Final- review chapter 7
use the info in the table above to calculate the value of private saving:
$25 million
in jan 2105, tim gyms, Inc. owned machines valued at $1 million, during the year, the market value of the equipment fell by 30%. during 2015, tim spent $200,000 on new machines. during 2015, tim's investment totaled:
-$100,000
At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's gross investment for the year totaled:
3 machines
if the nominal interest rate is 8% and the inflation rate is 2%, the real interest rate is approximately:
6%
which of the following is TRUE regarding the real interest rate?
Both I and II
Which of the following items are considered physical capital?
II and III
In the absence of a Ricardo-Barro effect, a government budget deficit ________ the demand for loanable funds and ________ investment.
Increases;decresases
In the above figure, the initial supply of loanable funds curve is SLF0 and the initial demand for loanable funds curve is DLF0. An economic expansion that raises disposable income and the expected profit would:
Shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1.
suppose the US spends moron foreign goods and services than foreigners spend on our goods and services and the US sells no foreign assets. Then the:
US must borrow an amount equal to imports minus exports
which of the following shifts the demand for loanable funds curve leftward
a decrease in the expected profit
which of the following explains why the demand for loanable funds is negatively related to the real interest rate?
a lower real interest rate makes more investment projects profitable
a ride in the real interest rate
creates a movement upward along the demand for loanable funds curve
suppose a bond promises to pay its holder $100 a year forever. the interest rate on the bond rises from 4% to 5%. the price of the bond:
falls from $2,500 to $2,000
the funds used to buy and operate physical capital are:
financial capital
according to the Ricardo-Barron edict:
households increase their personal saving when governments run budget deficits
the capital stock increases whenever:
net investment is positive
the term "crowding out" relates to the decrease in:
private investment from a government budget deficit
US investment is financed from:
private saving, government budget surpluses, and borrowing from the rest of the world
in the loanable funds market, the supply comes from:
saving, the government budget surplus and international borrowing
in the above figure, technological progress that increases the expected profit will:
shift the demand for loanable funds curve rightward
greater optimism about the expected profits from investment projects
shifts the demand for loanable funds curve rightward
If net taxes exceed government expenditures, the government sector has a budget ________ and government saving is ________.
surplus;positive
suppose that you took out a $1000 loan in Jan and had to pay $74 in annual interest. during the year, inflation was 6%. which of the following statements is CORRECT?
the nominal interest rate is 7.5% and the real interest rate is 1.5$
in the above five, the economy is at the equilibrium point on the supply of loanable funds curve SFL and demand for loanable funds curve DLF. what happens if disposable income decreases?
the supply of loanable funds curve would shift leftward
as a result of the recession in 2008, the default risk increased. how did this change affect the loanable funds market?
there was a leftward shift in the supply of the loanable funds curve
