Question 1

If China's government increases its budget surplus,there is ________ in the supply of loanable funds,private saving ________ and investment ________.

Accepted Answer

The answer of If China's government increases its budget surplus,there...

Question 2

The tendency for private saving to increase in response to growing government deficits is known as the

Accepted Answer

The tendency for private saving to increase in response to growing government deficits is known as the Ricardo-Barro effect. The theory holds that individuals anticipate the need to pay higher taxes in the future to pay for the government's budget deficit, and therefore, increase their savings in anticipation of those future taxes. This reduces the funds available for private investment and can result in a "crowding out" effect.

Question 3

If net taxes exceed government expenditures,the government sector has a budget ________ and government saving is ________.

Accepted Answer

If net taxes exceed government expenditures, the government has a surplus budget. This means they are collecting more revenue than they are spending. Government saving in this case would be positive, as they are able to put aside money for future use or pay off debts.

Question 4

When a government has a budget surplus,the surplus

Accepted Answer

A budget surplus means that the government is spending less than it is receiving in revenue. This allows the government to allocate some of the surplus towards investments, such as infrastructure, education, or research and development. These investments can help to promote economic growth and development. Therefore, a budget surplus can help to finance investment.

Question 5

When government saving is negative,

Accepted Answer

The answer of When government saving is negative,
...

Question 6

If the Ricardo-Barro effect occurs,a government budget deficit raises the equilibrium real interest rate by ________ and decreases the equilibrium quantity of investment by ________ if the Ricardo-Barro effect is absent.

Accepted Answer

The answer of If the Ricardo-Barro effect occurs,a government budget...

Question 7

A decrease in the government budget deficit decreases the ________ loanable funds and an increase in the government budget surplus increases the ________ loanable funds.

Accepted Answer

The answer of A decrease in the government budget deficit...

Question 8

According to the Ricardo-Barro effect,government deficits

Accepted Answer

The answer of According to the Ricardo-Barro effect,government deficits
...

Question 9

The crowding-out effect refers to

Accepted Answer

The answer of The crowding-out effect refers to
...

Question 10

Crowding out leads to all of the following EXCEPT

Accepted Answer

Crowding out typically results in higher interest rates, which can decrease investment and future capital accumulation, but it does not necessarily decrease private saving.

Question 11

A government budget deficit ________ the demand for loanable funds,________ the real interest rate,and ________ investment.

Accepted Answer

A government budget deficit increases the demand for loanable funds, which raises the real interest rate and crowds out private investment.

Question 12

If the government begins to run a larger budget deficit,the demand for loanable funds ________ and the real interest rate ________.

Accepted Answer

The answer of If the government begins to run a...

Question 13

A government budget deficit ________ the demand for loanable funds and ________ investment.

Accepted Answer

A government budget deficit increases the demand for loanable funds because the government needs to borrow more money to finance its spending. As a result, interest rates increase, which in turn decreases investment as borrowing becomes more expensive for individuals and firms.

Question 14

According to the Ricardo-Barro effect,

Accepted Answer

The answer of According to the Ricardo-Barro effect,
...

Question 15

Use the table below to answer the following question.
Table 23.3.1
Data from Northland
 
-Refer to Table 23.3.1.Table 23.3.1 shows the market for loanable funds in Northland.The government budget is balanced.If the government moves from a balanced budget to a surplus of $20 billion,the new equilibrium has a real interest rate of ________ percent and quantity of loanable funds traded equal to ________.

Accepted Answer

The answer of Use the table below to answer the...

Question 16

The tendency for a government budget deficit to decrease investment is called the

Accepted Answer

The crowding-out effect occurs when increased government borrowing leads to higher interest rates, which in turn reduces private investment. This happens because the government is competing with private borrowers for the available funds, thus decreasing the resources available for private investment.

Question 17

If the Ricardo-Barro effect occurs,________ in private saving finances the government budget deficit and the real interest rate ________.

Accepted Answer

The Ricardo-Barro effect occurs when people anticipate future taxes from the government to pay off the government deficit. As a result, private saving increases to finance the government deficit. This increase in private saving will put downward pressure on interest rates, which will remain the same as a result of increased loanable funds.

Question 18

The Ricardo-Barro effect of a government budget deficit is

Accepted Answer

The answer of The Ricardo-Barro effect of a government budget...

Question 19

According to the Ricardo-Barro effect,

Accepted Answer

The Ricardo-Barro effect suggests that government budget deficits do not affect the real interest rate because individuals anticipate future taxes to pay off the debt and increase their savings accordingly.

Question 20

The Ricardo-Barro effect holds that

Accepted Answer

The Ricardo-Barro effect suggests that a government budget deficit does not affect the real interest rate because people anticipate future taxes to pay off the debt and increase their savings accordingly.

Quiz 23: Finance, Saving, and Investment

If China's government increases its budget surplus,there is in the supply of loanable funds,private saving and investment .

The tendency for private saving to increase in response to growing government deficits is known as the

If net taxes exceed government expenditures,the government sector has a budget and government saving is .

When a government has a budget surplus,the surplus

When government saving is negative,

If the Ricardo-Barro effect occurs,a government budget deficit raises the equilibrium real interest rate by and decreases the equilibrium quantity of investment by if the Ricardo-Barro effect is absent.

A decrease in the government budget deficit decreases the loanable funds and an increase in the government budget surplus increases the loanable funds.

According to the Ricardo-Barro effect,government deficits

The crowding-out effect refers to

Crowding out leads to all of the following EXCEPT

A government budget deficit the demand for loanable funds, the real interest rate,and investment.

If the government begins to run a larger budget deficit,the demand for loanable funds and the real interest rate .

A government budget deficit the demand for loanable funds and investment.

According to the Ricardo-Barro effect,

The tendency for a government budget deficit to decrease investment is called the

If the Ricardo-Barro effect occurs, in private saving finances the government budget deficit and the real interest rate .

The Ricardo-Barro effect of a government budget deficit is

According to the Ricardo-Barro effect,

The Ricardo-Barro effect holds that