Question 1

National saving equals

Accepted Answer

A)  household saving + business saving. 
B)  household saving + business saving + government saving. 
C)  household saving + business saving + net taxes - government expenditure. 
D)  Both answers B and C are correct. 
A)  household saving + business saving. 
B)  household saving + business saving + government saving. 
C)  household saving + business saving + net taxes - government expenditure. 
D)  Both answers B and C are correct.

Question 2

If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real interest rate is approximately

Accepted Answer

A)  20 percent. 
B)  18 percent. 
C)  2 percent. 
D)  4 percent. 
A)  20 percent. 
B)  18 percent. 
C)  2 percent. 
D)  4 percent.

Question 3

Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of

Accepted Answer

A)  firms expecting higher future profits. 
B)  an increase in household wealth. 
C)  a decrease in the default risk. 
D)  an increase in disposable income. 
A)  firms expecting higher future profits. 
B)  an increase in household wealth. 
C)  a decrease in the default risk. 
D)  an increase in disposable income.

Question 4

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

Accepted Answer

A)  $1.3 billion; $1.6 billion 
B)  $1.0 billion; $0.7 billion 
C)  $1.3 billion; $1.0 billion 
D)  $1.0 billion; $1.3 billion 
A)  $1.3 billion; $1.6 billion 
B)  $1.0 billion; $0.7 billion 
C)  $1.3 billion; $1.0 billion 
D)  $1.0 billion; $1.3 billion

Question 5

A decrease in the real interest rate leads to

Accepted Answer

A)  an increase in investment demand so that the demand for loanable funds curve shifts rightward. 
B)  an increase in the expected profit. 
C)  a movement downward along the demand for loanable funds curve. 
D)  a fall in the capital stock. 
A)  an increase in investment demand so that the demand for loanable funds curve shifts rightward. 
B)  an increase in the expected profit. 
C)  a movement downward along the demand for loanable funds curve. 
D)  a fall in the capital stock.

Question 6

If the Ricardo-Barro effect occurs, an in saving finances the government budget deficit and the real interest rate .

Accepted Answer

A)  decrease; increases 
B)  decrease; remains the same 
C)  increase; remains the same 
D)  increase; falls 
A)  decrease; increases 
B)  decrease; remains the same 
C)  increase; remains the same 
D)  increase; falls

Question 7

If the Ricardo-Barro effect is present, a government budget deficit raises the equilibrium real interest rate by and decreases the equilibrium quantity of investment by than if the Ricardo-Barro effect is absent.

Accepted Answer

A)  less; less 
B)  more; more 
C)  less; more 
D)  more; less 
A)  less; less 
B)  more; more 
C)  less; more 
D)  more; less

Question 8

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT

Accepted Answer

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

Question 9

The total amount spent on new capital in a time period is equal to

Accepted Answer

A)  net investment. 
B)  gross investment. 
C)  depreciation. 
D)  wealth. 
A)  net investment. 
B)  gross investment. 
C)  depreciation. 
D)  wealth.

Question 10

-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

Accepted Answer

A)  only shift the supply of loanable funds curve rightward to a curve such as SLF1. 
B)  have no effect on either the demand for loanable funds curve or the supply of loanable funds curve. 
C)  shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1. 
D)  only shift the demand for loanable funds curve rightward to a curve such as DLF1. 
A)  only shift the supply of loanable funds curve rightward to a curve such as SLF1. 
B)  have no effect on either the demand for loanable funds curve or the supply of loanable funds curve. 
C)  shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1. 
D)  only shift the demand for loanable funds curve rightward to a curve such as DLF1.

Question 11

The term ʺcapital,ʺ as used in macroeconomics, refers to

Accepted Answer

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

Question 12

An increase in the real interest rate results in a

Accepted Answer

A)  None of the above. 
B)  leftward shift in the supply of loanable funds curve. 
C)  rightward shift in the supply of loanable funds curve. 
D)  movement along the supply of loanable funds curve. 
A)  None of the above. 
B)  leftward shift in the supply of loanable funds curve. 
C)  rightward shift in the supply of loanable funds curve. 
D)  movement along the supply of loanable funds curve.

Question 13

If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?

Accepted Answer

A)  5 percent 
B)  11 percent 
C)  3 percent 
D)  8 percent 
A)  5 percent 
B)  11 percent 
C)  3 percent 
D)  8 percent

Question 14

-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?

Accepted Answer

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

Question 15

A share of Apple stock has a price of $82.58 and gives $5.36 of Apple profit to its owner . The interest rate on this share

Accepted Answer

A)  $15.41. 
B)  $6.41. 
C)  15.4 percent 
D)  6.4 percent. 
A)  $15.41. 
B)  $6.41. 
C)  15.4 percent 
D)  6.4 percent.

