question
(Figure: Crowding Out) If the demand for loanable funds curve shifts to the right, then it will result in:
answer
an increase in the interest rate and the total amount of borrowing in the funds market.
question
(Figure: Crowding Out) If the supply of loanable funds curve shifts to the right, then it will result in:
answer
an increase in the total amount of borrowing and a fall in the interest rate.
question
(Figure: The Market for Loanable Funds II) If the interest rate is higher than ______ in this loanable funds market, the quantity supplied of loanable funds will _______ the quantity of loanable funds demanded.
answer
8%; be greater than
question
(Figure: The Market for Loanable Funds II) An increase in government borrowing will shift the demand for loanable funds to the:
answer
right and increase the interest rate.
question
(Figure: The Market for Loanable Funds II) Other things being equal, if there is an increase in the interest rate above 8%, ________ loanable funds will be demanded.
answer
Less
question
(Figure: The Market for Loanable Funds II) Other things being equal, an increase in taxes on savings and investment income will:
answer
shift supply to the left and increase the interest rate.
question
Capital inflow is equal to:
answer
the total inflow of foreign funds minus the total outflow of domestic funds.
question
In an open economy, total investment is equal to:
answer
national savings plus capital inflow.
question
Assume that I = Sprivate + Sgovernment + (IM - X). Furthermore, let's say that imports are equal to exports. Given this situation, which of the following is true?
answer
Private savings plus government saving are equal to investment.
question
In an open economy where government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, and GDP was $100 billion this year, investment spending was $10 billion. As a result, there was:
answer
a net capital inflow of $10 billion.
question
The sources of financing of physical capital include:
answer
foreign investment in the home country.
question
All other things unchanged, an increase in loanable funds demand would most likely be caused by a(n):
answer
increase in the amount of government borrowing.
question
When government spending is greater than net taxes,
answer
there is a budget deficit.
question
The government's budget deficit increases, and at the same time the trade deficit grows in an open economy. This will lead to a(n) _________ in the demand and a(n) ________ in the supply of loanable funds in domestic markets.
answer
increase; increase
question
In an open economy, investment spending equals
answer
the sum of private saving, the budget balance, and the difference between imports and exports
question
The price in the loanable funds market is:
answer
the interest rate.
question
GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion.
(Scenario: Closed Economy S = I) How much is private saving?
(Scenario: Closed Economy S = I) How much is private saving?
answer
$3.5 trillion
question
GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion.
(Scenario: Closed Economy S = I) How much is national saving?
(Scenario: Closed Economy S = I) How much is national saving?
answer
$2 trillion
question
GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion.
(Scenario: Closed Economy S = I) How much is investment spending?
(Scenario: Closed Economy S = I) How much is investment spending?
answer
$2 trillion
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