chap 13 Econ

Scenario 26-2. Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion;government purchases = $0.7 trillion; and taxes = $0.9 trillion. Refer to Scenario 26-2. For this economy, investment amounts to

1.2 trillion

Table 26-3. The following table presents information about a closed economy whose market for loanable funds is in equilibrium. GDP $8.7 trillion Consumption Spending $6.1 trillion Taxes Net of Transfers $1.0 trillion Government Purchases $0.8 trillion Refer to Table 26-3. Determine the quantity of private saving.

1.6 trillion

able 24-11. Megan's salary for three consecutive years, along with other values, are presented in the table below. Year 2011 2012 2013 Salary $65,000 $72,000 $76,000 Consumer Price Index 226 230 235 Real Interest Rate 2.5 percent 2.7 percent 1.8 percent Refer to Table 24-11. Suppose the consumer price index for 2013 is not necessarily 235. If the nominal interest rate for 2013 is 7.3 percent , then the consumer price index for 2013 is, in fact,

242.7

If the nominal interest rate is 7 percent and the real interest rate is 2 percent, then what is the inflation rate?

5 percent

Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures on goods and services of $30 billion. County B has private savings of $60 billion, and investment expenditures of $40 billion. Country C has GDP of $300 billion, investment of $90, consumption of $180 billion, taxes of $60 billion and transfers of $20 billion. From this information, we know that

country B has the largest government budget deficit.

In the late summer of 2005 some regions of the country were suffering from drought. What effect would we expect this to have on the stock of companies such as John Deere that manufacture farm equipment?

decrease the demand for existing shares of the stock, causing the price to fall

The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Year Price ofMeat Price of aToy 2004 $3 per pound $2 2005 $1 per pound $7 2006 $4 per pound $5 Refer to Table 24-5. If the base year is 2004, then the CPI

increased from 2004 to 2005 and increased from 2005 to 2006.

Table 23-8A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. Year Price of Potatoes Quantity of Potatoes Price of Meat Quantity of Meat 2011 $2.00 10 $20 6 2012 $2.50 15 $22 7 2013 $3.50 20 $25 8 Refer to Table 23-8. In 2012, nominal GDP is Correct!

$191.50, and real GDP is $170.

The country of Growpaw does not trade with any other country. Its GDP is $20 billion. Its government purchases $3 billion worth of goods and services each year, collects $4 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Growpaw is $4 billion. What is investment in Growpaw?

$3 billion

For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

$3 trillion and $2 trillion, respectively

Which of the following statements regarding the consumer price index and the GDP deflator is correct?

Divergence between the two price measures is the exception, not the rule.

After a corporation issues stock, the stock

None of the above are correct.

Which of the following people purchased the correct asset to meet his or her objective?

Tim wanted a high return, even if it meant taking some risk, so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric.

In a closed economy, if Y remained the same, but G rose, T rose by the same amount as G, and C fell but by less than the increase in T, what would happen to private and national saving?

both national saving and private saving would fall

Compared to stocks, bonds offer the holder

lower risk and lower potential return.

A larger budget surplus

reduces the interest rate and raises investment.

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S. Then

the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

Suppose government expenditures on goods and services increase, transfers are unchanged, and taxes rise by less than the increase in expenditures. These changes in the government's budget cause

the equilibrium interest rate to rise and the equilibrium quantity of loanable funds to fall.

Which of the following both make the interest rate on a bond higher than otherwise?

the interest it pays is taxed and it was issued by a financially weak corporation

A policy that induces people to save more shifts

the supply of loanable funds rightward and increases investment.