Module 8 Econ 252 Questions with Correct Answers (Grade A+)
Question 1: Which of the following is an example of indirect financing? Google retains $75 million in
profits to finance new software. Chase bank lends money to a customer. The federal government sells
$50 billion in U.S. Treasuries to finance the federal debt. Apple sells $100 billion in stocks to investors.
Answer: Chase bank lends money to a custome
Question 2: If the price of a firm's bond increases, then the cost of external funds increases.
expectations of future profits increases. expectations of future profits decreases. cost of external funds
decrease
Answer: cost of external funds decrease
Question 3: Suppose that in a closed economy GDP is $13 trillion, consumption is $8 trillion, taxes are
$4 trillion and the government runs a deficit of $1 trillion. Based on this information, private saving $
trillion, public saving is $ trillion, and national saving is $ trillion. Just enter a value. Do not include the
"$".
Answer: 1,-1,0
Question 4: If consumers decide to be more frugal and save more out of their income, then this will
cause a rightward shift of the supply curve for loanable fund
Answer: rightward shift of
Question 5: According to the loanable funds model, which of the following will decrease the equilibrium
level of investment and decrease the equilibrium interest rate, holding everything else constant? A
decrease in technological change. A decrease in business taxes. An increase in the federal budget deficit.
An increase in saving.
Answer: A decrease in technological change.
Question 6: According to the loanable funds model, if the government changes from an income tax to a
consumption tax, then the equilibrium interest rate would BLANK and the equilibrium quantity of
loanable funds BLANK.
Answer: Decrease and increase
Question 7: ccording to the loanable funds model, decreasing the amount of saving and increasing the
amount of consumer spending [ Select ] ["decreases", "increases", "does not change"] investment
expenditures, and [ Select ] ["decreases", "does not change", "increases"] long-run economic growth in
the economy.
Answer: decrease,decrease
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Question 1: Which of the following is an example of indirect financing? Google retains $75 million in
profits to finance new software. Chase bank lends money to a customer. The federal government sells
$50 billion in U.S. Treasuries to finance the federal debt. Apple sells $100 billion in stocks to investors.
Answer: Chase bank lends money to a custome
Question 2: If the price of a firm's bond increases, then the cost of external funds increases.
expectations of future profits increases. expectations of future profits decreases. cost of external funds
decrease
Answer: cost of external funds decrease
Question 3: Suppose that in a closed economy GDP is $13 trillion, consumption is $8 trillion, taxes are
$4 trillion and the government runs a deficit of $1 trillion. Based on this information, private saving $
trillion, public saving is $ trillion, and national saving is $ trillion. Just enter a value. Do not include the
"$".
Answer: 1,-1,0
Question 4: If consumers decide to be more frugal and save more out of their income, then this will
cause a rightward shift of the supply curve for loanable fund
Answer: rightward shift of
Question 5: According to the loanable funds model, which of the following will decrease the equilibrium
level of investment and decrease the equilibrium interest rate, holding everything else constant? A
decrease in technological change. A decrease in business taxes. An increase in the federal budget deficit.
An increase in saving.
Answer: A decrease in technological change.
Question 6: According to the loanable funds model, if the government changes from an income tax to a
consumption tax, then the equilibrium interest rate would BLANK and the equilibrium quantity of
loanable funds BLANK.
Answer: Decrease and increase
Question 7: ccording to the loanable funds model, decreasing the amount of saving and increasing the
amount of consumer spending [ Select ] ["decreases", "increases", "does not change"] investment
expenditures, and [ Select ] ["decreases", "does not change", "increases"] long-run economic growth in
the economy.
Answer: decrease,decrease
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