7. Which of the
following statements is (are) correct?
(x) Suppose government debt equaled zero until three years ago. In
the last three years government had a budget deficit of $80 billion
in each of the first two years and a budget surplus of $70 billion
in the last year. At the end of the last year, the government had
debt of $90 billion.
(y) When the U.S. government is in debt, it follows that they have
a deficit for the current year.
(z) Debts during wars may distribute the burden of the war more
evenly across generations.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only
8. According to the textbook and government statistics, which of
the following statements is (are) correct?
(x) In the last 100 years, the ratio of debt to GDP in the United
States has not always been less than one.
(y) The ratio of government debt to GDP, in the U.S., was higher
during the Reagan presidency than at any previous time in U.S.
history and the Obama presidency has gone even higher than
that.
(z) In the first decade of the 21st century, the ratio of debt to
GDP in the United States has grown such that it is now, in the year
2016, close to the value of two.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only
9. According to a macroeconomist, which of the following statements
is (are) correct?
A. The price of loanable funds is the interest rate and the forces
of supply and demand in the loanable funds market determine the
interest rate
B. The supply of loanable funds slopes upward because an increase
in the interest rate induces people to save more.
C. The source of the demand for loanable funds is investment
demand.
D. All of the above are correct.
E. A and B, only
7. Option (C) (x) and (z) only is correct
This option is correct because the government debt stands at $90 billion(80+80-70). Also, the debt of every country is highest during the war time.
8. Option (C) (x) and (z) only is correct
This option is correct because the debt of US has always remained high in the past 100 years. It further increased in the current years. So, debt to gdp ratio has always been rising for the US.
9. Option (D) All of the above are correct. is correct
This option is correct because the loanable funds are decided by the market forces of the demand and supply of funds in the market. It is generally demanded by the big corporate so as to invest in their businesses.
7. Which of the following statements is (are) correct? (x) Suppose government debt equaled zero until...
9. Which of the following statements is (are) correct? (x) A budget surplus occurs when government receipts are more than spending and a budget deficit occurs when government spending is more than receipts. (y) The most common methods that the U.S. government uses to finance the budget deficit is by borrowing solely from the Federal Reserve or printing currency in the amount of the budget deficit. (z) If interest rates remain constant, then government must spend a larger amount of...
According to the open economy macroeconomic model, which of the following statements is (are) correct? (x) The usual effects of capital flight include a rightward shift of demand in the loanable funds market and a rightward shift of the NCO curve, (y) Capital flight typically causes a decrease in the domestic interest rate and an increase in NCO. (z) Capital flight typically causes the real exchange rate of the domestic currency to depreciate because capital flight causes an increase in...
which of the following statements about the loanable funds market is (are) correct? (x) When the supply of loanable funds shifts to the right then the equilibrium real interest rate decreases and the equilibrium quantity of loanable funds decreases. (y) When the demand for loanable funds shifts to the right then the equilibrium real interest rate increases and the equilibrium quantity of loanable funds increases. (z) If the demand for loanable funds shifts to the right and the supply of...
19, which of the following statements is (are) correct? (x) A nation with a large trade surplus must have large and positive net capital outflow (y) A nation with a large trade deficit must have large and negative net capital outflow (z) A nation with a small trade deficit must have a slightly larger amount of exports than imports and slightly more capital outflow than capital inflow. A. (x), (y) and (z) B. (x) and (y) only C. (x) and...
5. , which of the following statements is (are) correct? (x) Transactions involving items produced in the past are included in current GDP because GDP measures the value of goods and services sold in the current year. (y) Robert, a United States citizen, works only in Mexico. The value added to production from his employment is included in the GDP of the United States, but not Mexican GDP. (z) GDP excludes items produced and sold illegally and items that are...
13. A country has domestic investment of $200 billion, national saving of $300 billion, and purchased $300 billion of foreign assets. How many of its assets did foreigners purchase? A. $100 billion B. $200 billion C. $300 billion D. $400 billion E. $500 billion 11. Which of the following statements is (are) correct? (x) If interest rates rise in the U.S., then other things the same, foreigners would buy more U.S. bonds which reduces the quantity of loanable funds demanded...
Which of the following statements is (are) correct? (x) Banks and credit unions are considered financial intermediaries because they act as financial institutions through which savers can indirectly provide funds to borrowers. (y) Mutual funds are one type of financial intermediary and the advantage of mutual funds is that they allow people with small amounts of money to diversify as well as give ordinary people access to the skills of professional money managers. (z) A mutual fund is an institution...
In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue. Select one: True False If there is a surplus of loanable funds, then neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. Select one: True False An increase in the budget deficit would cause a shortage of loanable funds at the original interest rate, which would lead to falling interest...
Which of the following statements is (are) correct? (x) If the average income of an American is higher than the average income of a Canadian, it is most likely because productivity is higher in Canada than in the United States. (y) To improve living standards, policymakers should reduce spending on public education. (z) In general, government policies that lead to an increase in productivity will elevate the average income of the residents of that country A. (x), (y) and (z)...
5. According to the textbook, which of the following statements is (are) correct? (x) From 1960 to about 1975 in the United States, net capital outflow was small and sometimes negative and sometimes positive. (y) Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a decrease in U.S. investment (z) In the U.S. from 2000 to 2006, net capital outflow as a percent of GDP became a larger...