Economics Quiz

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

• capital investment.

• investment in human capital.

• business consumption expenditures.

• personal saving.

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

• their consumption expenditures are being financed by someone else's saving.

• their consumption expenditures are being financed by someone else's investment.

• their investments are being financed by someone else's saving.

• their saving is being financed by someone else's investment.

Two of the economy's most important financial intermediaries are

• suppliers of funds and demanders of funds.

• banks and the bond market.

• the stock market and the bond market.

• banks and mutual funds.

In which of the following cases would it necessarily be true that national saving and private saving are equal for a closed economy?

• Private saving is equal to government expenditures.

• Public saving is equal to investment.

• After paying their taxes and paying for their consumption, households have nothing left.

• The government's tax revenue is equal to its expenditures.

Net exports must equal zero for any economy

• that is closed.

• for which Y = C + I + G.

• for which S = Y - C - G.

• All of the above are correct.

The identity that shows that total income and total expenditure are equal is

• GDP = Y.

• Y = DI + T + NX.

• GDP = GNP - NX.

• Y = C + I + G + NX.

Y = C + I + G + NX is an identity because

• each symbol identifies a macroeconomic variable.

• the right-hand and left-hand sides are equal when an equilibrium is reached.

• the equality holds due to the way the variables are defined.

• None of the above is correct.

Which of the following equations represents GDP for an open economy?

• Y = C + I + G + NX

• NX = I - G

• I = Y - C + G + NX

• Y = C + I + G

In a small closed economy investment is $50 billion and private saving is $55 billion. What are public saving and national saving?

• $60 billion and $5 billion

• $50 billion and -$5 billion

• $5 billion and $60 billion

• -$5 billion and $50 billion

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

• raise both national saving and private saving.

• raise national saving and reduce private saving.

• leave national saving and private saving unchanged.

• leave national saving unchanged and reduce private saving.