A. A closed economy has income of $1,000, government spending of $200, taxes of $150, and investment of $250. What is private saving?
a. $100
b. $200
c. $300
d. $400
B. I f a popular TV show on personal finance convinces Americans to save more for retirement, the _________ curve for loanable funds would shift, driving the equilibrium interest rate _________.
a. supply; up
b. supply; down
c. demand; up
d. demand; down
C. I f the business community becomes more optimistic about the profitability of capital, the _________ curve for loanable funds would shift, driving the equilibrium interest rate _________.
a. supply; up
b. supply; down
c. demand; up
d. demand; down
D. Which of the following policy actions would unambiguously reduce the supply of loanable funds and crowd out investment?
a. an increase in taxes and a decrease in government spending
b. a decrease in taxes together with an increase in government spending
c. an increase in both taxes and government spending
d. a decrease in both taxes and government spending
