Question 1

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

Accepted Answer

A)  The supply of loanable funds curve would shift rightward to a curve such as SLF2. 
B)  The supply of loanable funds curve would shift leftward to a curve such as SLF1. 
C)  There would be a movement to a point such as b on supply of loanable funds curve SLF0. 
D)  Nothing; the economy would remain at point a. 
A)  The supply of loanable funds curve would shift rightward to a curve such as SLF2. 
B)  The supply of loanable funds curve would shift leftward to a curve such as SLF1. 
C)  There would be a movement to a point such as b on supply of loanable funds curve SLF0. 
D)  Nothing; the economy would remain at point a.

Question 2

If the government has a budget deficit and the Ricardo- Barro effect does not apply,

Accepted Answer

A)  investment decreases 
B)  investment increases 
C)  the real interest rate rises. 
D)  Both answers A and C are correct. 
A)  investment decreases 
B)  investment increases 
C)  the real interest rate rises. 
D)  Both answers A and C are correct.

Question 3

Real interest rates around the world tend to

Accepted Answer

A)  be quite different because no two countries are exactly the same. 
B)  be equal after adjusting for differences in risk because financial capital seeks the highest possible return. 
C)  be equal because trading partners would not do business otherwise. 
D)  differ because inflation rates differ across countries. 
A)  be quite different because no two countries are exactly the same. 
B)  be equal after adjusting for differences in risk because financial capital seeks the highest possible return. 
C)  be equal because trading partners would not do business otherwise. 
D)  differ because inflation rates differ across countries.

Question 4

A rise in the real interest rate

Accepted Answer

A)  creates a movement downward along the demand for loanable funds curve. 
B)  shifts the demand for loanable funds curve leftward. 
C)  creates a movement upward along the demand for loanable funds curve. 
D)  shifts the demand for loanable funds curve rightward. 
A)  creates a movement downward along the demand for loanable funds curve. 
B)  shifts the demand for loanable funds curve leftward. 
C)  creates a movement upward along the demand for loanable funds curve. 
D)  shifts the demand for loanable funds curve rightward.

Question 5

Savings definitely increases if

Accepted Answer

A)  current disposable income falls. 
B)  future disposable income falls. 
C)  current and future disposable income rise. 
D)  current and future disposable income fall. 
A)  current disposable income falls. 
B)  future disposable income falls. 
C)  current and future disposable income rise. 
D)  current and future disposable income fall.

Question 6

The table below shows data for the United States.   Between 2006 and 2007, the real interest rate _ and caused a the demand for loana funds curve.

Accepted Answer

A)  increased; movement upward along 
B)  decreased; downward along 
C)  increased; rightward shift. 
D)  decreased; leftward. 
A)  increased; movement upward along 
B)  decreased; downward along 
C)  increased; rightward shift. 
D)  decreased; leftward.

Question 7

The demand for loanable funds curve shows that as the interest rate increases, there will be a curve.

Accepted Answer

A)  nominal; rightward shift in 
B)  nominal; movement down along 
C)  real; rightward shift in 
D)  real; movement up along. 
A)  nominal; rightward shift in 
B)  nominal; movement down along 
C)  real; rightward shift in 
D)  real; movement up along.

Question 8

If government saving is negative (that is, if government is running a budget deficit), crowding out might occur. Crowding out leads to all of the following EXCEPT

Accepted Answer

A)  a decreased quantity of investment. 
B)  a smaller capital stock in the future. 
C)  decreased private saving. 
D)  a higher real interest rate. 
A)  a decreased quantity of investment. 
B)  a smaller capital stock in the future. 
C)  decreased private saving. 
D)  a higher real interest rate.

Question 9

Which of the following shifts the demand for loanable funds curve leftward?

