Question 1

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

Accepted Answer

A)  expected future income; rightward 
B)  wealth; leftward 
C)  disposable income; leftward 
D)  default risk; rightward 
A)  expected future income; rightward 
B)  wealth; leftward 
C)  disposable income; leftward 
D)  default risk; rightward

Question 2

A nation's investment must be financed by

Accepted Answer

A)  national saving only. 
B)  the government's budget deficit. 
C)  borrowing from the rest of the world only. 
D)  national saving plus borrowing from the rest of the world. 
A)  national saving only. 
B)  the government's budget deficit. 
C)  borrowing from the rest of the world only. 
D)  national saving plus borrowing from the rest of the world.

Question 3

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

Accepted Answer

A)  there is a shortage of loanable funds. 
B)  there is a surplus of loanable funds. 
C)  expected profit falls. 
D)  government expenditure decreases. 
A)  there is a shortage of loanable funds. 
B)  there is a surplus of loanable funds. 
C)  expected profit falls. 
D)  government expenditure decreases.

Question 4

The Acme Stereo Company had a capital stock of $24 million at the beginning of the year.At the end of the year,the firm had a capital stock of $20 million.Thus its

Accepted Answer

A)  net investment was some amount but we need more information to determine the amount. 
B)  net investment was $4 million for the year. 
C)  gross investment was zero. 
D)  net investment was -$4 million for the year. 
A)  net investment was some amount but we need more information to determine the amount. 
B)  net investment was $4 million for the year. 
C)  gross investment was zero. 
D)  net investment was -$4 million for the year.

Question 5

In 2007,France's GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. ________ investment in 2006 was ________ billion.

Accepted Answer

A)  Gross; $357 
B)  Gross; $216 
C)  Gross; $335 
D)  Net; $216 
A)  Gross; $357 
B)  Gross; $216 
C)  Gross; $335 
D)  Net; $216

Question 6

The Restoring American Financial Stability Act of 2010

Accepted Answer

A)  cut the federal government's ties with Fannie Mae and Freddy Mac. 
B)  prohibits banks from selling mortgage backed securities, which were largely to blame for the financial market crisis in 2007-2008. 
C)  eliminated the Federal Deposit Insurance Corporation. 
D)  had restrictions that try to limit risky investment by banks. 
A)  cut the federal government's ties with Fannie Mae and Freddy Mac. 
B)  prohibits banks from selling mortgage backed securities, which were largely to blame for the financial market crisis in 2007-2008. 
C)  eliminated the Federal Deposit Insurance Corporation. 
D)  had restrictions that try to limit risky investment by banks.

Question 7

U.S.investment is financed from

Accepted Answer

A)  private saving, government budget surpluses, and borrowing from the rest of the world. 
B)  private saving, government budget deficits, and borrowing from the rest of the world. 
C)  private borrowing, government budget deficits, and lending to the rest of the world. 
D)  private saving and borrowing from the rest of the world only. 
A)  private saving, government budget surpluses, and borrowing from the rest of the world. 
B)  private saving, government budget deficits, and borrowing from the rest of the world. 
C)  private borrowing, government budget deficits, and lending to the rest of the world. 
D)  private saving and borrowing from the rest of the world only.

Question 8

In 2007,France's exports totaled $490 billion and its imports totaled $529 billion.As a result,the I. rest of the world supplies funds to France.
II) quantity of loanable funds in France is less than the supply.
III) Ricardo-Barro effect occurs in France.

Accepted Answer

A)  I only. 
B)  I and II. 
C)  I, II and III. 
D)  II and III only. 
A)  I only. 
B)  I and II. 
C)  I, II and III. 
D)  II and III only.

Question 9

The United States' August,2012 exports were $181.3 billion and its imports were $225.5 billion.During this month,the United States was

Accepted Answer

A)  an international borrower of funds from the rest of the world. 
B)  an international lender of funds to the rest of the world 
C)  neither an international borrower or lender because the U.S. government lends money for any trade imbalance 
D)  Not enough information is provided to determine whether the United States was an international borrower or lender 
A)  an international borrower of funds from the rest of the world. 
B)  an international lender of funds to the rest of the world 
C)  neither an international borrower or lender because the U.S. government lends money for any trade imbalance 
D)  Not enough information is provided to determine whether the United States was an international borrower or lender

Question 10

If the nominal interest rate is 7 percent and the inflation rate is 1 percent,the real interest rate is approximately

Accepted Answer

A)  7 percent. 
B)  6 percent. 
C)  8 percent. 
D)  -6 percent. 
A)  7 percent. 
B)  6 percent. 
C)  8 percent. 
D)  -6 percent.

