Question 1

Ignoring the Ricardo-Barro effect, what impact does the government have in the loanable funds market?

Accepted Answer

The government has two effects in the ma

Question 2

The quantity of loanable funds supplied increases if the real interest rate rises, all other things remaining the same, because the

Accepted Answer

A)  real interest rate is the opportunity cost of saving. 
B)  real interest rate is the opportunity cost of consumption. 
C)  cost of living is determined by the real interest rate. 
D)  real interest rate is inversely related to the cost of buying on credit. 
E)  demand for investment increases when the real interest rate rises. 
A)  real interest rate is the opportunity cost of saving. 
B)  real interest rate is the opportunity cost of consumption. 
C)  cost of living is determined by the real interest rate. 
D)  real interest rate is inversely related to the cost of buying on credit. 
E)  demand for investment increases when the real interest rate rises.

Question 3

In the loanable funds market, a shortage of loanable funds occurs when the

Accepted Answer

A)  demand for loanable funds exceeds supply of loanable funds. 
B)  supply of loanable funds exceeds demand for loanable funds. 
C)  quantity of loanable funds supplied exceeds the quantity of loanable funds demanded. 
D)  quantity of loanable funds demanded exceeds the quantity of loanable funds supplied. 
E)  supply of loanable funds curve shifts rightward. 
A)  demand for loanable funds exceeds supply of loanable funds. 
B)  supply of loanable funds exceeds demand for loanable funds. 
C)  quantity of loanable funds supplied exceeds the quantity of loanable funds demanded. 
D)  quantity of loanable funds demanded exceeds the quantity of loanable funds supplied. 
E)  supply of loanable funds curve shifts rightward.

Question 4

The Ricardo-Barro effect argues that the crowding-out effect

Accepted Answer

A)  is the result of a government budget surplus and higher interest rates. 
B)  will not occur, because the private saving supply will change to offset any change in the government budget deficit. 
C)  is the result of the government budget deficit and higher interest rates. 
D)  will occur, because the private saving supply will change to offset any change in the government budget deficit. 
E)  is stronger when the government runs a budget surplus than when it runs a budget deficit. 
A)  is the result of a government budget surplus and higher interest rates. 
B)  will not occur, because the private saving supply will change to offset any change in the government budget deficit. 
C)  is the result of the government budget deficit and higher interest rates. 
D)  will occur, because the private saving supply will change to offset any change in the government budget deficit. 
E)  is stronger when the government runs a budget surplus than when it runs a budget deficit.

Question 5

Which of the following are typically financed in a "bond market"?
i. a mortgage for a house.
ii. state government borrowing for a new road project
iii. your purchase of 4000 shares of stock in Google

Accepted Answer

A)  ii only. 
B)  i and ii. 
C)  ii and iii. 
D)  i only. 
E)  i and iii. 
A)  ii only. 
B)  i and ii. 
C)  ii and iii. 
D)  i only. 
E)  i and iii.

Question 6

With is no Ricardo-Barro effect, a government budget surplus ________ the real interest rate because the ________ loanable funds increases.

Accepted Answer

A)  raises; demand for 
B)  lowers; demand for 
C)  raises; supply of 
D)  lowers; supply of 
E)  None of the above answers are correct because the real interest rate does not change. 
A)  raises; demand for 
B)  lowers; demand for 
C)  raises; supply of 
D)  lowers; supply of 
E)  None of the above answers are correct because the real interest rate does not change.

Question 7

-In the figure above, the shift in the supply of loanable funds curve from SLF₁ to SLF₂ could be the result of

Accepted Answer

A)  an increase in the real interest rate. 
B)  a decrease in disposable income. 
C)  an increase in expected rate of profit. 
D)  a decrease in wealth 
E)  an increase in expected future disposable income. 
A)  an increase in the real interest rate. 
B)  a decrease in disposable income. 
C)  an increase in expected rate of profit. 
D)  a decrease in wealth 
E)  an increase in expected future disposable income.

Question 8

If a surplus of loanable funds exists in the loanable funds market, the real interest rate ________ and the quantity of saving ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  falls; does not change 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
E)  falls; does not change

Question 9

In the nation's financial markets, what are the various ways a firm can obtain financial capital?

