Exam 7: Finance, Saving, and Investment

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

If the real interest rate increases from 3 percent to 5 percent

When the real interest rate increases

In 2007, Singapore's government ran a budget surplus of $4.5 billion. The budget surplus ________ loanable funds and ________ the real interest rate.

The ________ interest rate approximately equals the ________ interest rate minus ________.

At the beginning of the year, your wealth is $10,000. During the year, you have an income of $80,000 and you spend $90,000 on consumption. You pay no taxes. Your wealth at the end of the year is

If you lend a dollar for a year and at the end of the year the price level has risen by 10 percent

Which of the following are included in the supply of loanable funds? I. private saving II. government budget surplus III. international borrowing

A decrease in disposable income shifts the

Suppose Country A had net taxes of $30 million and government expenditures of $35 million. In addition, household saving in Country A totaled $5 million while consumption was $80 million. The government of Country A is running a budget ________ and national saving is ________ million.

What is the approximate relationship among the real interest rate, the inflation rate, and the nominal interest rate?

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

In the loanable funds market, what variable changes to eliminate a shortage of loanable funds and how is the shortage eliminated?

As the purchasing power of wealth increases, saving decreases.

Suppose that expected profit decreases. This change means

Suppose that a bond promises to pay its holder $100 a year forever. If the price of the bond increases from $1,000 to $1,250, then the interest rate on the bond

An increase in ________ will shift the supply of loanable funds curve ________.

In the loanable funds market, if the interest rate is above the equilibrium level

-In the above figure, the initial supply of loanable funds curve is SLF₀ and the initial demand for loanable funds curve is DLF₀. An increase in the expected profit would

The supply of loanable funds curve shifts leftward if the real interest rate rises.