Question 1

When ________ changes, the supply of loanable funds curve shifts.

Accepted Answer

A)  the expected rate of profit 
B)  people's expected future income 
C)  the price level 
D)  "animal spirits" 
E)  investment 
A)  the expected rate of profit 
B)  people's expected future income 
C)  the price level 
D)  "animal spirits" 
E)  investment

Question 2

A decrease in households' disposable income ________ saving supply and the supply of loanable funds curve ________.

Accepted Answer

A)  decreases; shifts rightward 
B)  decreases; shifts leftward 
C)  increases; shifts rightward 
D)  increases; shifts leftward 
E)  does not change; does not shift 
A)  decreases; shifts rightward 
B)  decreases; shifts leftward 
C)  increases; shifts rightward 
D)  increases; shifts leftward 
E)  does not change; does not shift

Question 3

If there is no Ricardo-Barro effect, a government budget deficit will ________ the equilibrium real interest rate and ________ the equilibrium quantity of investment.

Accepted Answer

A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease 
E)  not change; not change 
A)  raise; increase 
B)  raise; decrease 
C)  lower; increase 
D)  lower; decrease 
E)  not change; not change

Question 4

If the disposable income decreases, then

Accepted Answer

A)  the supply of loanable funds increases. 
B)  the supply of loanable funds decreases. 
C)  the quantity of loanable funds demanded increases. 
D)  the quantity of loanable funds supplied decreases. 
E)  the demand for loanable funds increases. 
A)  the supply of loanable funds increases. 
B)  the supply of loanable funds decreases. 
C)  the quantity of loanable funds demanded increases. 
D)  the quantity of loanable funds supplied decreases. 
E)  the demand for loanable funds increases.

Question 5

In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,

Accepted Answer

A)  there is a shortage of loanable funds. 
B)  there is a surplus of loanable funds. 
C)  there is a surplus of investment. 
D)  the demand for loanable funds curve shifts rightward to restore the equilibrium. 
E)  the demand for loanable funds curve shifts leftward to restore the equilibrium. 
A)  there is a shortage of loanable funds. 
B)  there is a surplus of loanable funds. 
C)  there is a surplus of investment. 
D)  the demand for loanable funds curve shifts rightward to restore the equilibrium. 
E)  the demand for loanable funds curve shifts leftward to restore the equilibrium.

Question 6

If the real interest rate falls, there is

Accepted Answer

A)  an upward movement along the demand for loanable funds curve. 
B)  a downward movement along the demand for loanable funds curve. 
C)  a rightward shift of the demand for loanable funds curve. 
D)  a leftward shift of the demand for loanable funds curve. 
E)  a leftward shift of the supply of loanable funds curve. 
A)  an upward movement along the demand for loanable funds curve. 
B)  a downward movement along the demand for loanable funds curve. 
C)  a rightward shift of the demand for loanable funds curve. 
D)  a leftward shift of the demand for loanable funds curve. 
E)  a leftward shift of the supply of loanable funds curve.

Question 7

Is wealth the same thing as income?

Accepted Answer

No, wealth is different from i

Question 8

The figure above shows the supply of loanable funds curve.
-If the supply curve of loanable funds shifts rightward from the curve shown in the figure above, the shift could be the result of

Accepted Answer

A)  a rise in expected future income. 
B)  an increase in disposable income. 
C)  a decrease in the demand for loanable funds. 
D)  a decrease in the supply of loanable funds. 
E)  an increase in wealth. 
A)  a rise in expected future income. 
B)  an increase in disposable income. 
C)  a decrease in the demand for loanable funds. 
D)  a decrease in the supply of loanable funds. 
E)  an increase in wealth.

Question 9

According to the Ricardo-Barro effect, what is the effect on the real interest rate of a government budget surplus?

Accepted Answer

The government budget surplus, by itself

Question 10

-In the figure above, the leftward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₃, could be the result of

Accepted Answer

A)  a decrease in interest rates during an economic recession. 
B)  a increase in interest rates during an economic expansion. 
C)  the economy entering a recession. 
D)  a government budget surplus. 
E)  the economy entering an expansion. 
A)  a decrease in interest rates during an economic recession. 
B)  a increase in interest rates during an economic expansion. 
C)  the economy entering a recession. 
D)  a government budget surplus. 
E)  the economy entering an expansion.

