Exam 7: Finance, Saving, and Investment

The supply of loanable funds is the relationship between loanable funds and ________ other things remaining the same.

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF?. What happens if the interest rate rises?

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

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

A nation's investment must be financed by

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's gross investment for the year totaled

France's government is running a budget deficit. With no Ricardo-Barro effect, which of the following events will occur? I.The supply curve of loanable funds will shift leftward. II.A higher real interest rate crowds out investment. III.Saving increases.

A fall in the real interest rate

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

In January 2013, you can put your savings in a Bank of America account and be paid 2 percent per year. During 2013, suppose the inflation rate is 3.4 percent. In 2013 you earned a real interest rate of

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

If the nominal interest rate is 8 percent and the current inflation rate is 3 percent, approximately what is the real interest rate?

If the government's budget deficit increases and the Ricardo-Barro effect does not apply

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

If the economy's capital stock decreases over time

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

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

In 2007, France's GDP totaled $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. To calculate the amount of net investment in France for these years, you need to know ________.

If disposable income increases, people will decide to ________ saving, the supply of loanable funds will ________ and the real interest rate will ________.

The Ricardo-Barro effect holds that