ECON 105 Study Guide - Midterm Guide: Fiat Money, Neutrality Of Money, Money Supply

60 views2 pages

pearguinea-pig708

5 Apr 2014

School

Simon Fraser University

Department

Economics

Course

ECON 105

Professor

Junjie Liu

For unlimited access to Study Guides, a Grade+ subscription is required.

tianjin and 38107 others unlocked

ECON 105 Full Course Notes

Verified Note

17 documents

Document Summary

What you need to know for midterm #2: saving and investment (ch. Explain the relationship between saving and investment in a closed economy. Relate the supply and demand in the loanable funds market to saving and investment. Explain the equilibrium in the market for loanable funds. List and explain the factors that shift the supply of loanable funds. List and explain the factors that shift the demand for loanable funds. Use the loanable funds market to analyze the effects of saving incentives. Use the loanable funds market to analyze the effects of investment incentives. Use the loanable funds market to analyze the effects of the government budget deficits. Use the loanable funds market to analyze the effects of the government budget surpluses: unemployment (ch. Calculate the labour force, the unemployment rate, and the labour force participation rate. Understand the effect of discouraged searchers on the unemployment rate. Understand why the unemployment rate is not a perfect measure of joblessness.

Related Questions

6. If there is a shortage of loanable funds, then

a.	the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium.
b.	the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium.
c.	the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.
d.	the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

7. 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.

8. If the demand for loanable funds shifts to the right, then the equilibrium interest rate

a.	and the quantity of loanable funds rises.
b.	and the quantity of loanable funds falls.
c.	rises and the quantity of loanable funds falls.
d.	falls and the quantity of loanable funds rises.

9. Long-term bonds are

a.	riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds.
b.	riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
c.	less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds.
d.	less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.

10. Compared to bondholders, stockholders

a.	face higher risk and have the potential for higher returns.
b.	face higher risk but receive a fixed payment.
c.	face lower risk and have the potential for higher returns.
d.	face lower risk but receive a fixed payment.

11. The old adage, 'don't put all your eggs in one basket', is very similar to a modern bit of advice concerning financial matters:

a.	Buy low-risk bonds.
b.	Use a medium of exchange.
c.	Diversify.
d.	Intermediate.

12. A budget surplus is created if

a.	the government sells more bonds than it buys back.
b.	the government spends more than it receives in tax revenue.
c.	private saving is greater than zero.
d.	None of the above is correct.

greenwildebeest673

Assume an economy is closed. According to classical economic theory, explain what will be the long-run effects of an increase in taxes. You may want to organize your answer around these three parts:

A) Aggregate Supply/Output (includes a discussion of the determinant of the level of output and the effect of fiscal policy on output in the long-run

B) Aggregate Demand/Real expenditures (includes a discussion of components of expenditures, their determinants, and the effect of fiscal policy on expenditures and the composition of expenditures).

C) Loanable Funds Markets (includes a discussion of the determinant of the interest rate in the loanable funds market and the effect of the fiscal policy on the real interest rate in the long run). Please include a graph if possible.

skyfrog367

Consider a closed economy. Use the supply and demand for loanable funds model to predict the effects of the following events on interest rates and investment.

a. The government introduces a tax credit for savings accounts of up to $5000 per year.

b. The government introduces a tax credit for savings accounts of up to $5000 per year, and at the same time it repeals an investment tax exemption provision.

c. The government raises the tax rates.

d. The government issues bonds worth $10 billion.

(Which way do the supply and demand shift for each of the above- left or right?)

peachcrow249

ECON 105 Study Guide - Midterm Guide: Fiat Money, Neutrality Of Money, Money Supply

ECON 105 Full Course Notes

Document Summary

Get access

Related Documents

ECON 105 Chapter Notes - Chapter 8-12: Loanable Funds, Frictional Unemployment, Mutual Fund

ECON 105 Study Guide - Midterm Guide: Loanable Funds, Reserve Requirement, Bank Reserves

ECON 105 Study Guide - Midterm Guide: Canadian Dollar, Multiple Choice, Black Market

Related Questions