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Chapter 31 Test Bank
Multiple Choice Questions
1. When governments are borrowers in financial capital markets, which of the following is least
likely to be a possible source of the funds from a macroeconomic point of view?
A. central bank prints more money
B. increase in household savings
C. decrease in borrowing by private firms
D. foreign financial investors
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
2. A country's economic data indicates that there has been a substantial reduction in the
financial capital available to private sector firms. Which of the following most likely had the
greatest influence on this economy?
A. especially large and sustained household saving
B. increased borrowing by private firms
C. reduction in influx of funds for foreign financial investors
D. especially large and sustained government borrowing
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
3. If a country's economic data shows private savings of $300 million, government spending of
$350 million, tax revenue of $400 million, and a trade surplus of $75 million, then what does
investment equal?
A. $775 million
B. $475 million
C. $275 million
D. $700 million
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
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4. If a country's economic data shows private savings of $500 million, government spending of
$300 million, tax revenue of $400 million, and a trade surplus of $100 million, then what does
investment equal?
A. $600 million
B. $500 million
C. $700 million
D. $900 million
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
5. If a country's economic data shows private savings of $400 million, government spending of
$250 million, tax revenue of $400 million, and a trade surplus of $175 million, then what does
investment equal?
A. $550 million
B. $425 million
C. $800 million
D. $375 million
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
6. If a country's economic data shows that private savings equal $250 million, government
spending equals $400 million, taxes equal $350, and the trade surplus equals $150 million, then
what does investment equal?
A. $50 million
B. $75 million
C. $450 million
D. $350 million
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
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7. If a country's economic data shows that private savings equal $300 million, government
spending equals $400 million, taxes equal $300, and the trade surplus equals $100 million, then
what does investment equal?
A. $150 million
B. $175 million
C. $200 million
D. $100 million
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
8. If a country's economic data shows that private savings equal $350 million, government
spending equals $375 million, taxes equal $300, and the trade surplus equals $125 million, then
what does investment equal?
A. $50 million
B. $150 million
C. $425 million
D. $600 million
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
9. In the national savings and investment identity framework, an inflow of savings from abroad
is, by definition, equal to:
A. private sector investment.
B. the trade surplus.
C. the trade deficit.
D. domestic household savings.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
10. From a macroeconomic point of view, which of the following is a source of demand for
financial capital?
A. savings by households and firms
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Chapter 31 Test Bank
Multiple Choice Questions
1. When governments are borrowers in financial capital markets, which of the following is least
likely to be a possible source of the funds from a macroeconomic point of view?
A. central bank prints more money
B. increase in household savings
C. decrease in borrowing by private firms
D. foreign financial investors
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
2. A country's economic data indicates that there has been a substantial reduction in the
financial capital available to private sector firms. Which of the following most likely had the
greatest influence on this economy?
A. especially large and sustained household saving
B. increased borrowing by private firms
C. reduction in influx of funds for foreign financial investors
D. especially large and sustained government borrowing
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
3. If a country's economic data shows private savings of $300 million, government spending of
$350 million, tax revenue of $400 million, and a trade surplus of $75 million, then what does
investment equal?
A. $775 million
B. $475 million
C. $275 million
D. $700 million
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
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4. If a country's economic data shows private savings of $500 million, government spending of
$300 million, tax revenue of $400 million, and a trade surplus of $100 million, then what does
investment equal?
A. $600 million
B. $500 million
C. $700 million
D. $900 million
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
5. If a country's economic data shows private savings of $400 million, government spending of
$250 million, tax revenue of $400 million, and a trade surplus of $175 million, then what does
investment equal?
A. $550 million
B. $425 million
C. $800 million
D. $375 million
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
6. If a country's economic data shows that private savings equal $250 million, government
spending equals $400 million, taxes equal $350, and the trade surplus equals $150 million, then
what does investment equal?
A. $50 million
B. $75 million
C. $450 million
D. $350 million
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
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7. If a country's economic data shows that private savings equal $300 million, government
spending equals $400 million, taxes equal $300, and the trade surplus equals $100 million, then
what does investment equal?
A. $150 million
B. $175 million
C. $200 million
D. $100 million
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
8. If a country's economic data shows that private savings equal $350 million, government
spending equals $375 million, taxes equal $300, and the trade surplus equals $125 million, then
what does investment equal?
A. $50 million
B. $150 million
C. $425 million
D. $600 million
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
9. In the national savings and investment identity framework, an inflow of savings from abroad
is, by definition, equal to:
A. private sector investment.
B. the trade surplus.
C. the trade deficit.
D. domestic household savings.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
10. From a macroeconomic point of view, which of the following is a source of demand for
financial capital?
A. savings by households and firms
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