Question 11

If there is no Ricardo-Barro effect, the government

Accepted Answer

A)  plays no direct role in the loanable funds market because it doesn't affect either the demand for loanable funds or the supply of loanable funds. 
B)  always has negative saving and therefore lowers the real interest rate. 
C)  only affects the demand for loanable funds curve in the loanable funds market. 
D)  either increases or decreases total supply of loanable funds as its budget deficit or surplus shifts the supply of loanable funds curve. 
E)  has no effect because private saving changes to offset the effect that the government's budget deficit or surplus might otherwise have. 
A)  plays no direct role in the loanable funds market because it doesn't affect either the demand for loanable funds or the supply of loanable funds. 
B)  always has negative saving and therefore lowers the real interest rate. 
C)  only affects the demand for loanable funds curve in the loanable funds market. 
D)  either increases or decreases total supply of loanable funds as its budget deficit or surplus shifts the supply of loanable funds curve. 
E)  has no effect because private saving changes to offset the effect that the government's budget deficit or surplus might otherwise have.

Question 12

-The figure above shows the loanable funds market.The equilibrium real interest rate is ________ percent and the equilibrium quantity of loanable funds is ________.

Accepted Answer

A)  4; $1.8 trillion 
B)  6; $1.6 trillion 
C)  8; $1.4 trillion 
D)  4; $1.4 trillion 
E)  8; $1.8 trillion 
A)  4; $1.8 trillion 
B)  6; $1.6 trillion 
C)  8; $1.4 trillion 
D)  4; $1.4 trillion 
E)  8; $1.8 trillion

Question 13

What is the crowding-out effect and how does it operate?
 What is its relationship to the Ricardo-Barro effect?

Accepted Answer

The crowding-out effect is the tendency

Question 14

Which of the following is NOT a financial institution?

Accepted Answer

A)  an insurance company 
B)  a pension fund 
C)  Freddie Mac 
D)  a commercial bank 
E)  None of the above is correct because they are all financial institutions. 
A)  an insurance company 
B)  a pension fund 
C)  Freddie Mac 
D)  a commercial bank 
E)  None of the above is correct because they are all financial institutions.

Question 15

On January 1, Rick's Photo owned $50,000 of equipment.During the year, the value of the equipment fell by $10,000, plus Rick bought $25,000 in new equipment. Rick's company experienced

Accepted Answer

A)  $10,000 of depreciation. 
B)  $40,000 of depreciation. 
C)  an increase of new capital by $10,000. 
D)  an increase of net investment of $35,000. 
E)  a change in total financial capital of $15,000. 
A)  $10,000 of depreciation. 
B)  $40,000 of depreciation. 
C)  an increase of new capital by $10,000. 
D)  an increase of net investment of $35,000. 
E)  a change in total financial capital of $15,000.

Question 16

-In the figure above, the rightward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₂, could be the result of

Accepted Answer

A)  a rise in the interest rate. 
B)  an increase in wealth. 
C)  an increase in expected profit. 
D)  a decrease in expected profit. 
E)  a fall in the interest rate. 
A)  a rise in the interest rate. 
B)  an increase in wealth. 
C)  an increase in expected profit. 
D)  a decrease in expected profit. 
E)  a fall in the interest rate.

Question 17

What does the Ricardo-Barro Effect predict?

Accepted Answer

A)  The level of saving in a developed economy will be very low. 
B)  There is no way to explain animal spirits or irrational exuberance. 
C)  Private saving will offset the impact of government borrowing. 
D)  Government budget deficits crowd out private investment. 
E)  Net investment and gross investment will be equal. 
A)  The level of saving in a developed economy will be very low. 
B)  There is no way to explain animal spirits or irrational exuberance. 
C)  Private saving will offset the impact of government borrowing. 
D)  Government budget deficits crowd out private investment. 
E)  Net investment and gross investment will be equal.

Question 18

Which of the following equals the change in an economy's capital stock from one period to the next?

