Exam 23: Finance, Saving, and Investment

Suppose that you took out a $1,000 loan in January and were required to pay $75 in annual interest. During the year, inflation was 6 percent. Which of the following statements is correct?

As the ________ interest rate rises ________.

If national saving equals $100,000, net taxes equal $100,000 and government expenditure equals $25,000, what is private saving?

Figure 23.2.5 -Refer to Figure 23.2.5. In Figure 23.2.5, the initial supply of loanable funds curve is SLF0 and the initial demand for loanable funds curve is DLF₀. An increase in the expected profit

Capital stock increases when

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

Table 23.3.6 The table shows an economy's demand for loanable funds schedule and supply of loanable funds schedule when the government's budget is balanced. -Consider Table 23.3.6. If the Ricardo-Barro effect occurs, and if the government's budget becomes a deficit of $2.0 trillion, what is the real interest rate?

The equilibrium real interest rate is determined by the

Which of the following is false?

Table 23.2.3 The table shows an economy's demand for loanable funds schedule and supply of loanable funds schedule. -Consider Table 23.2.3. If planned saving decreases by $1.0 trillion at each real interest rate, what is the new equilibrium real interest rate?

Elena owns a Canada Savings Bond with a a price of $5,000, which pays $500 per year. The price of the bond rises in the bond market to $7,500. What is the new interest rate on the bond?

When government saving is negative,

Choose the statement that is incorrect.

A decrease in the demand for loanable funds occurs when

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

The demand for loanable funds curve

In January 2014, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the machines fell by 30 percent. During 2011, Tim spent $200,000 on new machines. During 2014, Tim's gross investment was

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

What is the effect of a decrease in expected profit?

Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate.