For each statement below, indicate if it is true or false by dragging the approp

ID: 1216791 • Letter: F

Question

For each statement below, indicate if it is true or false by dragging the appropriate label to the box next to each item.

1. An increase in government spending can crowd out private investment.

2. An improvement in the budget balance increases the demand for financial capital.

3. An increase in private consumption may crowd out private investment.

4. Lower interest rates can lead to private investment being crowded out.

5. A trade balance in surplus increases the supply of financial capital.

6. If private savings is equal to private investment, then there is neither a budget surplus nor a budget deficit.

1. An increase in government spending can crowd out private investment: TRUE

2. An improvement in the budget balance increases the demand for financial capital: FALSE

3. An increase in private consumption may crowd out private investment: FALSE

4. Lower interest rates can lead to private investment being crowded out: FALSE

5. A trade balance in surplus increases the supply of financial capital: TRUE

6. If private savings is equal to private investment, then there is neither a budget surplus nor a budget deficit: FALSE

(Budget deficit/surplus depends on the exchange rate and net exports. While full employment level depends on the S=I)

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