If the government budget is balanced, and saving is greater than investment, then the
A. current account must be in surplus.
B. current account must be in deficit.
C. current account balance must be zero.
D. capital account must be in surplus.
Answer: A
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Which of the following transactions would count in GDP?
a. Kerry buys a new sweater to wear this winter. b. Patricia receives a Social Security check. c. Roberto gives his daughter $50 for her birthday. d. Latika sells $1,000 of Google stock. e. Karen buys a new car. f. Amy buys a used car.
Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the market price is $21. Which of the following statement is true?
A) There is a shortage that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. B) There is a shortage that will cause the price to increase; quantity supplied will then decrease and quantity demanded will increase until the price equals $25. C) There is a shortage that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. D) There will be a shortage that will cause the price to increase; demand will then decrease and supply will increase until the price equals $25.
Suppose the economy was in equilibrium, and the national government increased spending by $200 billion. Monetarist theory would predict that the:
a. Long-term real GDP growth rate will rise. b. Long-term real GDP growth rate will fall. c. Long-term real GDP growth rate will remain unchanged. d. Long-term inflation rate will fall. e. The international value of the domestic currency will fall.
Suppose a bank has $200,000 in deposits, a required reserve ratio of 10 percent, and bank reserves of $45,000. Then this bank can make new loans in the amount of
A. $25,000. B. $10,000. C. $2,500. D. $20,000.