Exam 7: Finance, Saving, and Investment

Which of the following is NOT a determinant of household saving?

A nationʹs investment must be financed by

-In the above figure, new expectations of booming business conditions and a higher expected profit will

In 2008, the many people became unable to make payments on their mortgages and instead defaulted on them. As a result, the of loanable funds curve shifts and real interest rate .

ʺAn increase in the real interest rate increases the quantity of investment.ʺ Is the previous statement correct or incorrect?

-In the above figure, a decrease in the real interest rate will result in a movement from point E to

If householdsʹ disposable income decreases, then

The term ʺcrowding outʺ relates to the decrease in

As the purchasing power of wealth increases, saving decreases.

If the government begins to run a larger budget deficits, then assuming there is no Ricardo -Barro effect, the demand for loanable funds and the real interest rate .

A decrease in disposable income shifts the .

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 countryʹs foreign lending .

If households expect an increase in their future incomes, they will save

-In the above figure, technological progress that increases the expected profit will

When a government has a budget surplus, the surplus

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.

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 2007 was billion.

In the loanable funds market, the supply comes from

Which of the following is true? I. As the real interest rate increases, people increase the quantity they save. II. The supply of loanable funds curve is downward sloping. III. As disposable income increases, the supply of loanable funds curve becomes steeper.

When the actual real interest rate is less than the equilibrium real interest rate,