MACRO Test #1- Part 4

Kathleen is considering expanding her dress shop. If interest rates rise she is

less likely to expand. This illustrates why the demand for loanable funds slopes downward.

GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000 Refer to Scenario 1. For this economy, investment amounts to

12,000

GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000 Refer to Scenario 1. For this economy, government purchases amount to

38,000

GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000 Refer to Scenario 1. For this economy, taxes amount to

41,000

If the inflation rate is 2 percent and the real interest rate is 3 percent, then the nominal interest rate is

5%

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Interest would rise

Which of the following is a financial intermediary?

Mutual fund

In a closed economy, GDP is equal to 11,000, taxes are equal to 1,500, consumption equals 7,500, and government purchases equal 2,000. What is national saving?

None of the above is correct-----

GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000 Refer to Scenario 1. This economy's government is running a

Surplus 3,000

Which of the following lists correctly identifies the four expenditure categories of GDP?

consumption, government purchases, investment, net exports

The primary function of the financial system is to

match one person's saving with another person's investment

Demand moves

means investment

Supply moves

means savings

In a closed economy, T = $5,000, S = $11,000, C = $50,000, and the government is running a budget deficit of $1,000. Then

private saving = $12,000 and GDP = $67,000

If Congress instituted an investment tax credit, the interest rate would

rise and savings fall

A larger budget deficit

rise interest, reduces investment

The supply of loanable funds would shift to the right if either

tax reforms encouraged greater saving or the budget deficit became smaller.