Question : 61) Refer to Figure 26-3. Suppose the interest rate in : 1384432

61) Refer to Figure 26-3. Suppose the interest rate in this market for financial capital is 4%. In this case there is an excess ________ financial capital of ________ billion dollars.

A) supply of; 30

B) demand for; -60

C) supply of; 90

D) demand for; 30

E) demand for; 60

62) Refer to Figure 26-3. Suppose the interest rate in this market for financial capital is 2%. Which of the following statements correctly describes the adjustment that will occur in this market? 

A) The excess supply of saving will push up the real interest rate, which will decrease the quantity demanded of investment and increase the quantity supplied of saving.

B) The excess demand for investment will push up the real interest rate, which will decrease the quantity demanded of investment and increase the quantity supplied of saving.

C) The excess supply of saving will push down the real interest rate, which will decrease the quantity demanded of investment and increase the quantity supplied of saving.

D) The excess demand for investment will push down the real interest rate, which will decrease the quantity demanded of investment and increase the quantity supplied of saving.

E) The excess demand for investment will push up the real interest rate, which will increase the quantity demanded of investment and decrease the quantity supplied of saving.

63) In the long run, an increase in the demand for investment pushes ________ the real interest rate, encourages ________ saving by households, and leads to a ________ future growth rate of potential output.

A) down; less; lower

B) up; less; lower

C) down; less; higher

D) up; more; higher

E) up; more; lower

64) Data from most industrialized countries show that countries with high investment rates (as a percentage of GDP) tend to be countries

A) with the highest levels of per capita GDP.

B) with the highest levels of GDP.

C) with high rates of economic growth.

D) with the lowest rate of national saving.

E) with a negative relationship between investment and the rate of economic growth.

65) Consider the Neoclassical growth model. The effect of an increase in population (or the labour force) in an economy, with everything else held constant, is

A) an increase in per capita national income.

B) an increasingly aging population.

C) a decrease in per capita output.

D) a decrease in the capital-output ratio.

E) an inward shift of the production possibilities boundary.

66) One important assumption of the Neoclassical growth model is that, with a given state of technology,

A) increases in the use of a single factor bring increasing returns.

B) increases in the use of a single factor result in constant returns.

C) increases in the use of single factor bring diminishing returns.

D) the return from successive units of a single factor increases over time.

E) increases in GDP are possible only if all factors are increased at an equal rate.

67) The main properties of a Neoclassical aggregate production function are ________ when all factors are increased proportionally and ________ when any one factor is increased on its own.

A) increasing returns to scale; diminishing marginal returns

B) constant returns to scale; diminishing marginal returns

C) constant returns to scale; constant marginal returns

D) decreasing returns to scale; diminishing marginal returns

E) increasing returns to scale; increasing marginal returns

68) The Neoclassical growth model assumes that, with a given state of technology, increases in the use of a single factor will eventually

A) increase the average product of the factor.

B) decrease the average product of the factor.

C) lead to an increase in the marginal output of the factor.

D) lead to a decrease in total output by the factor.

E) lead to an increase in the material standard of living.

69) The Neoclassical growth model assumes that, with a given state of technology, increases in the use of a single factor eventually cause the

A) average product of the factor to increase.

B) marginal product of the factor to fall.

C) marginal product of the factor to increase at an increasing rate.

D) marginal product of the factor to increase but at a decreasing rate.

E) material standard of living to increase.

70) A central assumption of the Neoclassical growth model is that

A) long-run growth arises from correcting market failures.

B) long-run growth arises only from technological innovation.

C) there are diminishing marginal returns to a single factor.

D) there are constant marginal returns to investment.

E) there are increasing marginal returns to capital investment.