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