Question : 31) Refer to Figure 14-2. Which of the following consistent : 1244747

31) Refer to Figure 14-2. Which of the following is consistent with the graph depicted above?

A) An expected expansion increases the profitability of new investment.

B) The government runs a budget surplus.

C) There is a shift from an income tax to a consumption tax.

D) New government regulations decrease the profitability of new investment.

Figure 14-3

32) Refer to Figure 14-3. Which of the following is consistent with the graph depicted above?

A) Taxes are changed so that real interest income is taxed rather than nominal interest income.

B) An expected recession decreases the profitability of new investment.

C) The government runs a budget deficit.

D) Technological change increases the profitability of new investment.

Figure 14-4

33) Refer to Figure 14-4. Which of the following is consistent with the graph depicted?

A) an increase in household income

B) an increase in transfer payments to households

C) an increase in the proportion of income after net taxes used for consumption

D) an increase in tax revenues collected by the government

34) In comparison to a government that runs a balanced budget, when the government runs a budget deficit

A) the equilibrium interest rate will fall.

B) business investment will fall.

C) household savings will fall.

D) none of the above

35) The response of investment spending to an increase in the government budget deficit is called

A) expansionary investment.

B) private dissaving.

C) crowding out.

D) income minus net taxes.

Figure 14-5

36) Refer to Figure 14-5. “Crowding out” of firm investment as a result of a budget deficit is illustrated by the movement from ________ in the graph above.

A) A to B

B) B to A

C) B to C

D) C to A

37) How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes) affect private saving in the economy?

A) Private saving will increase by the amount of increase in the budget surplus.

B) Private saving will decrease by the amount of increase in the budget surplus.

C) Private saving will decrease by less than the amount of increase in the budget surplus.

D) Private saving will be unaffected by the increase in the budget surplus.

38) How would the equilibrium interest rate respond to a change from an income tax to a consumption tax?

A) The equilibrium interest rate would rise.

B) The equilibrium interest rate would fall.

C) The equilibrium interest rate would be unaffected.

D) The equilibrium interest rate may rise or fall based on whether the demand or supply of loanable funds changes.

39) How would the equilibrium quantity of loanable funds respond to a change from an income tax to a consumption tax?

A) The equilibrium quantity of loanable funds would rise.

B) The equilibrium quantity of loanable funds would fall.

C) The equilibrium quantity of loanable funds would be unaffected.

D) The equilibrium quantity of loanable funds may rise or fall based on whether household saving increases or decreases as a result of the change from an income tax to a consumption tax.

40) Which of the following would encourage economic growth through increases in the capital stock?

A) a change from an income tax to a consumption tax

B) an increase in household saving

C) a decrease in the government deficit

D) all of the above