Macro Chapter 8

If americans become more thrifty, we would expect

the supply of loanable funds to shift to the right and the real interest rate to fall

If government spending exceeds tax collections

there is a budget deficit

which of the following financial market securities would likely pay the highest interest rate

a bond issued by a start-up compay

which of the following sets of government policies is the most growth oriented

lower taxes on the returns to saving provide investment tax credits and lower the deficit

National Saving is equal to

private saving + public saving

credit risk refers to a bond's

probability of default

an increase in the budge deficit will

raise the real interest rate and decrease the quantity of loanable funds

if americans become less concerned with the future and less at each real interest rate

real interest tares rise and investment falss

If GDP= $1000 consumption 600 taxes 100 and government purchases 200 how much is saving and investment

saving = 200 investment = 200

which of the following statements is true

Municipal bonds pay less interest than comparable corporate bonds

Which of the following is an example of equity finance

Stock

A financial intermediary is a middle-person between

borrowers and lenders

If an increase in the budget deficit reduces national saving and investment we have witnessed a demonstration of

crowding out

If the public consumes 100 billion less and the government purchases 100 billion more which of the following is true

saving is unchanged

an increase in the budget deficit that causes the government to increase its borrowing

shifts the supply of loanable funds to the left

an increase in the budget surplus

shifts the supply of loanable funds to the right and reduces the real interest rate.

if the government increases investment tax credits and reduces taxes on the return to saving at the same time

the impact on the real interest rate is indeterminate

Investment is

the supply of loanable funds to shift to the right and teal interest rate to fall

An increase in the budget deficit is

a decrease in public saving

If the supply of loanable funds is very inelastic which policy would likely increase saving and investment the most

a reduction in the budget deficit