Accepted Answer

A)  a decrease in the expected profit 
B)  a decrease in the taxes paid by the business 
C)  a rise in the real interest rate 
D)  a fall in the real interest rate 
A)  a decrease in the expected profit 
B)  a decrease in the taxes paid by the business 
C)  a rise in the real interest rate 
D)  a fall in the real interest rate

Question 10

In January 2008, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2008, Tim spent $200,000 on new machines. During 2008, Tim's gross investment totalled

Accepted Answer

A)  $200,000 
B)  $900,000. 
C)  $1 million. 
D)  $300,000. 
A)  $200,000 
B)  $900,000. 
C)  $1 million. 
D)  $300,000.

Question 11

If the real interest rate increases from 3 percent to 5 percent,

Accepted Answer

A)  the nominal interest rate will also increase. 
B)  the demand for loanable funds curve will shift rightward. 
C)  the supply of loanable funds curve will shift rightward. 
D)  there will be a movement up along the demand for loanable funds curve. 
A)  the nominal interest rate will also increase. 
B)  the demand for loanable funds curve will shift rightward. 
C)  the supply of loanable funds curve will shift rightward. 
D)  there will be a movement up along the demand for loanable funds curve.

Question 12

Investment is financed by which of the following?
I. Government spending
II. National saving
III. Borrowing from the rest of the world

Accepted Answer

A)  II and III only 
B)  I and II only 
C)  I, II, and III 
D)  I and III only 
A)  II and III only 
B)  I and II only 
C)  I, II, and III 
D)  I and III only

Question 13

The University of Central Florida (UCF) wanted "to create a town center where students can live, ea study and revel in college traditions like football." In addition, the university needed funding to bui dorms that would house 2000 students. UCF was able to secure financing by promising to pay a len specific amount of money on specific dates.
HYPERLINK "http://www.sptimes.com/" www.sptimes.com 10/14/20
This transaction takes place in the market for capital.

Accepted Answer

A)  stock; financial 
B)  loan; financial. 
C)  bond; financial 
D)  loan; physical 
A)  stock; financial 
B)  loan; financial. 
C)  bond; financial 
D)  loan; physical

Question 14

A small country is a net foreign lender and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the country's foreign lending .

Accepted Answer

A)  does not change; does not change 
B)  increases; does not change 
C)  does not change; increases 
D)  increases; decreases 
A)  does not change; does not change 
B)  increases; does not change 
C)  does not change; increases 
D)  increases; decreases

Question 15

The term capital, as used in macroeconomics, refers to

Accepted Answer

A)  the sum of investment and government purchases of goods. 
B)  the plant, equipment, buildings, and inventories of raw materials and semi- finished goods. 
C)  investment. 
D)  financial wealth. 
A)  the sum of investment and government purchases of goods. 
B)  the plant, equipment, buildings, and inventories of raw materials and semi- finished goods. 
C)  investment. 
D)  financial wealth.

Question 16

In 2008, Tim's Gyms needs to finance the building of a new gym. Suppose Tim secures this financing from a bank, and the bank receives ownership if Tim fails to make payments. This type of funding is

Accepted Answer

A)  a stock issued in the bond market. 
B)  a mortgage obtained in the stock market. 
C)  a bond issued in the bond market. 
D)  a mortgage obtained in the loan market. 
A)  a stock issued in the bond market. 
B)  a mortgage obtained in the stock market. 
C)  a bond issued in the bond market. 
D)  a mortgage obtained in the loan market.

Question 17

If the inflation rate is 13 percent and the nominal interest rate is 12 percent, then the

Accepted Answer

A)  real interest rate is approximately 0 percent. 
B)  nominal interest rate adjusted for inflation is approximately is 25 percent. 
C)  real interest rate is approximately 1 percent. 
D)  real interest rate is approximately - 1 percent. 
A)  real interest rate is approximately 0 percent. 
B)  nominal interest rate adjusted for inflation is approximately is 25 percent. 
C)  real interest rate is approximately 1 percent. 
D)  real interest rate is approximately - 1 percent.

