Macroeconomics 302a,b,d Prof. Nilsen l 1 Macro Quiz 2a 1. Desired national saving equals (a) Y – C d – G . (b) C d + I d + G . (c) I d + G . (d) Y – I d – G. Answer: A 2. With a nominal interest rate of 4%, an expected inflation rate of 1%, and interest income taxed at a rate of 25%, what is the expected after-tax real interest rate? (a) 3% (b) 2% (c) 1% (d) 0% Answer: B 3. The Ricardian equivalence proposition suggests that a government deficit caused by a tax cut (a) causes inflation. (b) causes a current account deficit. (c) raises interest rates. (d) doesn’t affect consumption. Answer: D 4. If the United States sells computers to Russia, and uses the proceeds to buy shares of stock in Russian companies, the U.S. trade balance ________ and the U.S. capital and financial account balance _________. (a) rises; rises (b) rises; falls (c) falls; falls (d) falls; rises Answer: B 5. Suppose output is $1000 billion, government purchases are $200 billion, desired consumption is $700 billion, and desired investment is $150 billion. Net foreign lending would be equal to
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This note was uploaded on 04/30/2009 for the course ECONOMICS 302 taught by Professor N during the Spring '09 term at American University in Bulgaria.