If Japan goes from a small budget deficit to a large budget deficit, it will reduce A. public saving and so shift the supply of loanable funds left. B. None of the above is correct. C. investment and so shift the demand for loanable funds left. D. private saving and so shift the supply of loanable funds left.
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- Other things the same, people in the U.S. would want to save more if the real interest rate in the U.S. a. fell. The increased saving would increase the quantity of loanable funds demanded.b. fell. The increased saving would increase the quantity of loanable funds supplied.c. rose. The increased saving would increase the quantity of loanable funds demanded.d. rose. The increased saving would increase the quantity of loanable funds supplied.a. Consider the Market for Loanable Funds in a closed economy. What would be the impacts of the following events on interest rates and investment. i. The government introduces a tax credit for savings accounts of up to $10,000 per year. ii. The government introduces a tax credit for savings accounts of up to $10,000 per year, and at the same time it repeals an investment tax exemption provision. iii. The government raises the tax rates. iv. The government issues bonds worth $10 billion. b. In a closed economy GDP = $1,400, private saving = $225, government budget deficit = $15, and government spending $25 (all numbers are in billions). Calculate national saving, taxes, and consumption. %3DRecently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase. Clear my choice
- Recently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase.If at a given real interest rate desired national saving is $115 billion, domestic investment is $60 billion, and net capital outflow is $40 billion, then at that real interest rate in the loanable funds market there is a A. surplus. The real interest rate will fall. B. surplus. The real interest rate will rise. C. shortage. The real interest rate will rise. D. shortage. The real interest rate will fall.Supply 6 D1 D2 Consider the loanable funds market outlined above. Which of the following could explain a shift from D1 to D2? a. Firms increase their purchases of new equipment due to heightened market optimism about the future. b. The government increases taxes, resulting in a budget surplus. C. A new tax law is introduced which encourages people to save less and consume more. d. A new tax law is introduced which encourages people to save more and consume less.
- Use the analysis for the market for loanable funds diagram to illustrate and explain how the following government policy affects the economy’s saving and investment. Policy 1: Suppose the government starts with a balanced budget and then, because of a tax cut or spending increase, starts running a budget deficit.State, explain and draw the loanable funds diagram for i,ii and iii. (i) which which loanable funds curve would this policy affect?(ii) which way would the loanable funds curve shift?(iii) what would be the the impact on interest rates?The explanation for the slope of the A. supply of loanable funds curve is based on the logic that a higher real interest rate leads to lower saving. B. supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving. C. demand for loanable funds curve is based on the logic that a higher interest rate leads to higher saving. D. demand for loanable funds curve is based on the logic that a higher interest rate leads to lower saving.Suppose the government of a small open economy decides to increase taxes on all gross incomes, describe what will happen to public saving assuming all other things remain constant. a.Public saving will not be affected b.Public saving will decrease c.National saving will increase d.Public saving will increase
- The demand for loanable funds has a ________ slope because the lower the interest rate, the ________ number of investment projects are profitable, and the ________ the quantity of loanable funds demanded. A. negative; lesser; greater B. positive; lesser; lesser C. negative; greater; greater D. positive; greater; greater E. negative; greater; lesser QUESTION 14 The statement "This Dell laptop costs $1,200" illustrates which function of money? A. Liquidity. B. Medium of exchange. C. Standard of deferred payment. D. Store of value. E. Unit of account.During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would shift: a. the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right. b. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right. c. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left. d. the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left.QUESTION 11 What does (Y - T-C) represent in a closed economy? a. national saving b. private saving С. public saving d. government tax revenue a C QUESTION 12 For an imaginary closed economy, T = $12,000; S = $22,000;C = $90,000; and the government is running a budget surplus of $4,000. Then %3D %3D private saving = $20,000 and GDP = $110,000. a. %3D %3D private saving = $18,000 and GDP = $120,000. private saving = $20,000 and GDP = $126,000. private saving = $24,000 and GDP = $138,000. b. %3D С. %3D d. %3D a b. Sa