Question : 41) Consider the long-run theory of investment, saving, and growth. : 1384430

41) Consider the long-run theory of investment, saving, and growth. For a given level of private saving, an increase in government purchases will likely ________ the economy’s long-run growth rate.

A) slow down

B) accelerate

C) not affect

D) increase

E) Not enough information to know

42) For a given level of national income, an increase in private consumption or government purchases will cause national saving to

A) increase.

B) grow at a constant rate.

C) remain unchanged from its initial level.

D) exceed investment.

E) decrease.

43) An increase in the government budget surplus, everything else constant, will cause a(n)

A) decrease in national saving.

B) increase in national saving.

C) decrease in the growth rate.

D) equal increase in private consumption.

E) equal decrease in private investment.

44) Consider a closed economy in the long run. A country with a low national saving rate (as a fraction of real GDP) is likely to have

A) a high growth rate because aggregate expenditure will be high out of any given income.

B) either a high or low growth rate depending on the investment schedule.

C) an AS curve moving continually to the right.

D) trouble achieving potential real national income in the short run.

E) a low growth rate because sustained high investment is not possible with low saving.

45) Consider the market for financial capital for a closed economy in the long run. Other things being equal, a country with a high national saving rate will tend to have

A) a high growth rate because aggregate expenditure will be high out of any given income.

B) a high growth rate because sustained high investment is possible with high saving.

C) an AS curve moving continually to the left.

D) trouble achieving potential real national income in the short run.

E) either a high or low growth rate depending on the investment demand schedule.

46) Which of the following statements concerning national saving is true?

A) A country’s saving rate is unrelated to its growth rate.

B) An increase in the rate of saving will lead to a reduction in consumption and therefore to both a short-run and a long-run decrease in national income.

C) An increase in the rate of saving will cause an immediate increase in national income, but may cause a drop in national income in the long-run.

D) An increase in the rate of saving will always be offset by a reduction in private investment.

E) An increase in the rate of saving will lead to a short-run reduction in national income, but to higher economic growth in the long run.

47) For a given level of national income, a decrease in government tax revenues will cause

A) a decrease in national saving.

B) an increase in national saving.

C) an increase in the growth rate.

D) no effect on national saving.

E) a decrease in consumption.

48) For a given level of private saving, a decrease in the government’s budget deficit ________ the long-run rate of economic growth.

A) will reduce

B) will leave unchanged

C) will increase

D) will diminish

E) none of the above

49) Consider the long-run theory of investment, saving, and growth. For a given level of national income, a decrease in private consumption or government purchases will cause the equilibrium interest rate to

A) increase and the flow of national saving to decrease.

B) increase and the flow of investment to increase.

C) increase and the flow of investment to decrease.

D) decrease and the flow of national saving to increase.

E) decrease and the flow of national saving to decrease.

50) For a given level of national income, a decrease in private consumption or government purchases will cause the equilibrium interest rate to

A) increase and the flow of national saving to fall.

B) increase and the flow of investment to increase.

C) increase and the flow of investment to decrease.

D) decrease and the flow of investment to decrease.

E) decrease and the flow of investment to increase.