Accepted Answer

A)  depreciation 
B)  gross investment 
C)  net investment 
D)  wealth 
E)  stock 
A)  depreciation 
B)  gross investment 
C)  net investment 
D)  wealth 
E)  stock

Question 19

________ decreases a firm's capital stock and ________ increases its capital stock.

Accepted Answer

A)  Saving; depreciation 
B)  Saving; investment 
C)  Depreciation; investment 
D)  Time; depreciation 
E)  Investment; saving 
A)  Saving; depreciation 
B)  Saving; investment 
C)  Depreciation; investment 
D)  Time; depreciation 
E)  Investment; saving

Question 20

Suppose that there is an increase in future expected disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.

Accepted Answer

A)  rises; might increase, decrease, or not change 
B)  rises; increases 
C)  rises; decreases 
D)  falls; might increase, decrease, or not change 
E)  falls; increases 
A)  rises; might increase, decrease, or not change 
B)  rises; increases 
C)  rises; decreases 
D)  falls; might increase, decrease, or not change 
E)  falls; increases

When ________ changes, the supply of loanable funds curve shifts.

A decrease in households' disposable income saving supply and the supply of loanable funds curve .

If there is no Ricardo-Barro effect, a government budget deficit will the equilibrium real interest rate and the equilibrium quantity of investment.

If the disposable income decreases, then

In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,

If the real interest rate falls, there is

Is wealth the same thing as income?

The figure above shows the supply of loanable funds curve. -If the supply curve of loanable funds shifts rightward from the curve shown in the figure above, the shift could be the result of

According to the Ricardo-Barro effect, what is the effect on the real interest rate of a government budget surplus?

-In the figure above, the leftward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₃, could be the result of

If there is no Ricardo-Barro effect, the government

-The figure above shows the loanable funds market.The equilibrium real interest rate is percent and the equilibrium quantity of loanable funds is .

What is the crowding-out effect and how does it operate? What is its relationship to the Ricardo-Barro effect?

Which of the following is NOT a financial institution?

On January 1, Rick's Photo owned $50,000 of equipment.During the year, the value of the equipment fell by $10,000, plus Rick bought $25,000 in new equipment. Rick's company experienced

-In the figure above, the rightward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₂, could be the result of

What does the Ricardo-Barro Effect predict?

Which of the following equals the change in an economy's capital stock from one period to the next?

decreases a firm's capital stock and increases its capital stock.

Suppose that there is an increase in future expected disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate and the equilibrium quantity of loanable funds .

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 10: Finance, Saving, and Investment

When ________ changes, the supply of loanable funds curve shifts.

A decrease in households' disposable income ________ saving supply and the supply of loanable funds curve ________.

If there is no Ricardo-Barro effect, a government budget deficit will ________ the equilibrium real interest rate and ________ the equilibrium quantity of investment.

If the disposable income decreases, then

In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,

If the real interest rate falls, there is

Is wealth the same thing as income?

The figure above shows the supply of loanable funds curve. -If the supply curve of loanable funds shifts rightward from the curve shown in the figure above, the shift could be the result of

According to the Ricardo-Barro effect, what is the effect on the real interest rate of a government budget surplus?

-In the figure above, the leftward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₃, could be the result of

If there is no Ricardo-Barro effect, the government

-The figure above shows the loanable funds market.The equilibrium real interest rate is ________ percent and the equilibrium quantity of loanable funds is ________.

What is the crowding-out effect and how does it operate? What is its relationship to the Ricardo-Barro effect?

Which of the following is NOT a financial institution?

On January 1, Rick's Photo owned $50,000 of equipment.During the year, the value of the equipment fell by $10,000, plus Rick bought $25,000 in new equipment. Rick's company experienced

-In the figure above, the rightward shift from the demand for loanable funds curve DLF₁ to the demand for loanable funds curve DLF₂, could be the result of

What does the Ricardo-Barro Effect predict?

Which of the following equals the change in an economy's capital stock from one period to the next?

________ decreases a firm's capital stock and ________ increases its capital stock.

Suppose that there is an increase in future expected disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A decrease in households' disposable income saving supply and the supply of loanable funds curve .

If there is no Ricardo-Barro effect, a government budget deficit will the equilibrium real interest rate and the equilibrium quantity of investment.

-The figure above shows the loanable funds market.The equilibrium real interest rate is percent and the equilibrium quantity of loanable funds is .

decreases a firm's capital stock and increases its capital stock.

Suppose that there is an increase in future expected disposable income and simultaneously an increase in the profitability of investment.As a result, the equilibrium real interest rate and the equilibrium quantity of loanable funds .