Macro Ch 10 Sapling

Shift in Supply or shift in demand? Due to an increase in revenues after a tax hike, the US is able to eliminate the deficit and begins to maintain a balanced budget for the first time in serveral decades

Shift in Demand

which of the following acts as the "price" in the market for loanable funds?

interest rate

capital inflow

the net amount of funds coming into a county

What describes financial intermediary?

A financial institution that transforms investor funds into financial assets

Bond

A promise to pay issued by a borrower with annual interest payments and a principal payment at maturity

What summarizes the impact of the Fisher effect?

Consumers consider future inflation

Shift in Supply or shift in demand? Calopolis, a college town in Northern CA has for many years banned the presence of fast food restaurants in city limits. As of 2012 however, the city will allow several fast food companies to open franchised locations

Shift in Demand

Shift in Supply or shift in demand? China decides to reduce its capital investment in the US as it expects low returns due to a weak US economy

Shift in Supply

Shift in Supply or shift in demand? As a result of a stock market boom, individuals begin to feel richer and spend more while also saving less

Shift in Supply

If the projected rate of return for a project is less than the interest rate for a loan that is necessary to complete the project, how will the borrowing business act?

The business will not take out the loan

Budget Balance

The difference between the amount the government collects and how much it spends is known as this

stock

a share of ownership in a company

loan

agreement between a lender and a borrower

bank deposits

funds that are kept in a bank that must be relinquished upon the owner's request

budget surplus

if the government spends less money than it takes in through taxes

budget deficit

if the government spends more money than it takes in through taxes it will experience this

The fundamental relationship between savings and investment spending is that...

investment spending and savings are always equal

As interest rate decreases, what happens to the quantity of loanable funds demanded?

quantity demanded will increase

What effect will an increase in interest rates have on the quantity of loanabale funds supplied?

quantity supplied will increase

National Savings

when the term above is combined with all of the privately held savings from across the country

How do mutual funds reduce risk for the average individual investor?

Mutual funds reduce risk through portfolio diversification