question
Financial capital is the ___________.
A. money used to buy stocks and bonds
B. money used to buy physical capital
C. funds that savers supply and buyers of physical capital borrow
D. money in the bank
A. money used to buy stocks and bonds
B. money used to buy physical capital
C. funds that savers supply and buyers of physical capital borrow
D. money in the bank
answer
Answer B is essentially the definition of financial capital.
question
If the price of a U.S. government bond is $50 and the owner of the bond is
entitled to $2.50 income each year, then the interest rate on the bond is
____.
A. 0.2 percent
B. 5 percent
C. 10 percent
D. 20 percent
entitled to $2.50 income each year, then the interest rate on the bond is
____.
A. 0.2 percent
B. 5 percent
C. 10 percent
D. 20 percent
answer
Answer: B The interest rate on an asset is equal to the interest paid divided
by the price, then multiplied by 100.
by the price, then multiplied by 100.
question
In the loanable funds market, an increase in ________.
A. the real interest rate increases the demand for loanable funds
B. expected profit increases the demand for loanable funds
C. expected profit doesn't change the demand for loanable funds, but
the quantity of loanable funds demanded increases
D. the real interest rate doesn't change the demand for loanable funds,
but the quantity of loanable funds demanded increases
A. the real interest rate increases the demand for loanable funds
B. expected profit increases the demand for loanable funds
C. expected profit doesn't change the demand for loanable funds, but
the quantity of loanable funds demanded increases
D. the real interest rate doesn't change the demand for loanable funds,
but the quantity of loanable funds demanded increases
answer
Answer: B The increase in expected profit increases the demand for
loanable capital, which means the demand curve for loanable
capital shifts rightward.
loanable capital, which means the demand curve for loanable
capital shifts rightward.
question
The supply of loanable funds increases ________.
A. when the demand for loanable funds increases
B. when people increase saving as the real interest rate rises
C. when disposable income increases or wealth decreases
D. if net taxes decrease or expected future income increases
A. when the demand for loanable funds increases
B. when people increase saving as the real interest rate rises
C. when disposable income increases or wealth decreases
D. if net taxes decrease or expected future income increases
answer
Answer: C An increase in disposable income or decrease in wealth influence
people to increase their saving, which increases the supply
of loanable funds.
people to increase their saving, which increases the supply
of loanable funds.
question
An increase in expected profit _______ the real interest rate and ________
the quantity of loanable funds.
A. decreases; decreases
B. increases; decreases
C. decreases; increases
D. increases; increases
the quantity of loanable funds.
A. decreases; decreases
B. increases; decreases
C. decreases; increases
D. increases; increases
answer
Answer: D An increase in expected profit increases the demand for loanable
funds, which increases the real interest rate and the
quantity of loanable funds.
funds, which increases the real interest rate and the
quantity of loanable funds.
question
A government budget surplus _______.
A. increases the supply of loanable funds
B. raises the real interest rate
C. decreases the demand for loanable funds and lowers the real interest
rate
D. decreases net taxes, increases disposable income, and increases saving
A. increases the supply of loanable funds
B. raises the real interest rate
C. decreases the demand for loanable funds and lowers the real interest
rate
D. decreases net taxes, increases disposable income, and increases saving
answer
Answer: A A government budget surplus is a source of loanable funds
and so increases the supply of saving.
and so increases the supply of saving.
question
Crowding out occurs when ______.
A. households' budgets are in deficit and saving decreases
B. the government budget is in surplus, so people have paid too much
tax
C. the government budget is in deficit and the real interest rate rises
D. the government budget is in deficit but taxpayers are rational and the
Ricardo-Barro effect operates
A. households' budgets are in deficit and saving decreases
B. the government budget is in surplus, so people have paid too much
tax
C. the government budget is in deficit and the real interest rate rises
D. the government budget is in deficit but taxpayers are rational and the
Ricardo-Barro effect operates
answer
Answer: C Pages 677 to 678 explain the crowding-out effect
question
An increase in the government budget deficit _______.
A. increases private saving and investment
B. increases private saving and decreases investment
C. increases the supply of private saving and decreases investment
D. decreases private saving and investment
A. increases private saving and investment
B. increases private saving and decreases investment
C. increases the supply of private saving and decreases investment
D. decreases private saving and investment
answer
Answer: B The increase in the budget deficit raises the real interest rate,
which increases private saving and decreases investment.
which increases private saving and decreases investment.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
