AP Macro

Use scenario 22-1. How much is investment spending?

$2 trillion

Use scenario 22-1. How much is national saving?

$2 trillion

Use scenario 22-1. How much is private saving?

$3.5 trillion

Use scenario 22-1. What is the government budget balance?

a deficit of $1.5 trillion

Commodity-backed money is

a medium of exchange with no intrinsic value

A bond is

an IOU that pays interest

From the standpoint of economic growth, banks are important to

channel savings into investment

Which of the following assets would be considered to be most liquid?

currency

The narrowest definition of money excludes

currency in the vault at the bank.

Physical capital is purchased through investment spending, which in turn is mostly financed out of

domestic and foreign savings

Private savings is equal to

income minus taxes, plus transfers, minus consumption

To help increase investment spending, the government can

lower taxes on the returns from savings, so that total savings increase and the interest rate falls

As an investor, you may choose to purchase a bond or a share of stock. If you choose to purchase the bond, you are likely to receive a _____ return in exchange for a _____ level of risk.

lower;lower

What is considered investment spending in macroeconomics?

money spent on capital goods or goods used in the production of capital goods

The savings-investment spending identity says that

savings and investment spending are always equal for the economy as a whole

A share in the ownership of a company held by a shareholder is considered a

stock

Transactions costs are

the expenses of negotiating and executing a deal

The value of all accumulated savings of a household is considered

wealth

What is an asset that most people would consider money?

your checking account balance