Macro Exam 3 Review

Chapters 12,13,16
Other things the same, a government budget deficit will reduce
both public and national saving
if there is a surplus of loanable funds, then
the quantity of loanable funds supplied > quantity of loanable funds demanded and the interest rate is above equilibrium
Budget Surplus
excess tax over gov spending
T-G=public saving
Budget Deficit
shortfall of tax revenue from gov spending
G-T= -(public saving)
If the economy is at point A in 2007, then it will definitely remain at pointA in 2008 if , between 2007 and 2008,
K doubles, # of workers doubles, H doubles
natural resources and tech remain constant
the discount rate is the interest rate that
the Fed charges banks for loans
22 graph is consistent with the statement that
returns to capital become increasingly smaller at the amount of capital per worker increases.
In a closed economy, national saving equals
private saving plus public saving
When Fed sells assets from its portfolio to the public with the intent of changing the money supply,
those assets are government bonds and the Fed's reason for selling them is to increase the money supply
We would expect the interest rat on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that
Bond A has a term of 20 years and Bond B has a term of 2 years
Proprietary technology is knowledge that is
known only by the company that discovered it
Nastech Pharmaceuticals announed it has developed a nasal spray that would reduce hunger cravings. Ceteris Paribus, we would expect
the demand for existing shares of stock in this company to increase, so price would rise.
Of the following which is NOT included in M1 or M2
-small time deposits
-demand deposits
-money market mutual funds
-U.S. Treasury bills
U.S. Treasury Bills
If the federal funds rate was above the target level the Fed could move it by
buying bonds. Thus, increasing the money supply
If the supply of the loanable funds shifted rightward, then
eqil interest rate would decrease, and equil quantity of LF would increase
A perpetuity is distinguished from other bonds in that it
never maturressss
If Congress instituted an investment tax credit, the interest rate would
rise and savings would rise
Productivity is defined as
the quantity of goods and services produced from each unit of labor input
Who was appointed chairman of the Board of Governors by Pres George W. Bush?
Ben Bernanke
1. mutual funds allow people with small amounts of money to diversify.
2. mutual funds provide the skills of professional money managers blah blah blah...
Which of these do economists agree with?
The first statement
If gov's expenditures exceeded its receipts, it would likely
sell bonds directly to public ( increasing money supply)
an increase in taxes would ________ private saving and ________ public saving
Suppose that an American opens and operates a candy factory in Finland. This is an example of
foreign direct investment.
American saving finances Finish investment
Investment in physical capital, like investment in human capital, has _____________
an opportunity cost.
To decrease the money supply, the Fed can
sell gov bonds or increase the discount rate
In a market economy, we know that a resource has become scarcer when
its price rises relative to other prices
countries experience political instability with lower standards of living due to
lack of respect for property rights
If a country's saving rate increases, then in the long run
productivity and real GDP per person both increase
made 40 cabinents with 320 hours of labor. What is their productivity?
Liquidity refers to
the ease with which an assert is converted to the medium of exchange