Exam 7: Finance, Saving, and Investment

Between January and November in 2008, the stocks listed in the Dow Jones Industrial Average lost half of their value. For shareholders of these stocks, this reflects i. capital losses ii. a decrease in wealth iii. gross investment

What is the approximate relationship among the real interest rate, the inflation rate, and the nominal interest rate?

The capital stock increases whenever

A decrease in the real interest rate leads to

If a bank's net worth is negative, then the bank definitely is

The total amount spent on new capital

If disposable income increases, people will decide to saving, the supply of loanable funds will _ _ and the real interest rate will _.

The real interest rate has a positive relationship with the supply of loanable funds.

According to the Ricardo- Barro effect,

A decrease in disposable income shifts the _ .

Technological progress that increases the expected profit shifts the demand for loanable funds curve

-In the above figure, a 4 percent interest rate results in

The quantity of loanable funds demanded increases so there is a movement downward along the demand for loanable funds curve when

If the world real interest rate falls, then a country that is a net foreign lender

The supply of loanable funds curve

Which of the following is correct?

Suppose that you took out a $1000 loan in January and had to pay $75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is correct?

An increase in will shift the supply of loanable funds curve .

In 2007, Singapore's government ran a budget surplus of $4.5 billion. The budget surplus loanable funds and the real interest rate.

Which of the following items are considered physical capital? i. shares of Ford traded on the NYSE ii. the production line at the Saturn plant in Tennessee iii. the windshields at the Saturn plant in Tennessee iv. the salaries paid to Ford executives