Accepted Answer

A firm can obtain financial ca

Question 10

If capital gains equal zero, then the Ng family's wealth at the end of the year equals their wealth at the beginning of the year

Accepted Answer

A)  minus personal income taxes. 
B)  plus saving. 
C)  minus consumption. 
D)  plus income. 
E)  plus consumption minus income. 
A)  minus personal income taxes. 
B)  plus saving. 
C)  minus consumption. 
D)  plus income. 
E)  plus consumption minus income.

Question 11

Suppose the real interest rate increases from 4 percent to 6 percent. As a result,

Accepted Answer

A)  governments decrease the quantity supplied of loanable funds. 
B)  firms increase their demand for loanable funds. 
C)  governments decrease their demand for loanable funds. 
D)  firms decrease the quantity demanded of loanable funds. 
E)  governments increase the supply of loanable funds. 
A)  governments decrease the quantity supplied of loanable funds. 
B)  firms increase their demand for loanable funds. 
C)  governments decrease their demand for loanable funds. 
D)  firms decrease the quantity demanded of loanable funds. 
E)  governments increase the supply of loanable funds.

Question 12

During the year, suppose a country's total purchases of newly produced capital goods is $2,000 billion, issues $1,600 billion of stock certificates, and has $500 billion in depreciation.Gross investment in this country equals

Accepted Answer

A)  $2,000 billion. 
B)  $2,500 billion. 
C)  $3,600 billion. 
D)  $4,100 billion. 
E)  $2,100 billion. 
A)  $2,000 billion. 
B)  $2,500 billion. 
C)  $3,600 billion. 
D)  $4,100 billion. 
E)  $2,100 billion.

Question 13

If the market value of what it has lent is less than the market value of it has borrowed, a financial institution's net worth is ________ and it is ________.

Accepted Answer

A)  negative; illiquid but not necessarily insolvent 
B)  negative; insolvent but not necessarily illiquid 
C)  positive; illiquid and insolvent 
D)  negative; illiquid and insolvent 
E)  positive; insolvent but not necessarily illiquid 
A)  negative; illiquid but not necessarily insolvent 
B)  negative; insolvent but not necessarily illiquid 
C)  positive; illiquid and insolvent 
D)  negative; illiquid and insolvent 
E)  positive; insolvent but not necessarily illiquid

Question 14

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

Accepted Answer

Gross investment is the total amount spe

Question 15

Define wealth.What is the relationship between wealth and saving?

Accepted Answer

Wealth is the value

Question 16

At the current interest rate, the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded.Therefore

Accepted Answer

A)  the real interest rate is below the equilibrium level. 
B)  the real interest rate is above the equilibrium level. 
C)  equilibrium will not be achieved until something shifts the supply of loanable funds curve leftward. 
D)  equilibrium will not be achieved until something shifts the demand for loanable funds curve rightward. 
E)  equilibrium will not be achieved until something shifts the supply of loanable funds curve rightward. 
A)  the real interest rate is below the equilibrium level. 
B)  the real interest rate is above the equilibrium level. 
C)  equilibrium will not be achieved until something shifts the supply of loanable funds curve leftward. 
D)  equilibrium will not be achieved until something shifts the demand for loanable funds curve rightward. 
E)  equilibrium will not be achieved until something shifts the supply of loanable funds curve rightward.

Question 17

Which of the following is correct?

Accepted Answer

A)  Gross investment equals net investment minus depreciation. 
B)  Net investment is the same as capital consumption. 
C)  Gross investment is the total spent on capital. 
D)  Net investment is the total spent on capital. 
E)  The change in the nation's capital stock over a year equals the amount of gross investment. 
A)  Gross investment equals net investment minus depreciation. 
B)  Net investment is the same as capital consumption. 
C)  Gross investment is the total spent on capital. 
D)  Net investment is the total spent on capital. 
E)  The change in the nation's capital stock over a year equals the amount of gross investment.

Question 18

A decrease in expected profit

Accepted Answer

A)  lowers the equilibrium real interest rate. 
B)  raises the equilibrium real interest rate. 
C)  increases the demand for loanable funds. 
D)  decreases the supply of loanable funds. 
E)  increases the supply of loanable funds. 
A)  lowers the equilibrium real interest rate. 
B)  raises the equilibrium real interest rate. 
C)  increases the demand for loanable funds. 
D)  decreases the supply of loanable funds. 
E)  increases the supply of loanable funds.