Question 18

If the real interest rate is below the equilibrium real interest rate, then the quantity of loanable funds supplied is

Accepted Answer

A)  greater than the quantity of loanable funds demanded, and the real interest rate will fall. 
B)  less than the quantity of loanable funds demanded, and the real interest rate will rise. 
C)  greater than the quantity of loanable funds demanded, and the real interest rate will rise. 
D)  less than the quantity of loanable funds demanded, and the real interest rate will fall. 
A)  greater than the quantity of loanable funds demanded, and the real interest rate will fall. 
B)  less than the quantity of loanable funds demanded, and the real interest rate will rise. 
C)  greater than the quantity of loanable funds demanded, and the real interest rate will rise. 
D)  less than the quantity of loanable funds demanded, and the real interest rate will fall.

Question 19

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

Accepted Answer

A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increases 
A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increases

Question 20

If U.S. net exports are positive,

Accepted Answer

A)  the United States borrows from other countries to pay for some of the goods the United States purchases from them. 
B)  other countries borrow from the United States to pay for some of the goods they purchase from the United States. 
C)  the United States sells some of the assets it owns in other countries to pay for some of the goods it sells to other countries. 
D)  other countries make loans to the United States so that the United States can pay for some of the goods it purchases from other countries. 
A)  the United States borrows from other countries to pay for some of the goods the United States purchases from them. 
B)  other countries borrow from the United States to pay for some of the goods they purchase from the United States. 
C)  the United States sells some of the assets it owns in other countries to pay for some of the goods it sells to other countries. 
D)  other countries make loans to the United States so that the United States can pay for some of the goods it purchases from other countries.

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

If the government has a budget deficit and the Ricardo- Barro effect does not apply,

Real interest rates around the world tend to

A rise in the real interest rate

Savings definitely increases if

The table below shows data for the United States. Between 2006 and 2007, the real interest rate _ and caused a the demand for loana funds curve.

The demand for loanable funds curve shows that as the interest rate increases, there will be a curve.

If government saving is negative (that is, if government is running a budget deficit), crowding out might occur. Crowding out leads to all of the following EXCEPT

Which of the following shifts the demand for loanable funds curve leftward?

In January 2008, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2008, Tim spent $200,000 on new machines. During 2008, Tim's gross investment totalled

If the real interest rate increases from 3 percent to 5 percent,

Investment is financed by which of the following? I. Government spending II. National saving III. Borrowing from the rest of the world

A small country is a net foreign lender and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the country's foreign lending .

The term capital, as used in macroeconomics, refers to

In 2008, Tim's Gyms needs to finance the building of a new gym. Suppose Tim secures this financing from a bank, and the bank receives ownership if Tim fails to make payments. This type of funding is

If the inflation rate is 13 percent and the nominal interest rate is 12 percent, then the

If the real interest rate is below the equilibrium real interest rate, then the quantity of loanable funds supplied is

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

If U.S. net exports are positive,

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 7: Finance, Saving, and Investment

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

If the government has a budget deficit and the Ricardo- Barro effect does not apply,

Real interest rates around the world tend to

A rise in the real interest rate

Savings definitely increases if

The table below shows data for the United States. Between 2006 and 2007, the real interest rate _ and caused a the demand for loana funds curve.

The demand for loanable funds curve shows that as the interest rate increases, there will be a curve.

If government saving is negative (that is, if government is running a budget deficit), crowding out might occur. Crowding out leads to all of the following EXCEPT

Which of the following shifts the demand for loanable funds curve leftward?

In January 2008, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the equipment fell by 30 percent. During 2008, Tim spent $200,000 on new machines. During 2008, Tim's gross investment totalled

If the real interest rate increases from 3 percent to 5 percent,

Investment is financed by which of the following? I. Government spending II. National saving III. Borrowing from the rest of the world

A small country is a net foreign lender and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the country's foreign lending .

The term capital, as used in macroeconomics, refers to

In 2008, Tim's Gyms needs to finance the building of a new gym. Suppose Tim secures this financing from a bank, and the bank receives ownership if Tim fails to make payments. This type of funding is

If the inflation rate is 13 percent and the nominal interest rate is 12 percent, then the

If the real interest rate is below the equilibrium real interest rate, then the quantity of loanable funds supplied is

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

If U.S. net exports are positive,

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

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