). Suppose that depreciation is 12 percent of GDP. _ _ investment in 2006 was _ billion.

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if disposable income decreases?

Capital

When the inflation rate is zero, the

-In the above figure, the initial supply of loanable funds curve is SLF₀ and the initial demand for loanable funds curve is DLF₀. An economic expansion that raises disposable income and the expected profit would

When government saving is negative,

-In the above figure, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

The term capital, as used in macroeconomics, refers to

In the market for loanable funds, if the actual interest rate is higher than the equilibrium interest rate, there is a

Sarah and Diane are both billing clerks for the local trucking company earning $17,000 per year. Sarah is attending college, plans to graduate in one year and earn $55,000 as an economist. Diane is not in college or undergoing any specialized training and will have the same job next year. According to economic theory, which of the two individuals would tend to have a higher current savings rate?

-In the above figure, the initial supply of loanable funds curve is SLF₀ and the initial demand for loanable funds curve is DLF₀. An increase in the expected profit would

In 2006 the inflation rate is 1 percent and Wally is willing to lend Barbara $100,000 at a 6 percent interest rate. In 2007, the inflation rate rises to 3 percent. As a result

A fall in the real interest rate

Greater optimism about the expected profits from investment projects

-In the above figure, an 8 percent real interest rate results in

In 2007, France's GDP totaled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in each year was $357 billion (2007) and $335 billion (2006). To calculate the amount of net investment in France for these years, you need to know .

In the absence of the Ricardo- Barro effect, an increase in the government deficit results in a Real interest rate and a equilibrium quantity of investment.