Question 11

-In the above figure,the economy is at point a on the initial supply of loanable funds curve SLF₀.What happens if real wealth decreases?

Accepted Answer

A)  Nothing; the economy would remain at point a. 
B)  There would be a movement to a point such as b on supply of loanable funds curve SLF₀. 
C)  The supply of loanable funds curve would shift rightward to a curve such as SLF₂. 
D)  The supply of loanable funds curve would shift leftward to a curve such as SLF₁. 
A)  Nothing; the economy would remain at point a. 
B)  There would be a movement to a point such as b on supply of loanable funds curve SLF₀. 
C)  The supply of loanable funds curve would shift rightward to a curve such as SLF₂. 
D)  The supply of loanable funds curve would shift leftward to a curve such as SLF₁.

Question 12

If the economy's capital stock increases over time,

Accepted Answer

A)  net investment is positive. 
B)  depreciation is less than zero. 
C)  depreciation exceeds gross investment. 
D)  gross investment equals depreciation. 
A)  net investment is positive. 
B)  depreciation is less than zero. 
C)  depreciation exceeds gross investment. 
D)  gross investment equals depreciation.

Question 13

The real interest rate is 4 percent a year.When the inflation rate is zero,the nominal interest rate is approximately ________ percent a year; and when the inflation rate is 2 percent a year,the nominal interest rate is approximately ________ percent a year.

Accepted Answer

A)  0; 2 
B)  4; 6 
C)  6; 8 
D)  6; 4 
A)  0; 2 
B)  4; 6 
C)  6; 8 
D)  6; 4

Question 14

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

Accepted Answer

The real interest ra

Question 15

-In the above figure,a decrease in the real interest rate will result in a movement from point E to

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

Question 16

In 2007,France's exports totalled $490 billion and its imports totalled $529 billion. As a result,France is an international ________ and financial funds from around the world ________ France's market for loanable funds.

Accepted Answer

A)  borrower; leaves 
B)  borrower; enters 
C)  lender; leaves 
D)  lender; enters 
A)  borrower; leaves 
B)  borrower; enters 
C)  lender; leaves 
D)  lender; enters

Question 17

Suppose the real interest rate rises and the quantity of loanable funds decreases.These changes could have been the result of

Accepted Answer

A)  firms expecting higher future profits. 
B)  an increase in disposable income. 
C)  an increase in household wealth. 
D)  a decrease in the default risk. 
A)  firms expecting higher future profits. 
B)  an increase in disposable income. 
C)  an increase in household wealth. 
D)  a decrease in the default risk.

Question 18

Suppose the United States spends more on foreign goods and services than foreigners spend on our goods and services and the United States sells no foreign assets.Then the

Accepted Answer

A)  United States must borrow an amount equal to national saving. 
B)  United States must borrow an amount equal to imports minus exports. 
C)  rest of the world may or may not finance the U.S. trade deficit. 
D)  United States must borrow an amount equal to consumption expenditure plus investment. 
A)  United States must borrow an amount equal to national saving. 
B)  United States must borrow an amount equal to imports minus exports. 
C)  rest of the world may or may not finance the U.S. trade deficit. 
D)  United States must borrow an amount equal to consumption expenditure plus investment.

Question 19

-In the above figure,a decrease in the expected profit will result in a movement from point E to

Accepted Answer

A)  point F. 
B)  point G. 
C)  point H. 
D)  point I. 
A)  point F. 
B)  point G. 
C)  point H. 
D)  point I.

Question 20

The Ricardo-Barro effect asserts that

Accepted Answer

A)  government saving affects private saving. 
B)  government budget deficits crowd out private borrowing. 
C)  government expenditure affects private expenditure. 
D)  taxation raises interest rates. 
A)  government saving affects private saving. 
B)  government budget deficits crowd out private borrowing. 
C)  government expenditure affects private expenditure. 
D)  taxation raises interest rates.

