Macro
macro ch 13 savings & investment
True/False
Indicate whether the statement is true or false.
____ 1. Most entrepreneurs finance their purchases of real capital using their past saving.
____ 2. To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.
____ 3. Public saving is equal to national saving minus private saving.
____ 4. To state that public saving is equal to investment, for a closed economy, is to state an accounting identity.
____ 5. Suppose a small closed economy has GDP of $5 billion, consumption of $3 billion, and government expenditures of $1 billion. Then investment and national saving are both $1 billion.
____ 6. The ratio of government debt to GDP was higher during the Reagan presidency than at any previous time in U.S. history.
____ 7. An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.
____ 8. An increase in the budget deficit shifts the demand for loanable funds to the right.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 9. We associate the term debt finance with
a.|the bond market, and we associate the term equity finance with the stock market.|
b.|the stock market, and we associate the term equity finance with the bond market.|
c.|financial intermediaries, and we associate the term equity finance with financial markets.|
d.|financial markets, and we associate the term equity finance with financial intermediaries.|
____ 10. If Proctor and Gamble sells a bond it is
a.|borrowing directly from the public.|
b.|borrowing indirectly from the public.|
c.|lending directly to the public.|
d.|lending indirectly to the public.|
____ 11. Which of the following is correct?
a.|Some bonds have terms as short as a few months.|
b.|Because they are so risky, junk bonds pay a low rate of interest.|
c.|Corporations buy
True/False
Indicate whether the statement is true or false.
____ 1. Most entrepreneurs finance their purchases of real capital using their past saving.
____ 2. To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.
____ 3. Public saving is equal to national saving minus private saving.
____ 4. To state that public saving is equal to investment, for a closed economy, is to state an accounting identity.
____ 5. Suppose a small closed economy has GDP of $5 billion, consumption of $3 billion, and government expenditures of $1 billion. Then investment and national saving are both $1 billion.
____ 6. The ratio of government debt to GDP was higher during the Reagan presidency than at any previous time in U.S. history.
____ 7. An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.
____ 8. An increase in the budget deficit shifts the demand for loanable funds to the right.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 9. We associate the term debt finance with
a.|the bond market, and we associate the term equity finance with the stock market.|
b.|the stock market, and we associate the term equity finance with the bond market.|
c.|financial intermediaries, and we associate the term equity finance with financial markets.|
d.|financial markets, and we associate the term equity finance with financial intermediaries.|
____ 10. If Proctor and Gamble sells a bond it is
a.|borrowing directly from the public.|
b.|borrowing indirectly from the public.|
c.|lending directly to the public.|
d.|lending indirectly to the public.|
____ 11. Which of the following is correct?
a.|Some bonds have terms as short as a few months.|
b.|Because they are so risky, junk bonds pay a low rate of interest.|
c.|Corporations buy