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ECON 1010 Chapter Notes - Chapter 23: Loanable Funds, Real Interest Rate, Nominal Interest Rate

55 views5 pages
1 Sep 2016
School
York University
Department
Economics
Course
ECON 1010
Professor
Gordana Colby

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Document Summary

Econ1010 lecture #4 chapter 23: finance, savings and investment. To study the economics of financial institutions and markets we distinguish between: It looks at how households and firms obtain and use financial resources and how they cope with the risks that arise in this activity. It is based on how we come up with the funds/raise the funds. It looks at how households and firms use it, how much of it they hold, how banks create and manage it, and how its quantity influences the economy. It is the medium of exchange how we pay the goods and services. It is the tools, instruments, machines, buildings and other items that have been produced in the past and that are used today to produce goods and services. The funds that firms use to buy the physical capital. It is the total amount spent on purchases of new capital and on replacing depreciated capital.

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Related Questions

What is the market for factors of production?

  1. What is the market for factors of production?

    1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages. 

  2. What is the money market?

    1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.

  3. Who are the three economic actors in the circular flow model?

    1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.

  4. How is the national income of an economy determined?

    1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.

  5. What is GDP?

    1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

1. Which of the following groups of countries are all advanced economies?

   

Hong Kong, Japan, France, and the United Kingdom
   

Italy, the United States, China, and Russia
   

Singapore, Russia, France, and Chad
   

Australia, Brazil, and the United States

QUESTION 2

1. The most people live in ________ economies and the fewest people live in ________ economies.

   

developing; emerging market
   

advanced; emerging market
   

emerging market; developing
   

advanced; developing

QUESTION 3

1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.

   

goods; financial
   

government; goods
   

goods; factor
   

financial; factor

QUESTION 4

1. As a factor of production, oil reserves are counted as

   

labor.
   

capital.
   

entrepreneurship.
   

land.

QUESTION 5

1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.

   

Households are; the government determines
   

Firms are; households that determine
   

The government is; firms determine
   

Households are; firms that determine

QUESTION 6

1. The emerging market economies are

   

the nations that are currently agricultural in nature.
   

most of the nations of Western Europe.
   

the largest grouping including the nations of China and India.
   

in the transition from state-owned production to free markets.

QUESTION 7

1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

   

consumption of goods and services.
   

entrepreneurship.
   

capital.
   

labor.

QUESTION 8

1. Items bought by individuals to provide personal enjoyment are termed

   

personal goods.
   

consumption of goods.
   

consumption or investment goods.
   

standard goods.

QUESTION 9

1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment

   

virtually all; none
   

some; some
   

virtually all; virtually all
   

virtually all; some

QUESTION 10

1. The productive resource that includes all the "gifts of nature" is called

   

land.
   

labor.
   

entrepreneurship.
   

capital.

QUESTION 11

1. What would be an example of government good?

   

Donald Trump purchases furniture for his office.
   

Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
   

The local driver's license office purchases a new digital camera and printer.
   

Jake buys an iPhone.

QUESTION 12

1. The world population is approximately ________ people.

   

2 trillion
   

680 million
   

6.8 billion
   

6.8 million

QUESTION 13

1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

   

U.S. exports of goods and services.
   

U.S. government goods and services.
   

foreign capital goods.
   

U.S. consumer goods and services.

QUESTION 14

1. Of the following, the federal government obtains most revenue from

   

corporate income taxes.
   

excise taxes.
   

sales taxes.
   

social security taxes.

QUESTION 15

1. Items bought by businesses to help produce other goods and services are called

   

capital goods.
   

government goods and services.
   

consumption of goods and services.
   

exports of goods and services.

QUESTION 16

1. The majority of the income earned in the United States is paid in

   

profit.
   

interest.
   

rent.
   

wages.

QUESTION 17

1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market

   

must include a written contract between buyers and sellers.
   

requires a physical location for buyers and sellers to get together.
   

is only a place to purchase groceries.
   

is an arrangement that brings buyers and sellers together.

QUESTION 18

1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a

   

highly skilled and educated labor force.
   

a large number of kind and generous humans.
   

a large number of people and a great deal of land.
   

a large amount of machinery and equipment.

QUESTION 19

1. Which of the following correctly lists the categories of factors of production?

   

labor, machines, buildings, capital, and entrepreneurship
   

land, buildings, capital, and entrepreneurship
   

land, labor, capital, and entrepreneurship
   

forests, fish, buildings, capital, and entrepreneurship

QUESTION 20

1. Which of the following correctly lists the categories of factors of production?

   

capital, money, and labor
   

hardware, software, land, and money
   

land, labor, capital, and entrepreneurship
   

machines, buildings, land, and money

QUESTION 21

1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.

   

10
   

3
   

15
   

20

QUESTION 22

1. What would be an example of a consumption service?

   

Jake buys an iPhone.
   

The local driver's license office purchases a new digital camera and printer.
   

Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
   

Rhianna gets a haircut.

