Macro Chapter 9

What is the definition of wealth in macroeconomics?

• The total value of all goods and services produced in a country

• The value of assets minus liabilities

• The amount of money saved in a bank account

• The total income earned in a year

Which of the following best describes saving?

• Spending all disposable income

• Borrowing money from a bank

• The portion of income not spent on current consumption

• Investing in the stock market

Which of the following is NOT a component of national saving?

• Private saving

• Public saving

• Foreign saving

• Government saving

What is the primary reason firms invest in capital?

• To increase current consumption

• To reduce their workforce

• To pay off debts

• To increase future production and profits

Which of the following is an example of a financial market?

• Grocery store

• Car dealership

• Restaurant

• Stock exchange

How does an increase in saving affect wealth, assuming all else is constant?

• It increases wealth

• It decreases wealth

• It has no effect on wealth

• It only affects income

Which psychological factor can influence an individual's decision to save?

• Interest rates only

• Peer pressure

• Time preference for consumption

• Government policy

If the government runs a budget surplus, what happens to public saving?

• It becomes negative

• It increases

• It stays the same

• It decreases

Which of the following best explains why people save for retirement?

• To increase current spending

• To pay more taxes

• To provide for future consumption when income is lower

• To avoid inflation

A firm is considering investing in new machinery. Which factor is most likely to influence its decision?

• The color of the machinery

• The expected return on investment

• The number of employees

• The location of the factory