ec

decreases; increases

1. A decrease in the perceived riskiness of Company A stock ______ the risk premium investors require to purchase Company A stock and ______ the price of Company A stock.

increase public saving.

1. An increase in net taxes (taxes paid by the private sector to the government less transfer payments and interest payments made by the government to the private sector) will

- supply of labor to the Best Quality Vacuum decreases.

1. If the price of vacuums produced by Best Quality Vacuum falls from $300 to $250 per vacuum, then the

liabilities will decrease, and her wealth will increase.

1. Shannon's current income is $100 more per month than her current consumption needs. She decides to use the $100 to reduce her credit card debt. As a result, her

When the Chinese government buys bonds issued by an American company

1. State whether each of the following is a capital inflow or capital outflow from the perspective of the U.S.

demand for labor by Capsule Corp increases.

1. Suppose computers allow factory workers at Capsule Corp to manufacture more computers in an hour than they could before. Then

- supply of labor to poultry processing plants decreases.

1. Suppose the existence of alternative opportunities make people less willing to work in poultry processing plants. Then the

Investment; an increase, an increase

1. Suppose the price of Walter and Jesse's product increases relative to other goods. Holding other factors constant, then ________ increases, leading to ________ in the real interest rate and ________ in equilibrium quantity of national saving and investment.

total number of tickets sold by the time of the raffle; number of tickets sold each day

1. The Cub Scouts and Girl Scouts have so far sold 300 tickets for their upcoming raffle, but they sell an additional 32 tickets every day. The ______ is a stock variable, and the ______ is a flow variable.

Gerry and Terry put $2,000,000 in a trust fund that will go to their children when they die.

1. Which of the following is an example of the life-cycle motive for saving?

actual reserve-deposit ratio is greater than the desired reserve-deposit ratio.

After the Federal Reserve increases reserves in the banking system, banks create new deposits through multiple rounds of lending and accepting deposits until the

increase; increase

Holding other factors constant, if Congress passes a 5% investment tax credit under which a firm receives $5 in tax refunds from the government for every $100 it spends on new capital equipment, then the real interest rate will ______ and the equilibrium quantity of national saving and investment will _____.

increase; decrease

Holding other factors constant, if a change in tax laws discourages people from saving more for retirement, then the real interest rate will ______ and the equilibrium quantity of saving and investment will _____.

decrease; increase

Holding other factors constant, if state income tax is replaced with a consumption tax, then the real interest rate will ______ and the equilibrium quantity of saving and investment will _______.

does not change; increases

If household saving decreases by $4 million, business saving increases by $4 million, and the government budget deficit decreases by $4 million, then private saving ______ and public saving ______.

trade deficit of $300 billion.

If the United States has a $300 billion net capital inflow, then there must be a

increase; decrease

In an open economy with a given level of real interest rates and risk, a decrease in real interest rates abroad will ______ net capital inflows and ______ the equilibrium domestic real interest rate.

increases; decreases

In an open economy, a decrease in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment.

it will generate a net income (after taxes, maintenance and operating costs) of $2,000 per year. He has no other opportunities. He should purchase the truck only if the real interest rate is less than 2 percent.

Joe's Taco Hut can purchase a delivery truck for $20,000 and Joe estimates

Lisa has experienced a $500 capital gain.

Lisa owns a beautiful diamond ring she purchased for $2,500. When she has it appraised, she learns that it is now worth $3,000. Based on this information

increase; decrease; decreases

Stock prices increase when expected future dividends _____, interest rates _____, and/or the risk premium _____.

imports increase; inflow to

When a U.S. restaurant purchases French wine and the French wine company uses the proceeds to buy U.S. government debt, U.S. ______ and there is a capital ______ the United States.

increases by more than $1,000,000.

When the central bank buys $1,000,000 worth of government bonds from the public, the money supply

An increase in domestic saving

Which of the following events will increase the domestic real interest rate in an open economy?