Question :
11) Suppose the government has a budget surplus of $2 : 1227792
11) Suppose the government has a budget surplus of $2 billion. If there is no Ricardo-Barro effect, what occurs?
A) The supply of loanable funds curve shifts rightward, lowering the interest rate, and increasing investment.
B) The demand for loanable funds curve shifts rightward, raising the interest rate, and increasing investment.
C) The supply of loanable funds curve shifts leftward, raising the interest rate, and decreasing investment.
D) The demand for loanable funds curve shifts leftward, lowering the interest rate, and decreasing investment.
E) The supply of loanable funds curve shifts leftward, lowering the interest rate, and increasing investment.
12) China’s government runs a budget budget surplus. As a result,
A) if there is no Ricardo-Barro effect, the supply of loanable funds curve lies to the right of the private supply of loanable funds curve.
B) interest rates should increase.
C) the Ricardo-Barro effect predicts that the real interest rate will increase.
D) the quantity of loanable funds decreases.
E) saving will exceed investment.
13) India’s government runs a government budget surplus. If there is no Ricardo-Barro effect, the surplus means that the
A) private supply of loanable funds curve lies to the left of the supply of loanable funds curve.
B) private demand for loanable funds curve lies to the left of the demand for loanable funds curve.
C) private supply of loanable funds curve lies to the right of the supply of loanable funds curve.
D) private supply of loanable funds curve is the same as the supply of loanable funds curve.
E) None of the above answers are correct.
14) If there is no Ricardo-Barro effect, when the government runs a budget surplus, it
A) competes with businesses for private saving.
B) shifts the supply of loanable funds curve leftward.
C) shifts the demand for loanable funds curve leftward.
D) contributes to financing investment.
E) shifts the demand for loanable funds curve rightward.
15) If there is no Ricardo-Barro effect, a government budget surplus ________ the supply of loanable funds and ________ equilibrium investment.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
16) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. The government has a budget
A) surplus of $60 billion.
B) surplus of $20 billion.
C) deficit of $20 billion.
D) deficit of $60 billion.
E) surplus of $40 billion.
17) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. When the real interest rate is 4 percent, the supply of loanable funds is equal to
A) $80 billion.
B) $30 billion.
C) $50 billion.
D) $90 billion.
E) $10 billion.
18) The table above gives a nation’s investment demand and saving supply schedules. It also has the government’s net taxes and expenditures. The loanable funds market is in equilibrium when the real interest rate is
A) 4 percent.
B) 5 percent.
C) 6 percent.
D) 7 percent
E) 3 percent
19) In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. Given these curves, there is a government budget ________ and therefore the real interest rate is ________ than it would be otherwise.
A) surplus; higher
B) surplus; lower
C) deficit; higher
D) deficit; lower
E) deficit; not different
20) In the figure above, the SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. The equilibrium interest rate is ________ percent and the equilibrium quantity of loanable funds is ________.
A) 6; $1.6 trillion
B) 6; $2.0 trillion
C) 4; $1.4 trillion
D) 4; $1.8 trillion
E) 4; $2.0 trillion
