ECON 1000 Lecture Notes - Lecture 8: Government Budget Balance, Loanable Funds, Virtuous Circle And Vicious Circle

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erinchinchilla572

29 Jul 2015

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Financial system- the group of institutions in the economy that help to match one person"s saving with another person"s investment. Financial markets- financial institutions through which savers can directly provide funds to borrowers. Stock- a claim to partial ownership in a firm. Financial intermediaries- financial institutions through which savers can indirectly provide funds to borrowers. Mutual fund- an institution that sells shares to the public and uses the proceeds to buy a portfolio of stocks and bonds. National saving- the total income in the economy that remains after paying for consumption and government purchases. Private saving- the income that households have left after paying for taxes and consumption. Public saving- the tax revenue that the government has left after paying for its spending. Budget surplus- an excess of tax revenue over government spending. Budget deficit- a shortfall of tax revenue from government spending.

Related Questions

1. A decrease in investment spending that results from an increase in government borrowing is called

a.) a deficit

b.) a surplus

c.) a liability

d.) crowding out

2. In a closed economy:

a.) national saving equals net worth

b.) there are no taxes

c.) there is no interaction with other countries

d.) there is no government

3. If we calculate income minus taxes minus consumption, then we are left with:

a.) national saving

b.) investment

c.) public saving

d.) private saving

4. In the financial market, ____ are supplying the funds and ____ are demanding the funds.

a.) governments: people

b.) foreigners: banks

c.) borrowers: savers

d.) savers: borrowers

sangriaturtle342

In a closed economy, private saving is

A. The amount of income that households have left after paying for their taxes and consumption.

B. The amount of income that businesses have left after paying for the factors of production.

C. The amount of tax revenue that the government has left after paying for its spending.

D. Always equal to investment.

roseox969

Hi !! i was studying for final exam for eco Few more question i don't really get
Q6) When each firm is producing its capacity and there is full employment, this shows:

1. An inflationary gap

2. all of the above

3. a deflationary gap

4. the long run AS curve

Q7) According to the RBA, the rate of unemployment is beginning to edge higher. Which of the following causes of unemployment is not associated with an excess supply of labour?

1. Efficiency wages
2. Job Search

3. Minimum wage laws
4. Unions

Q8) According to the RBA, public spending is scheduled to be subdued. Public spending is

1. The amount of income that businesses have left after paying for the factors of production

2. the amount of tax revenue that the government has left after paying for its spending

3. the amount of income that households have left after paying their taxes and paying for their consumption

4. always equal to investment

Q9) The demand for loanable funds is downward-sloping because:
1. As the interest rate falls, the demand for loanable funds falls

2. As the interest rate rises, the quantity of loanable funds demanded rises

3. as the interest rate falls, the demand for loanable fund increases

4. as the interest rate rises the quantity of loanable funds demand falls.

Q10) Suppose that the government decides to issue an investment tax credit to encourage more investment spending. Then this:
1. Shifts the demand curve for loanable fund to the right

2. does not affect the interest rate

3. reduces the supply of loanable funds

4. lowers the interest rate

ECON 1000 Lecture Notes - Lecture 8: Government Budget Balance, Loanable Funds, Virtuous Circle And Vicious Circle

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