Macroeconomics ch 10 Quiz

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If the government's expenditures exceeded its receipts, it would likely

sell bonds directly to the public.

For a closed economy, GDP is $31 trillion, consumption is $7 trillion, taxes are $3.0 trillion and the government runs a surplus of $4 trillion. What are private saving and national saving?

$21.0 trillion and $25.0 trillion, respectively

Consider a closed economy. If national saving is greater than zero, which of the following must be true?

Y - C - G > 0

Refer to Figure 9-2 . Without trade, consumer surplus amounts to

$9,720.

Refer to Figure 9-2 . Without trade, producer surplus amounts to

$9,720.

If the nominal interest rate is 8 percent and the inflation rate is 3 percent, then the real interest rate is

5 percent

Alex buys 1,000 shares of stock issued by Greg Brewing. In turn, Greg uses the funds to buy new machinery for one of its breweries.

Alex is saving; Greg is investing.

Assume, for India, that the domestic price of copper without international trade is lower than the world price of copper. This suggests that, in the production of copper,

India has a comparative advantage over other countries and India will export copper

In a closed economy, what does the difference between the tax revenue and government purchases, (T − G), represent?

Public saving

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

S = I + NX.

Consider a closed economy. In which of the following cases national saving must equal private saving?

The government's tax revenue is equal to its expenditures.

If there is a shortage of loanable funds, then the quantity of loanable funds

demanded is greater than the quantity of loanable funds supplied and the interest rate will rise.

Institutions that help to match one person's saving with another person's investment are collectively called the

financial system

If there is a shortage of loanable funds, then

neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.

Assume, for Brazil, that the domestic price of apples without international trade is higher than the world price of apples. This suggests that, in the production of apples,

other countries have a comparative advantage over Brazil and Brazil will import apples.

An increase in the government's budget surplus means public saving is

positive and increasing

In a closed economy, national saving equals

private saving plus public saving.

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

rises and the quantity of loanable funds falls.

Given that Sarah's income exceeds her expenditures, Sarah is best described as a

saver or as a supplier of funds.

In a closed economy, public saving is the amount of

tax revenue that the government has left after paying for its spending.

In a closed economy, private saving is

the amount of income that households have left after paying for their taxes and consumption.

National saving is

the total income in the economy that remains after paying for consumption and government purchases


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