Question : 71) An economy’s upward-sloping supply curve of desired saving usually : 1384302

71) An economy’s upward-sloping supply curve of desired saving is usually plotted with ________ on the vertical axis.

A) the price of capital

B) capital stock

C) the market interest rate

D) technology

E) the general price level

72) A firm’s demand for physical capital leads to its ________ and a household’s supply of saving leads to its ________.

A) demand for financial capital; supply of financial capital

B) demand for stocks; supply of stocks

C) lending behaviour; borrowing behaviour

D) negative effect on the interest rate; positive effect on the interest rate

E) demand for bonds; supply of bonds

73) If the interest rate that you could earn on your saving is 4% per year, then your decision to spend $1500 on a big screen TV today “costs” you ________ in potential forgone spending one year from now.

A) $0

B) $60

C) $120

D) $1500

E) $1560

74) Suppose you are working as an intern at a large financial firm with an annual salary of $30 000, but you are guaranteed a salary increase to $85 000 at the end of the internship. In general, we can expect that

A) your current level of saving rises in anticipation of the higher future income.

B) your current level of saving falls and your supply of financial capital to the economy decreases in anticipation of the higher future income.

C) your current level of saving falls and your supply of financial capital to the economy rises in anticipation of the higher future income.

D) your current level of saving rises because there is a positive relationship between household saving and future income.

E) your current level of saving is certain to be positive.

75) Consider the economy’s upward-sloping supply of saving curve. An increase in the interest rate causes ________; an increase in current income causes ________.

A) a movement downward along the curve; a shift of the curve to the right

B) a shift of the curve to the left; a movement upward along the curve

C) a movement upward along the curve; a shift of the curve to the right

D) a shift of the curve to the left; a movement downward along the curve

E) a movement upward along the curve; a movement downward along the curve

76) Households’ supply of financial capital is derived from

A) their supply of human capital.

B) their supply of physical capital.

C) firms’ demand for financial capital

D) firms’ demand for physical capital.

E) their supply of saving.

77) Suppose the nominal interest rate is 10%. The rate of inflation has been 4% and is expected to continue at 4% in the future. The real interest rate, which determines the firm’s decision to purchase capital, is therefore

A) 4%.

B) 6%.

C) 10%.

D) 14%.

E) indeterminate.

78) Suppose that you lend me $100 for a year, and that I agree to pay you $110 at the end of one year (principal plus interest). Over the intervening year, however, the average price of goods in the economy rises by 3%. The real rate of return that you will earn on your loan to me is therefore equal to

A) 3%.

B) 7%.

C) 10%.

D) 13%.

E) greater than 13%.

79) Suppose that you lend me $100 for a year, and that I agree to pay you $110 at that time (principal plus interest). Over the intervening year, however, the average price of goods in the economy falls by 4%. The real rate of return that you will earn on your loan to me is therefore equal to

A) 4%.

B) 6%.

C) 10%.

D) 14%.

E) greater than 14%.

80) For the economy as a whole, the equilibrium interest rate is determined by

A) the current state of technology.

B) the intersection of the aggregate investment demand curve with the aggregate saving supply curve.

C) the condition that the MRP of capital equal the purchase price of capital.

D) only by the purchase price of capital.

E) exclusively by government policy.