macro chapter 13

Suppose a closed economy had public saving of −$1 trillion and private saving of $3 trillion. What are national saving and investment for this country? a. $2 trillion, $2 trillion b. $3 trillion, $3 trillion c. $4 trillion, $2 trillion d. $2 trillion, $3 trillion

a, 2 trillion, 2 trillion

Which of the following bonds has the highest interest rate? a. A long term and a high credit risk b. A long term and a low credit risk c. A low credit risk and a short term d. A high credit risk and a short term

a, a long term and high credit risk

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market? a. An increase in the supply of or a decrease in the demand for loanable funds b. A decrease in the supply of or a decrease in the demand for loanable funds c. An increase in the supply of or an increase in the demand for loanable funds d. A decrease in the supply of or an increase in the demand for loanable funds

a, an increase in the supply of or a decrease in the demand for loanable funds

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate? a. Corporate bond, U.S. government bond, municipal bond b. U.S. government bond, municipal bond, corporate bond c. Corporate bond, municipal bond, U.S. government bond d. Municipal bond, U.S. government bond, corporate bond

a, corporate bond, us government bond, municpial bond

Northwest Wholesale Foods sells common stock. The company is using a. equity financing and the return shareholders earn depends on how profitable the company is. b. equity financing and the return shareholders earn is fixed. c. debt financing and the return shareholders earn depends on how profitable the company is. d. debt financing and the return shareholders earn is fixed.

a, equity financing and the return shareholders earn depends on how profitable the company is

In a closed economy, if Y and T remained the same, but G rose and C fell but by less than the rise in G, what would happen to public and national saving? a. Public and national saving would fall. b. Public and national saving would rise. c. Public saving would rise and national saving would fall. d. Public saving would fall and national saving would rise.

a, public and national saving would fall

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead, a. sell bonds. b. purchase bonds. c. use equity finance. d. invest in physical capital.

a, sell bonds

Refer to Scenario 26-1. For this economy, private saving amounts to a. $37,000. b. $18,000. c. $22,000. d. $15,000.

b, 18000

A budget deficit a. does not influence the supply of or the demand for loanable funds. b. changes the supply of loanable funds. c. changes the demand for loanable funds. d. changes both the supply of and demand for loanable funds.

b, changes the supply of loanable funds

The slope of the supply of loanable funds curve represents the a. positive relation between the interest rate and investment. b. positive relation between the interest rate and saving. c. negative relation between the interest rate and saving. d. negative relation between the interest rate and investment.

b, positive relation between the interest rate and saving

In a closed economy, public saving is the amount of a. income that businesses have left after paying for the factors of production. b. tax revenue that the government has left after paying for its spending. c. spending that the government undertakes in excess of the taxes it collects. d. income that households have left after paying for taxes and consumption.

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

Other things the same, when the interest rate rises, people would want to lend a. more, making the supply of loanable funds increase. b. more, making the quantity of loanable funds supplied increase. c. less, making the quantity of loanable funds supplied decrease. d. less, making the supply of loanable funds decrease.

b. more, making the quantity of loanable funds supplied increase.

Which of the following could explain an increase in the equilibrium interest rate and a decrease in the equilibrium quantity of loanable funds? a. The demand for loanable funds shifted right. b. The demand for loanable funds shifted left. c. The supply of loanable funds shifted left. d. The supply of loanable funds shifted right.

c, the supply of loanable funds shifted left

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000, and taxes equal 3,000. What are private saving, public saving, and national saving? a. −2,000, 1,000, and 2,000, respectively. b. 2,000, 1,000, and 2,000, respectively. c. 1,000, 2,000, and 3,000, respectively. d. 2,000, −1,000, and 1,000, respectively.

d, 2000, -1000, and 1000 respectfully

If the supply of loanable funds shifts to the right, then the equilibrium interest rate a. and quantity of loanable funds rise. b. rises and the quantity of loanable funds falls. c. and quantity of loanable funds fall. d. falls and the quantity of loanable funds rises.

d, falls and the quantity of loanable funds rises

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 a. I = S + NX. b. S = I. c. S = 0. d. S = I + NX.

d, s = i + nx

We associate the term debt finance with a. financial intermediaries, and we associate the term equity finance with financial markets. b. financial markets, and we associate the term equity finance with financial intermediaries. c. the stock market, and we associate the term equity finance with the bond market. d. the bond market, and we associate the term equity finance with the stock market.

d, the bond market, and we associate the term equity finance with the stock market

Consider the expressions T − G and Y − T − C. Which of the following statements is correct? a. Each one of these is equal to public saving. b. Each one of these is equal to national saving. c. The first of these is private saving; the second one is public saving. d. The first of these is public saving; the second one is private saving.

d, the first of these is public saving, the second one is private saving

National saving is a. equal to private saving minus public saving. b. always greater than investment for a closed economy. c. the total income in the economy that remains after paying for consumption. d. the total income in the economy that remains after paying for consumption and government purchases.

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

Which of the following is a certificate of indebtedness? a. Bonds but not stocks b. Both stocks and bonds c. Stocks but not bonds d. Neither stocks nor bonds

a, bonds but not stocks