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Principles of Macroeconomics Study Set 8
Exam 13: Saving Investment and the Financial System: Part A
Path 4
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Question 41
Essay
When tax code changes reduce saving incentives, the interest rate will _____ and investment will _____.
Question 42
Essay
How do banks make profits?
Question 43
Essay
The income that households have left after paying their taxes and paying for their consumption is known as______.
Question 44
Essay
Which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why. a.a U.S.government bond or a Venezuelan government bond b.a U.S.government bond or a municipal bond with the same term and issued by a creditworthy municipality. c.a 6-month Treasury bill or a 20-year Treasury bond d.a Microsoft bond or a bond issued by a new recording company
Question 45
Essay
If consumers reduced their spending,what would happen to the interest rate and investment?
Question 46
Essay
What happens to desired investment spending if the interest rate rises? Is this response relevant to the supply of loanable funds curve or the demand for loanable funds curve?
Question 47
Essay
When tax code changes increase saving incentives, the interest rate will _____ and investment will _____.
Question 48
Essay
Robert buys bonds.Rachel buys a new truck for her landscaping business.Identify both as savers,investors,both,or neither.
Question 49
Essay
Suppose there is a shortage in the market for loanable funds.Is the interest rate above or below its equilibrium level? How do desired saving and desired investment at this interest rate compare?
Question 50
Essay
Bond A and Bond B have identical characteristics except that Bond A has a higher interest rate.Which bond has a higher credit risk?
Question 51
Essay
Stock in Frozen Dreams,an ice cream manufacturer,has a price to earnings ratio of 24.Is this comparatively high or low? What are two explanations for the size of this company's price to earnings ratio?
Question 52
Essay
Bond A and Bond B are identical except Bond B has a longer term. Therefore, we expect Bond _____ to pay a higher rate of interest.
Question 53
Essay
The two most important financial markets are the _____ market and the _____ market.
Question 54
Essay
In a closed economy taxes are $750 billion,government transfers are $400 billion,government expenditures are $500 billion,and investment is $400 billion.What are private saving,public saving and national saving?