Question 16

Suppose Molly has an income of $35,000 annually and has inherited a savings account of $20,000. Wyatt has a job that pays $35,000 annually, but has debts totaling $6,000. Which of the following is true?

Accepted Answer

A)  We can expect Wyatt and Molly to have equal amounts of consumption this year. 
B)  We can expect Wyatt to save more than Molly this year. 
C)  We can expect Wyatt and Molly to save the same proportion of their incomes this year. 
D)  We can expect Molly to save more than Wyatt this year. 
A)  We can expect Wyatt and Molly to have equal amounts of consumption this year. 
B)  We can expect Wyatt to save more than Molly this year. 
C)  We can expect Wyatt and Molly to save the same proportion of their incomes this year. 
D)  We can expect Molly to save more than Wyatt this year.

Question 17

Which of the following have a positive relationship with household saving?
I. the real interest rate
II. disposable income
III. expected future income

Accepted Answer

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

Question 18

In the global loanable funds market,

Accepted Answer

A)  loans of equal risk will have equal interest rates. 
B)  interest rates for all types of loans will be equal. 
C)  safer loans will have higher real interest rates than riskier loans. 
D)  riskier loans will have lower real interest rates than safer loans. 
A)  loans of equal risk will have equal interest rates. 
B)  interest rates for all types of loans will be equal. 
C)  safer loans will have higher real interest rates than riskier loans. 
D)  riskier loans will have lower real interest rates than safer loans.

Question 19

At the beginning of the year, Tomʹs Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tomʹs net investment for the year totaled

Accepted Answer

A)  3 machines. 
B)  2 machines. 
C)  1 machine. 
D)  6 machines. 
A)  3 machines. 
B)  2 machines. 
C)  1 machine. 
D)  6 machines.

Question 20

The greater a householdʹs the less is its saving.

Accepted Answer

A)  return from saving 
B)  expected future profits 
C)  disposable income 
D)  wealth 
A)  return from saving 
B)  expected future profits 
C)  disposable income 
D)  wealth

National saving equals

If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real interest rate is approximately

Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of

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

A decrease in the real interest rate leads to

If the Ricardo-Barro effect occurs, an in saving finances the government budget deficit and the real interest rate .

If the Ricardo-Barro effect is present, a government budget deficit raises the equilibrium real interest rate by and decreases the equilibrium quantity of investment by than if the Ricardo-Barro effect is absent.

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT

The total amount spent on new capital in a time period is equal to

-In the above figure, the initial supply of loanable funds curve is SLF₀and the initial demand for loanable funds curve is DLF₀. An economic expansion that raises disposable income and the expected profit would

The term ʺcapital,ʺ as used in macroeconomics, refers to

An increase in the real interest rate results in a

If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?

-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?

A share of Apple stock has a price of $82.58 and gives $5.36 of Apple profit to its owner . The interest rate on this share

Suppose Molly has an income of $35,000 annually and has inherited a savings account of $20,000. Wyatt has a job that pays $35,000 annually, but has debts totaling $6,000. Which of the following is true?

Which of the following have a positive relationship with household saving? I. the real interest rate II. disposable income III. expected future income

In the global loanable funds market,

At the beginning of the year, Tomʹs Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tomʹs net investment for the year totaled

The greater a householdʹs the less is its saving.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 7: Finance, Saving, and Investment

National saving equals

If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real interest rate is approximately

Suppose the real interest rate rises and the quantity of loanable funds decreases. These changes could have been the result of

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

A decrease in the real interest rate leads to

If the Ricardo-Barro effect occurs, an in saving finances the government budget deficit and the real interest rate .

If the Ricardo-Barro effect is present, a government budget deficit raises the equilibrium real interest rate by and decreases the equilibrium quantity of investment by than if the Ricardo-Barro effect is absent.

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT

The total amount spent on new capital in a time period is equal to

-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

The term ʺcapital,ʺ as used in macroeconomics, refers to

An increase in the real interest rate results in a

If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?

-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?

A share of Apple stock has a price of $82.58 and gives $5.36 of Apple profit to its owner . The interest rate on this share

Suppose Molly has an income of $35,000 annually and has inherited a savings account of $20,000. Wyatt has a job that pays $35,000 annually, but has debts totaling $6,000. Which of the following is true?

Which of the following have a positive relationship with household saving? I. the real interest rate II. disposable income III. expected future income

In the global loanable funds market,

At the beginning of the year, Tomʹs Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tomʹs net investment for the year totaled

The greater a householdʹs the less is its saving.

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

-In the above figure, the initial supply of loanable funds curve is SLF₀and the initial demand for loanable funds curve is DLF₀. An economic expansion that raises disposable income and the expected profit would

-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?