QUESTION 23

1. The total value of capital in the United States is around

   

$47 trillion.
   

$10 trillion.
   

$100 trillion.
   

$79 trillion.

QUESTION 24

1. An export good is a good produced

   

by foreigners in the United States and purchased by U.S. households.
   

in another country and purchased by U.S. residents.
   

in the United States and sold to foreigners living in the United States.
   

in the United States and sold in other countries.

QUESTION 25

1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.

   

Interest is; wages are; profit is
   

Rent is; wages are; interest is
   

Rent is; interest is; wages are
   

Mortgages are; interest is; wages are

1. Which of the following groups of countries are all advanced economies?

   

Hong Kong, Japan, France, and the United Kingdom
   

Italy, the United States, China, and Russia
   

Singapore, Russia, France, and Chad
   

Australia, Brazil, and the United States

QUESTION 2

1. The most people live in ________ economies and the fewest people live in ________ economies.

   

developing; emerging market
   

advanced; emerging market
   

emerging market; developing
   

advanced; developing

QUESTION 3

1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.

   

goods; financial
   

government; goods
   

goods; factor
   

financial; factor

QUESTION 4

1. As a factor of production, oil reserves are counted as

   

labor.
   

capital.
   

entrepreneurship.
   

land.

QUESTION 5

1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.

   

Households are; the government determines
   

Firms are; households determine
   

The government is; firms determine
   

Households are; firms determine

QUESTION 6

1. The emerging market economies are

   

the nations that are currently agricultural in nature.
   

most of the nations of Western Europe.
   

the largest grouping including the nations of China and India.
   

in the transition from state-owned production to free markets.

QUESTION 7

1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

   

consumption of goods and services.
   

entrepreneurship.
   

capital.
   

labor.

QUESTION 8

1. Items bought by individuals to provide personal enjoyment are termed

   

personal goods.
   

consumption of goods.
   

consumption or investment goods.
   

standard goods.

QUESTION 9

1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment

   

virtually all; none
   

some; some
   

virtually all; virtually all
   

virtually all; some

QUESTION 10

1. The productive resource that includes all the "gifts of nature" is called

   

land.
   

labor.
   

entrepreneurship.
   

capital.

QUESTION 11

1. What would be an example of government good?

   

Donald Trump purchases furniture for his office.
   

Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
   

The local driver's license office purchases a new digital camera and printer.
   

Jake buys an iPhone.

QUESTION 12

1. The world population is approximately ________ people.

   

2 trillion
   

680 million
   

6.8 billion
   

6.8 million

QUESTION 13

1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

   

U.S. exports of goods and services.
   

U.S. government goods and services.
   

foreign capital goods.
   

U.S. consumer goods and services.

QUESTION 14

1. Of the following, the federal government obtains most revenue from

   

corporate income taxes.
   

excise taxes.
   

sales taxes.
   

social security taxes.

QUESTION 15

1. Items bought by businesses to help produce other goods and services are called

   

capital goods.
   

government goods and services.
   

consumption of goods and services.
   

exports of goods and services.

QUESTION 16

1. The majority of the income earned in the United States is paid in

   

profit.
   

interest.
   

rent.
   

wages.

QUESTION 17

1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market

   

must include a written contract between buyers and sellers.
   

requires a physical location for buyers and sellers to get together.
   

is only a place to purchase groceries.
   

is an arrangement that brings buyers and sellers together.

QUESTION 18

1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a

   

highly skilled and educated labor force.
   

a large number of kind and generous humans.
   

a large number of people and a great deal of land.
   

a large amount of machinery and equipment.

QUESTION 19

1. Which of the following correctly lists the categories of factors of production?

   

labor, machines, buildings, capital, and entrepreneurship
   

land, buildings, capital, and entrepreneurship
   

land, labor, capital, and entrepreneurship
   

forests, fish, buildings, capital, and entrepreneurship

QUESTION 20

1. Which of the following correctly lists the categories of factors of production?

   

capital, money, and labor
   

hardware, software, land, and money
   

land, labor, capital, and entrepreneurship
   

machines, buildings, land, and money

QUESTION 21

1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.

   

10
   

3
   

15
   

20

QUESTION 22

1. What would be an example of a consumption service?

   

Jake buys an iPhone.
   

The local driver's license office purchases a new digital camera and printer.
   

Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
   

Rhianna gets a haircut.

QUESTION 23

1. The total value of capital in the United States is around

   

$47 trillion.
   

$10 trillion.
   

$100 trillion.
   

$79 trillion.

QUESTION 24

1. An export good is a good produced

   

by foreigners in the United States and purchased by U.S. households.
   

in another country and purchased by U.S. residents.
   

in the United States and sold to foreigners living in the United States.
   

in the United States and sold in other countries.

QUESTION 25

1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.

   

Interest is; wages are; profit is
   

Rent is; wages are; interest is
   

Rent is; interest is; wages are
   

Mortgages are; interest is; wages are