MACRO (CH 12-13)
If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, there is a
surplus and the interest rate is above the equilibrium level.
The key determinant of the standard of living in a country is
the amount of goods and services produced from each hour of a worker's time.
The economy's two most important financial markets are
the bond market and the stock market.
Assume the following information for an imaginary, closed economy. GDP $100,000 Taxes $22,000 Government Purchases $25,000 National Saving $15,000 For this economy, investment amounts to
$15,000.
Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to make 270,000 final goods.
Country A has lower productivity and lower real GDP per person than country B.
Which of the following statements accurately describes catch-up growth?
In one generation, China will be one of the richest countries in the world, if China's GDP per person continues to grow 9% per year.
The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves. Which of the following events would shift the supply curve from S1 to S2?
In response to tax reform, households are encouraged to save more than they previously saved.
In a closed economy, what does (Y − T − C) represent?
Private saving
In the production function Y=AF(L,K,H,N), what does H represent?
Quantity of human capital
A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?
The first but not the second
Suppose private saving in a closed economy is $12b and investment is $10b.
The government budget deficit must equal $2b.
Which of the following can be measured by the level of real GDP per person?
The standard of living but not productivity
Which of the following is an example of human capital?
The things you have learned this semester
If the demand for loanable funds shifts to the right, then the equilibrium interest rate
and quantity of loanable funds rise.
Financial intermediaries are
financial institutions through which savers can indirectly provide funds to borrowers.
Other things the same, a country that increases its savings rate will have
higher future capital and higher future real GDP per person.
A mutual fund
is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of both stocks and bonds.
The source of the supply of loanable funds
is saving and the source of demand for loanable funds is investment.
Apple founder Steve Jobs received patents on many of his ideas. While the patents existed, his ideas were
private goods and proprietary knowledge.
Productivity is the amount of goods and services produced for each hour of a worker's time. It is linked to a nation's economic policies.
produced for each hour of a worker's time. It is linked to a nation's economic policies.
