Exam 7: Finance, Saving, and Investment

Item Millions of dollars Personal consumption expenditure 80 Government expenditure on goods and services 30 Net taxes 35 Gross private domestic investment 20 Imports of goods and services 10 Exports of goods and services 20 -Use the information in the table above to calculate the value of private saving.

According to the Ricardo-Barro effect, government deficits

According to the Ricardo-Barro effect,

The nominal interest rate approximately equals which of the following?

How does expected future income affect saving supply?

In the loanable funds market, if the interest rate is above the equilibrium level

A small country is a net foreign borrower and its demand for loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the countryʹs foreign borrowing .

The the expected profit, the greater is the .

If the real interest rate is above the equilibrium real interest rate,

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

When the inflation rate is zero, the

There is a positive relationship between the demand for loanable funds and the real interest rate.

The real interest rate is 4 percent a year. When the inflation rate is zero, the nominal interest rate is approximately percent a year; and when the inflation rate is 2 percent a year, the nominal interest rate is approximately percent a year.

A fall in the real interest rate

In 2007, Franceʹs GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. investment in 2006 was billion.

At the beginning of the year, your wealth is $10,000. During the year, you have an income of $90,000 and you spend $80,000 on consumption. You pay no taxes. Your wealth at the end of the year is

Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond

If the real interest rate is below the equilibrium real interest rate,

Suppose Country A had net taxes of $30 million and government expenditures of $35 million. In addition, household saving in Country A totalled $5 million while consumption was $80 million. The government of Country A is running a budget and national saving is million.

The idea that a government budget deficit decreases investment is called