红河学院《宏观经济学》复习指南
billion and investment equals $2 billion. What is public saving in Nemedia, and what is the value of the goods and services purchased by the government of Nemedia?
a. -$2 billion and $3 billion b. $1 billion and $3 billion c. -$1 billion and $4 billion
d. There is not enough information to answer the question.
50．In a closed economy, private saving is
a. the amount of income that households have left after paying for their taxes and consumption. b. the amount of income that businesses have left after paying for the factors of production. c. the amount of tax revenue that the government has left after paying for its spending. d. always equal to investment.
51．Which of the following is not always correct in a closed economy?
a. National saving equals private saving plus public saving. b. Net exports equal zero.
c. Real GDP measures both income and expenditures. d. Private saving equals investment.
52．If the tax revenue of the federal government exceeds spending, then the government
a. runs a budget deficit. b. runs a budget surplus. c. runs a national debt. d. will increase taxes.
53．A budget surplus is created if
a. the government sells more bonds than it buys back. b. the government spends more than it receives in tax revenue. c. private savings are greater than zero. d. None of the above are correct.
54．Which of the following would a macroeconomist consider as investment?
a. Ernest purchases a bond issued by Star-Kist. b. Jerry purchases stock issued by IBM. c. Alice builds a new restaurant. d. All of the above are correct.
55．Fred is considering expanding his dress shop. If interest rates rise he is
a. less likely to expand. This illustrates why the supply of loanable funds slopes downward. b. more likely to expand. This illustrates why the supply of loanable funds slopes upward.
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红河学院《宏观经济学》复习指南
c. less likely to expand. This illustrates why the demand for loanable funds slopes downward. d. more likely to expand. This illustrates why the demand for loanable funds slopes upward.
56．If the current market interest rate for loanable funds is above the equilibrium level, then
a. the quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest
rate will rise.
b. the quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest
rate will rise.
c. the quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest
rate will fall.
d. the quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest
rate will fall.
57．The nominal interest rate is the
a. interest rate corrected for inflation. b. interest rate as usually reported by banks. c. real rate of return to the lender. d. real cost of borrowing to the borrower.
58．If the nominal interest rate is 5 percent and the rate of inflation is 2 percent, then the real interest rate is
a. 7 percent. b. 3 percent. c. 2.5 percent. d. 2/5 percent.
59．What would happen in the market for loanable funds if the government were to decrease the tax rate on interest
income?
a. The supply of and demand for loanable funds would shift right. b. The supply of and demand for loanable funds would shift left.
c. The supply of loanable funds would shift right and the demand for loanable funds would shift left. d. None of the above are correct.
60．Which of the following would not be a result of replacing the income tax with a consumption tax?
a. The interest rate would decrease. b. Investment would decrease.
c. The standard of living would eventually rise. d. The supply of loanable funds would shift right.
61．In 1995 Congressperson Bill Archer proposed that the income tax be replaced with a consumption tax. If his program
had been passed, then today it is likely that the equilibrium interest rate
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红河学院《宏观经济学》复习指南
a. and quantity of loanable funds would be lower. b. and quantity of loanable funds would be higher.
c. would be higher and the equilibrium quantity of loanable funds would be lower. d. would be lower and the equilibrium quantity of loanable funds would be higher.
62．What would happen in the market for loanable funds if the government were to increase the tax on interest income?
a. Interest rates would rise.
b. Interest rates would be unaffected. c. Interest rates would fall.
d. The change in the interest rate would be ambiguous.
63．What would happen in the market for loanable funds if the government were to decrease the tax on interest income?
a. There would be an increase in the amount of loanable funds borrowed. b. There would be a reduction in the amount of loanable funds borrowed. c. There would be no change in the amount of loanable funds borrowed. d. The change in loanable funds borrowed would be ambiguous.
64．If Congress reduced the tax rate on interest income, investment
a. would increase and saving would decrease. b. would decrease and saving would increase. c. and saving would increase. d. and saving would decrease.
65．Suppose a country has a consumption tax that is similar to a state sales tax. If its government eliminates the
consumption tax and replaces it with an income tax that includes an income tax on interest from savings, what happens?
a. There is no change in the interest rate or saving. b. The interest rate decreases and saving increases. c. The interest rate increases and saving decreases. d. None of the above are correct.
66．Other things the same, countries that tax saving less will have
a. lower interest rates and higher investment than other countries. b. lower interest rates and lower investment than other countries. c. higher interest rates and higher investment than other countries. d. higher interest rates and lower investment than other countries.
67．Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable
funds?
a. The demand and supply of loanable funds would shift right.
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红河学院《宏观经济学》复习指南
b. The demand and supply of loanable funds would shift left. c. The supply of loanable funds would shift right. d. The demand for loanable funds would shift left.
68．Suppose Congress institutes an investment tax credit. What would happen in the market for loanable funds?
a. The interest rate and investment would fall. b. The interest rate and investment would rise.
c. The interest rate would rise and investment would fall. d. None of the above is necessarily correct.
69．An increase in the budget deficit
a. changes the supply of loanable funds. b. changes the demand for loanable funds.
c. changes both the supply of and demand for loanable funds. d. does not influence the supply of or the demand for loanable funds.
70．An increase in the budget deficit would cause a
a. shortage of loanable funds at the original interest rate, which would lead to falling interest rates. b. surplus of loanable funds at the original interest rate, which would lead to rising interest rates. c. shortage of loanable funds at the original interest rate, which would lead to rising interest rates. d. surplus of loanable funds at the original interest rate, which would lead to falling interest rates.
71．An increase in the budget deficit
a. makes investment spending fall. b. makes investment spending rise. c. does not affect investment spending.
d. may increase, decrease, or not affect investment spending.
72．Interest rates fall and investment falls. Which of the following could explain these changes?
a. the government goes from a surplus to a deficit b. the government repeals an investment tax credit
c. the government replaces a consumption tax with an income tax d. None of the above are correct.
73．A change in the tax laws which increases the supply of loanable funds will have a bigger effect on investment when
a. the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic. b. the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic. c. both the demand for and supply of loanable funds are more elastic. d. both the demand for and supply of loanable funds are more inelastic.
74．Credit risk refers to a bond's
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