Exam 23: Finance, Saving, and Investment

In 2011,Country A has net taxes of $30 million and government expenditures of $35 million.Private saving in Country A is $5 million and consumption expenditure is $80 million.The government of Country A is running a budget ________ and national saving is ________.

National saving equals

Refer to the figure below to answer the following questions. Figure 23.2.2 -Refer to Figure 23.2.2.In Figure 23.2.2,a decrease in the real interest rate will result in a movement from point E to

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

In the market for loanable funds,as the real interest rate rises the ________ and the ________.

Loanable funds flow among countries because ________.

If net taxes exceed government expenditures,the government sector has a budget ________ and government saving is ________.

Refer to the figure below to answer the following questions. Figure 23.2.2 -Refer to Figure 23.2.2.In Figure 23.2.2,a decrease in expected profit will result in a movement from point E to

Suppose a firm has an investment project which will cost $200,000 and result in $30,000 profit.The firm will not undertake the project if the interest rate is ________.

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

The tendency for private saving to increase in response to growing government deficits is known as the

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

If households believe they will experience higher income in the near future,there is a

As the ________ interest rate increases,the quantity of loanable funds demanded ________.

Table 23.3.2 -Refer to Table 23.3.2.The table shows an economy's demand for loanable funds and supply of loanable funds schedules when the government's budget is balanced.The quantity of loanable funds demanded increases by $1 trillion at each real interest rate and the quantity of loanable funds supplied increases by $2 trillion at each real interest rate.If the government wants investment to be $9 trillion,it must ________ its budget balance by ________ trillion.

Investment will be higher if

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.

Changes in all of the following shift the supply curve of loanable funds EXCEPT

________ increases households' saving.

Refer to the figure below to answer the following questions. Figure 23.2.5 -Refer to Figure 23.2.5.In Figure 23.2.5,the supply of loanable funds curve is SLF? and the demand for loanable funds curve is DLF?.An expansion that increases disposable income and expected profit