Exam 10: Savings, Investment Spending, and the Financial Syst

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Suppose that Jim just got a $20,000 loan from his credit union to buy a new car. The loan is a _____ for Jim and a _____ for the credit union.

(Multiple Choice)
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Most physical capital, except infrastructure, is financed by private investment spending by people and corporations.

(True/False)
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Which item is a requirement to pay in the future? I. a financial asset II) a physical asset III) a liability

(Multiple Choice)
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The present value of future payments depends on:

(Multiple Choice)
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The crowding-out effect is the negative effect of government budget deficits on private investment spending.

(True/False)
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Use the following to answer questions: Use the following to answer questions:   -(Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion? -(Figure: Loanable Funds) Use Figure: Loanable Funds. Which scenario might produce a new equilibrium interest rate of 5% and a new equilibrium quantity of loanable funds of $150 billion?

(Multiple Choice)
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The Fisher effect states that the:

(Multiple Choice)
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Expectations of an improving economy will generally cause an increase in investment by shifting the loanable funds demand curve to the right.

(True/False)
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A decrease in the level of business opportunity will generally _____ the loanable funds demand curve.

(Multiple Choice)
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The interest rate is 5% in the market for loanable funds. Investors wish to borrow $100 million and savers wish to save $125 million at this interest rate. We would expect the interest rate to _____, as there is a _____ of loanable funds.

(Multiple Choice)
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The present value of a future payment _____ if the _____.

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A shift away from taxing asset income and toward taxing consumption would lead to a:

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Interest rates:

(Multiple Choice)
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Capital inflow equals:

(Multiple Choice)
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In a closed economy, national savings equals private savings:

(Multiple Choice)
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Suppose that there is no trade and no government in a small economy. GDP is $25 trillion, and consumption spending is $18 trillion this year. There is a new government, and it imposes taxes on its citizens to spend on infrastructure. Taxes and government spending are both $2 trillion. What is the level of private saving now?

(Multiple Choice)
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Financial markets:

(Multiple Choice)
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Bonds are less risky than stocks because a company legally must pay what it owes to lenders before it can distribute profits to stockholders.

(True/False)
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A financial intermediary transforms funds gathered from many individuals into financial assets.

(True/False)
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Generally, bonds are considered to be riskier than stocks.

(True/False)
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