Exam 8: Saving, investment, and the Financial System

Suppose that in a closed economy GDP is 10,000,consumption is 6500,and taxes are 2000.What value of government expenditures would make national saving equal 1500?

If the nominal interest rate is 14 percent and the real interest rate is 2 percent,what is the inflation rate?

If other things are the same,will countries that tax less on saving have lower or higher interest rates and investment than other countries?

What is most likely to happen if Canada increases its budget deficit?

What do shareholders receive when they are paid a dividend?

Suppose that interest rates and investment both rise.Which statement best explains these changes?

Reggie's income exceeds his expenditures.Which statement best describes Reggie?

Compared to bonds,what does stock offer the holder?

Joan uses some of her income to buy mutual fund shares.A macroeconomist would refer to Joan's purchase as investment.

Suppose a developing country decides to institute an investment tax credit.As a result,what is most likely to happen?

Most entrepreneurs finance their purchases of real capital using their past saving.

As a money management fee,how much do mutual funds usually charge their customers?

In a closed economy,the fact that total income equals total expenditure is reflected by the GDP identity Y = C + I + G. a.Starting from the GDP identity,show that national saving (S)must be equal to investment.Show that an increase in government spending reduces national saving. b.Rewrite the GDP identity by introducing taxes (T).In this new form of the GDP relationship,identify private saving and public saving.Show that an increase in taxes has no effect on national saving. c.Is the equation S = I true for an open economy? Could you explain why or why not?

In the national income accounting identity showing the equality between national saving and investment,what is the representation of private saving and what is the representation of public saving?

Recently,the Canadian government has gone from a surplus to a deficit.Assuming other things remain the same,what does this change mean?

The demand for loanable funds comes from saving,and the supply of loanable funds comes from investment.

What is the "volume" as reported in stock tables?

If the nominal interest rate is 68 percent and the rate of inflation is 2 percent,what is the real interest rate?

Table 8-2 The following table shows stock prices and volumes for a few hypothetical companies. -Refer to Table 8-2.Which company had the highest earnings per share?

Which statement best defines the nominal interest rate?