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

Financial intermediaries do NOT include:

All other things unchanged, a general decrease in the amount of government borrowing will typically:

When the housing market collapsed in 2007, the demand for loanable funds decreased and caused interest rates to decrease.

The _____ money paid back after borrowing money, the _____ the interest rate.

Use the following to answer questions: -(Table: National Income Accounts) Use Table: National Income Accounts. The value of net capital inflow is:

Which index includes smaller companies, many in the technology sector?

You receive an email from a firm proposing the following business deal. The firm will send you $1,000 now, and in exchange you will send it $1,100 in one year. You will just break-even if the annual interest rate is _____%.

Use the following to answer questions: -(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. An increase in savings by the private sector will shift the supply of loanable funds to the_____ and _____ the interest rate.

Investment spending in a closed economy must equal GDP minus consumption minus government spending.

MOST human capital is provided by: I. governments through public education. II) investment spending by private sector firms.

A bond is a financial asset that pays a fixed amount of interest each year and then repays the principal on a given date.

If you borrow money from a bank to buy a house, the mortgage (loan) is a financial asset for you and a liability for the bank.

Financial markets make borrowing large amounts of money easier because they simplify negotiation between borrowers and lenders. This example illustrates:

A _____ is a nonprofit institution that collects the savings of its members and invests those funds in a diversified portfolio to provide income to members when they retire.

From the standpoint of economic growth, banks are important to:

The expenses involved in actually putting together and executing a deal are called transactions costs.

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 investment spending now?

If Mega Corp. borrows $9,000 and agrees to pay the lender $10,000 in one year, the annual interest rate on the loan is approximately _____%.

Suppose that a lender expects a real interest rate of 6% and the inflation rate is expected to be 3%. In this case, the nominal interest rate equals _____%.

If Debbie gets a loan to remodel her kitchen, the loan is a liability for Debbie and an asset for the bank that issued the loan.