Use the equations for public and private savings and the income-expenditure identity (i. Y = C + 1 + G + NX) to show that national savings equals...
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Question

1/ Which of the following is correct about the loanable funds market?

The real interest rate reflects the rate of return lenders receive after accounting for inflation.


Investment refers to household purchases of stocks and corporate bonds.


Savings > Investment in a closed economy.


All of the above are correct.


2/Financial intermediaries are


markets where lenders can directly lend money to borrowers, such as a stock market.


individuals who make profits by buying a stock low and selling it high.


a more general name for financial assets such as stocks, bonds, and checking accounts.


financial institutions through which savers can indirectly provide funds to borrowers, such as a bank.


7/ If per capita GDP in the US is growing at 2% per year, approximately how long will it take for per capita income to double in the US?


50 years


35 years


100 years


70 years


10/Diminishing marginal product of capital means that each additional unit of capital adds


more output than the previous unit of capital.


less output than the previous unit of capital.


the same amount of output as the previous unit of capital.


nothing to GDP, so we should stop using capital and just give up.


11/ The government can promote economic growth by

Group of answer choices



promoting the rule of law, establishing property rights, providing incentives for research and development, and placing restrictions on trade to protect domestic producers.


increasing capital gains taxes to pay for new transfer programs, establishing property rights, providing incentives for research and development, and placing restrictions on trade to protect domestic producers.


promoting the rule of law, establishing property rights, limiting research and development, and removing restrictions on trade.


promoting the rule of law, establishing property rights, providing incentives for research and development, and removing restrictions on trade.


14/ Which of the following policies are NOT associated with higher levels of per capita income?


Property rights.


Free trade.


High corporate tax rates.


Public subsidies for R&D.

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Use the equations for public and private savings and the income-expenditure identity (i.e. Y = C + 1 + G + NX) to show that national savings equals investment in a closed economy. You must show all of your work to receive full credit. (5pts) Edit View Insert Format Tools Table 12pt w Paragraph * B I U A By Tv V EV EV To BB V VX p 0 words | < / > #:::

A) Assume that the graph below is the loanable funds market. Identify curves 1 and 2 and each axis. l5pts) 2 B) Referencing the graph above, describe how the loanable funds market will respond to a new EPA regulafion that will take effect in 12 months that reduces the marginal product of capital. In your description, detail which curve is shifting and in what direction it shifts. What happens to the equilibrium real interest rate and quantities of savings and investment? {Sptsl Note: If more than one curve is impacted. a description of how each curve is impacted must be included in your answer.

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