Which of the following will cause an increase in the equilibrium real interest rate?
(A) An increase in investment demand
(B) An increase in national saving
(C) An increase in the government budget surplus
(D) A decrease in the government budget deficit
(E) The purchase of government bonds by the central bank
The loanable funds market is best described as bringing together
(A) savers and borrowers
(B) investors and borrowers
(C) financial institutions and investors
(D) savers and lenders
(E) banks and savers
Which of the following is most likely to increase the real interest rate in Country Z ?
(A) Country Z reduces government expenditures.
(B) Country Z is viewed as having increased political and economic risk.
(C) Country Z’s citizens increase their savings in anticipation of needed retirement income.
(D) Country Z introduces a tax on consumption goods.
(E) None of the above
All of the following changes will shift the investment demand curve to the right EXCEPT
(A) a decrease in the corporate income tax rate
(B) an increase in the productivity of new capital goods
(C) an increase in the real interest rate
(D) an increase in corporate profits
(E) an increase in real gross domestic product
Which of the following describes a major difference between stocks and bonds?
(A) Stocks represent ownership in a corporation, and bonds represent a loan to a corporation.
(B) Bonds represent ownership in a corporation, and stocks represent a loan to a corporation.
(C) Stocks are counted in gross domestic product, and bonds are not counted.
(D) Bonds are counted in gross domestic product, and stocks are not counted.
(E) Bonds pay dividends, and stocks earn interest.
A country’s government runs a budget deficit when which of the following occurs in a given year?
(A) The amount of new loans to developing nations exceeds the amount of loans paid off by developing nations.
(B) Government spending exceeds tax revenues.
(C) The debt owed to foreigners exceeds the debt owed to the country’s citizens.
(D) The amount borrowed exceeds the interest payment on the national debt.
(E) Interest payments on the national debt exceed spending on goods and services.
Which of the following is true about a country’s national debt?
(A) It is the sum of the country’s trade deficit and government budget deficit.
(B) It increases when gross domestic product increases.
(C) It increases when the country’s government has a budget deficit.
(D) It decreases when the country’s exports exceed its imports.
(E) It decreases when national savings decrease.
Which of the following is true about the national debt of the United States?
(A) It is the debt owed to foreign investors.
(B) It is the accumulation of past and current budget deficits and surpluses.
(C) It increases when gross domestic product increases.
(D) It increases when exports decrease, and decreases when exports increase.
(E) It did not exist before 1980.
Crowding out is most likely to occur with which of the following changes?
(A) Decrease in government spending
(B) Increase in budget surplus
(C) Increase in budget deficit
(D) Decrease in the real interest rate
(E) Decrease in trade deficit
Crowding out occurs when investment spending by the private sector decreases as a result of
(A) decreasing interest rates caused by an increase in the supply of government bonds
(B) decreasing interest rates caused by a decrease in the demand for loanable funds
(C) decreasing interest rates caused by an increase in government borrowing
(D) increasing interest rates caused by an increase in government borrowing
(E) increasing interest rates caused by a decrease in government borrowing