Question 19

If, at the current interest rate, the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, then

Accepted Answer

A)  the supply of loanable funds curve shifts rightward and the real interest rate rises. 
B)  the supply of loanable funds curve shifts leftward and the real interest rate falls. 
C)  the real interest rate falls. 
D)  the real interest rate rises. 
E)  the supply of loanable funds curve shifts leftward and the real interest rate rises. 
A)  the supply of loanable funds curve shifts rightward and the real interest rate rises. 
B)  the supply of loanable funds curve shifts leftward and the real interest rate falls. 
C)  the real interest rate falls. 
D)  the real interest rate rises. 
E)  the supply of loanable funds curve shifts leftward and the real interest rate rises.

Question 20

The funds firms use to buy and operate physical capital are referred to as

Accepted Answer

A)  physical capital. 
B)  financial capital. 
C)  government capital. 
D)  human capital. 
E)  business capital. 
A)  physical capital. 
B)  financial capital. 
C)  government capital. 
D)  human capital. 
E)  business capital.

Ignoring the Ricardo-Barro effect, what impact does the government have in the loanable funds market?

The quantity of loanable funds supplied increases if the real interest rate rises, all other things remaining the same, because the

In the loanable funds market, a shortage of loanable funds occurs when the

The Ricardo-Barro effect argues that the crowding-out effect

Which of the following are typically financed in a "bond market"? i. a mortgage for a house. ii. state government borrowing for a new road project iii. your purchase of 4000 shares of stock in Google

With is no Ricardo-Barro effect, a government budget surplus the real interest rate because the loanable funds increases.

-In the figure above, the shift in the supply of loanable funds curve from SLF₁ to SLF₂ could be the result of

If a surplus of loanable funds exists in the loanable funds market, the real interest rate and the quantity of saving .

In the nation's financial markets, what are the various ways a firm can obtain financial capital?

If capital gains equal zero, then the Ng family's wealth at the end of the year equals their wealth at the beginning of the year

Suppose the real interest rate increases from 4 percent to 6 percent. As a result,

During the year, suppose a country's total purchases of newly produced capital goods is $2,000 billion, issues $1,600 billion of stock certificates, and has $500 billion in depreciation.Gross investment in this country equals

If the market value of what it has lent is less than the market value of it has borrowed, a financial institution's net worth is and it is .

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

Define wealth.What is the relationship between wealth and saving?

At the current interest rate, the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded.Therefore

Which of the following is correct?

A decrease in expected profit

If, at the current interest rate, the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, then

The funds firms use to buy and operate physical capital are referred to as

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

Ignoring the Ricardo-Barro effect, what impact does the government have in the loanable funds market?

The quantity of loanable funds supplied increases if the real interest rate rises, all other things remaining the same, because the

In the loanable funds market, a shortage of loanable funds occurs when the

The Ricardo-Barro effect argues that the crowding-out effect

Which of the following are typically financed in a "bond market"? i. a mortgage for a house. ii. state government borrowing for a new road project iii. your purchase of 4000 shares of stock in Google

With is no Ricardo-Barro effect, a government budget surplus ________ the real interest rate because the ________ loanable funds increases.

-In the figure above, the shift in the supply of loanable funds curve from SLF₁ to SLF₂ could be the result of

If a surplus of loanable funds exists in the loanable funds market, the real interest rate ________ and the quantity of saving ________.

In the nation's financial markets, what are the various ways a firm can obtain financial capital?

If capital gains equal zero, then the Ng family's wealth at the end of the year equals their wealth at the beginning of the year

Suppose the real interest rate increases from 4 percent to 6 percent. As a result,

During the year, suppose a country's total purchases of newly produced capital goods is $2,000 billion, issues $1,600 billion of stock certificates, and has $500 billion in depreciation.Gross investment in this country equals

If the market value of what it has lent is less than the market value of it has borrowed, a financial institution's net worth is ________ and it is ________.

Define gross investment and net investment.Discuss the relationship between gross investment and net investment.

Define wealth.What is the relationship between wealth and saving?

At the current interest rate, the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded.Therefore

Which of the following is correct?

A decrease in expected profit

If, at the current interest rate, the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, then

The funds firms use to buy and operate physical capital are referred to as

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

With is no Ricardo-Barro effect, a government budget surplus the real interest rate because the loanable funds increases.

If a surplus of loanable funds exists in the loanable funds market, the real interest rate and the quantity of saving .

If the market value of what it has lent is less than the market value of it has borrowed, a financial institution's net worth is and it is .