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WorksheetsEconomics Quiz 4
Total questions: 20
Worksheet time: 10mins
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.
Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchases equal 2,000. What are private saving, public saving, and national saving?
1,500, 1,000, and 500, respectively
1,000, 500, and 1,500, respectively
500, 1,500, and 1,000, respectively
None of the above is correct.
Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?
9,500
10,000
10,500
11,000
The source of the supply of loanable funds
is saving and the source of demand for loanable funds is investment.
is investment and the source of demand for loanable funds is saving.
and the demand for loanable funds is saving.
and the demand for loanable funds is investment.
Assuming the market for loanable funds is in equilibrium, use the following numbers to determine the quantity of loanable funds supplied. GDP $8.7 trillion Consumption Spending $3.2 trillion Taxes Net of Transfers $2.7 trillion Government Purchases $3.0 trillion
$2.2 trillion
$2.5 trillion
$3.9 trillion
$5.2 trillion
Suppose the market for loanable funds is in equilibrium. Given the numbers below, determine the quantity of loanable funds demanded. GDP $200 billion Consumption $130 billion Taxes Net of Transfers $30 billion Government Spending $40 billion
$30 billion
$25 billion
$20 billion
$15 billion
The Eye of Horus incense company has $10 million in cash which it has accumulated from retained earnings. It was planning to use the money to build a new factory. Recently, the rate of interest has increased. The increase in the rate of interest should
not influence the decision to build the factory because The Eye of Horus doesn't have to borrow any money.
not influence the decision to build the factory because its stockholders are expecting a new factory.
make it more likely that The Eye of Horus will build the factory because a higher interest rate will make the factory more valuable.
make it less likely that The Eye of Horus will build the factory because the opportunity cost of the $10 million is now higher.
Kathleen is considering expanding her dress shop. If interest rates rise she is
less likely to expand. This illustrates why the supply of loanable funds slopes downward.
more likely to expand. This illustrates why the supply of loanable funds slopes upward.
less likely to expand. This illustrates why the demand for loanable funds slopes downward.
more likely to expand. This illustrates why the demand for loanable funds slopes upward.
If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,
there is a surplus and the interest rate is above the equilibrium level.
there is a surplus and the interest rate is below the equilibrium level.
there is a shortage and the interest rate is above the equilibrium level.
there is a shortage and the interest rate is below the equilibrium level.
If there is a shortage of loanable funds, then
the quantity demanded is greater than the quantity supplied and the interest rate will rise.
the quantity demanded is greater than the quantity supplied and the interest rate will fall.
the quantity supplied is greater than the quantity demanded and the interest rate will rise.
the quantity supplied is greater than the quantity demanded and the interest rate will fall.
Suppose that Congress were to institute an investment tax credit. What would happen in the market for loanable funds?
The demand for loanable funds would shift left.
The supply of loanable funds would shift left.
The demand for loanable funds would shift right.
The supply of loanable funds would shift right.