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

A nation's investment must be financed by

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

The Acme Stereo Company had a capital stock of $24 million at the beginning of the year.At the end of the year,the firm had a capital stock of $20 million.Thus its

In 2007,France's GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. investment in 2006 was billion.

The Restoring American Financial Stability Act of 2010

U.S.investment is financed from

In 2007,France's exports totaled $490 billion and its imports totaled $529 billion.As a result,the I. rest of the world supplies funds to France. II) quantity of loanable funds in France is less than the supply. III) Ricardo-Barro effect occurs in France.

The United States' August,2012 exports were $181.3 billion and its imports were $225.5 billion.During this month,the United States was

If the nominal interest rate is 7 percent and the inflation rate is 1 percent,the real interest rate is approximately

-In the above figure,the economy is at point a on the initial supply of loanable funds curve SLF₀.What happens if real wealth decreases?

If the economy's capital stock increases over time,

The real interest rate is 4 percent a year.When the inflation rate is zero,the nominal interest rate is approximately percent a year; and when the inflation rate is 2 percent a year,the nominal interest rate is approximately percent a year.

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

-In the above figure,a decrease in the real interest rate will result in a movement from point E to

In 2007,France's exports totalled $490 billion and its imports totalled $529 billion. As a result,France is an international and financial funds from around the world France's market for loanable funds.

Suppose the real interest rate rises and the quantity of loanable funds decreases.These changes could have been the result of

Suppose the United States spends more on foreign goods and services than foreigners spend on our goods and services and the United States sells no foreign assets.Then the

-In the above figure,a decrease in the expected profit will result in a movement from point E to

The Ricardo-Barro effect asserts that

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 7: Finance, Saving, and Investment

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

A nation's investment must be financed by

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

The Acme Stereo Company had a capital stock of $24 million at the beginning of the year.At the end of the year,the firm had a capital stock of $20 million.Thus its

In 2007,France's GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. ________ investment in 2006 was ________ billion.

The Restoring American Financial Stability Act of 2010

U.S.investment is financed from

In 2007,France's exports totaled $490 billion and its imports totaled $529 billion.As a result,the I. rest of the world supplies funds to France. II) quantity of loanable funds in France is less than the supply. III) Ricardo-Barro effect occurs in France.

The United States' August,2012 exports were $181.3 billion and its imports were $225.5 billion.During this month,the United States was

If the nominal interest rate is 7 percent and the inflation rate is 1 percent,the real interest rate is approximately

-In the above figure,the economy is at point a on the initial supply of loanable funds curve SLF₀.What happens if real wealth decreases?

If the economy's capital stock increases over time,

The real interest rate is 4 percent a year.When the inflation rate is zero,the nominal interest rate is approximately ________ percent a year; and when the inflation rate is 2 percent a year,the nominal interest rate is approximately ________ percent a year.

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

-In the above figure,a decrease in the real interest rate will result in a movement from point E to

In 2007,France's exports totalled $490 billion and its imports totalled $529 billion. As a result,France is an international ________ and financial funds from around the world ________ France's market for loanable funds.

Suppose the real interest rate rises and the quantity of loanable funds decreases.These changes could have been the result of

Suppose the United States spends more on foreign goods and services than foreigners spend on our goods and services and the United States sells no foreign assets.Then the

-In the above figure,a decrease in the expected profit will result in a movement from point E to

The Ricardo-Barro effect asserts that

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

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

In 2007,France's GDP totalled $1.9 trillion and in 2006 GDP was $1.8 trillion. The total amount spent on new capital in 2007 was $357 billion and in 2006 was $335 billion. Suppose that depreciation is 12 percent of GDP. investment in 2006 was billion.

The real interest rate is 4 percent a year.When the inflation rate is zero,the nominal interest rate is approximately percent a year; and when the inflation rate is 2 percent a year,the nominal interest rate is approximately percent a year.

In 2007,France's exports totalled $490 billion and its imports totalled $529 billion. As a result,France is an international and financial funds from around the world France's market for loanable funds.