ECON 201 TEST 3
If americans become more thrifty, we would expect
the supply of loanable funds to shift to the right and the real interests rate to fall
If government spending exceeds tax collections..
there is a budget defiit
An increase in the budget deficit is
a decrease in public saving
If the supply of loanable funds is very inelastic (steep), which policy would likely increase saving and investment the most?
a reduction in the budget deficit
Which of the following sets of government policies is the most growth oriented?
lower taxes in the returns to saving, provide investment tax credits, and lower the deficit
National saving (or just saving) is equal to
private saving + public saving
An increase in the budget deficit will
raise the real interest rate and decrease the quantity of loanable funds demanded for investment
If americans become less concerned with the future and save less at each real interest
real interest rates rise, and investment falls
If GDP = $1000, consumption = $600, taxes = $100, and government purchases = $200, how much is saving and investment?
saving = $200, investment = $200
Labor force participation rate
(labor force/adult population) x 100
Unemployment rate
(number of unemployed/labor force) x 100
Which of the following financial market securities would likely pay the highest interest rate?
A bond issues by a start up company
Which of the following statements is true?
Municipal bonds pay less interest than comparable corporate bonds
Credit risk refers to a bonds..
Probability of default
If the public consumes $100 billion less than the government purchases $100 billion more (other things unchanging), which of the following statements is true?
Saving is unchanged
Which of the following is an example of a equity finance?
Stock
A financial intermediary is a middleperson between
borrowers and lenders
If an increase in the budget deficit reduces national saving and investment, we have witnessed a demonstration of
crowding out
An increase isn 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 is indeterminate
Investment is
the purchase capital equipment and structures
