HELP ASAP QUESTION 1 When government is running a budget surplus, which of the f
ID: 1191397 • Letter: H
Question
HELP ASAP
QUESTION 1
When government is running a budget surplus, which of the following statements is correct?
Net taxes exceed government spending.
Net taxes are less than government spending.
Net taxes equal government spending.
The real interest rate rises.
1 points
QUESTION 2
If the government budget deficit is getting larger, then the supply of loanable funds will __________ and the real interest rate will __________.
decrease; fall
increase; rise
decrease; rise
increase; fall
1 points
QUESTION 3
The supply of loanable funds will shift to the right when
government runs a budget deficit.
government runs a budget surplus.
government runs a balanced budget.
real interest rate increases.
1 points
QUESTION 4
In the loanable funds market, a larger government deficit will lead to
a higher equilibrium real interest rate and investment.
a lower equilibrium real interest rate and investment.
a higher equilibrium real interest rate but lower investment.
a lower equilibrium real interest rate and higher investment.
1 points
QUESTION 5
Which of the following is included in the markets for financial capital?
the Bank of Canada
stock markets
bond markets
both stock and bond markets
1 points
QUESTION 6
The total amount firms spend on new capital is called
savings.
gross investment.
net investment.
wealth.
1 points
QUESTION 7
Gross investment is
equal to wealth.
the total amount firms spend on new capital.
the total amount households spend on new goods and services.
the amount of stocks and bonds households hold.
1 points
QUESTION 8
For a net foreign lender, if the world real interest rate increases, then it will
increase the amount of lending.
decrease the amount of lending.
increase the amount of borrowing.
decrease the amount of borrowing.
1 points
QUESTION 9
For a small open economy that is a net lender, a fall in the world real interest rate will
increase the amount of its lending.
decrease the amount of lending.
not change the amount of lending.
move the country from trade surplus to trade deficit.
1 points
QUESTION 10
The quantity of loanable funds in Canada is smaller than our national saving when
Canada experiences a trade surplus.
Canada experiences a trade deficit.
Canada experiences unemployment.
Canada is a net borrower.
1 points
QUESTION 11
At the current world real interest rate, if a country has a shortage of loanable funds, then
the country increases its net exports.
the country decreases its net exports.
the world interest rate will fall.
world suppliers of loanable funds move funds to this country.
1 points
QUESTION 12
Suppose government spending is $25,000, private saving is $35,000, net taxes are $50,000. National saving would equal to
$40,000.
$50,000.
$60,000.
$70,000.
1 points
QUESTION 13
The quantity of loanable funds demanded increases when
real interest rate increases.
real interest rate decreases.
inflation rate increases.
inflation rate decreases.
1 points
QUESTION 14
Government saving plus private saving equals
investment.
national saving.
global saving.
net investment.
1 points
QUESTION 15
The quantity of loanable funds demanded decreases when
real interest rate increases.
real interest rate decreases.
inflation rate increases.
inflation rate decreases.
1 points
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a.
Net taxes exceed government spending.
b.Net taxes are less than government spending.
c.Net taxes equal government spending.
d.The real interest rate rises.
Explanation / Answer
1.When government spending is less than its net taxes there is a budget surplus. A budget surplus increases public saving and the total level of saving in the economy.
So the correct option is A.
2.If the government budget deficit is getting larger, then the supply of loanable funds will decrease and the interest rates will go up in the economy. Therefore the correct option is c.
3. Supply of loanable funds will shift to the right when there is an increase in budget surplus so the correct option which should be chosen is b.
4. In the loanable funds market, a larger government deficit will lead to a higher rate of interest at equilibrium but the investment will go down due to decrease in supply of loanable funds. So the correct option is C.
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