81.Whenthegovernmentrunsabudgetdeficit, a.interestratesarelowerthantheywouldbeifthebudgetwerebalanced. b.nationalsavingishigherthanitwouldbeifthebudgetwerebalanced. c.investmentislowerthanitwouldbeifthebudgetwerebalanced. d.Alloftheabovearecorrect. 82.SupposetheCongressandpresidentdecreasedthemaximumannualcontributionslimitstoretirementaccountsandatthesametimereducedthebudgetdeficit.Whatwouldhappentotheinterestrate? a.Itwoulddecrease. b.Itwouldincrease. c.Itwouldstaythesame. d.Itmightdoanyoftheabove. 83.Whichofthefollowingeventscouldexplainadecreaseininterestratestogetherwithanincreaseininvestment? a.Thegovernmentwentfromsurplustodeficit. b.Thegovernmentinstitutedaninvestmenttaxcredit. c.Thegovernmentreducedthetaxrateonsavings. d.Noneoftheaboveiscorrect. 84.Whichofthefollowingeventscouldexplainanincreaseininterestratestogetherwithadecreaseininvestment? a.Thegovernmentbudgetwentfromsurplustodeficit. b.Thegovernmentinstitutedaninvestmenttaxcredit. c.Thegovernmentreducedthetaxrateonsavings. d.Noneoftheaboveiscorrect. 85.Whichofthefollowingeventscouldexplainanincreaseininterestratestogetherwithanincreaseininvestment? a.Thegovernmentrunsalargerdeficit. b.Thegovernmentinstitutesaninvestmenttaxcredit. c.Thegovernmentreplacestheincometaxwithaconsumptiontax. d.Noneoftheaboveiscorrect. 86.Interestratesfallandinvestmentfalls.Whichofthefollowingcouldexplainthesechanges? a.Thegovernmentgoesfromasurplustoadeficit. b.Thegovernmentrepealsaninvestmenttaxcredit. c.Thegovernmentreplacesaconsumptiontaxwithanincometax. d.Noneoftheaboveiscorrect. 87.Thesupplyofloanablefundswouldshifttotherightifeither a.taxreformsencouragedgreatersavingorthebudgetdeficitbecamesmaller. b.taxreformsencouragedgreatersavingorinvestmenttaxcreditswereincreased. c.thebudgetdeficitbecamelargerorinvestmenttaxcreditswereincreased. d.thebudgetdeficitbecamelargerortaxreformsdiscouragedsaving. 88.Achangeinthetaxlawsthatincreasesthesupplyofloanablefundswillhaveasmallereffectoninvestmentwhen a.thedemandforloanablefundsismoreelasticandthesupplyofloanablefundsismoreinelastic. b.thedemandforloanablefundsismoreinelasticandthesupplyofloanablefundsismoreelastic. c.boththedemandforandsupplyofloanablefundsaremoreelastic. d.boththedemandforandsupplyofloanablefundsaremoreinelastic. 89.Agovernmentbudgetdeficitaffectsthesupplyofloanablefunds,ratherthanthedemandforloanablefunds,because a.inourmodeloftheloanablefundsmarket,wedefine“loanablefunds”astheflowofresourcesavailabletofundprivateinvestment. b.inourmodeloftheloanablefundsmarket,wedefine“loanablefunds”astheflowofresourcesavailablefromprivatesaving. c.marketsforgovernmentdebtarefundamentallydifferentfrommarketsforprivatedebt. d.ofourassumptionthattheeconomyisclosed. 90.Ifweweretochangetheinterpretationoftheterm“loanablefunds”insuchawaythatgovernmentbudgetdeficitswouldaffectthedemandforloanablefunds,ratherthanthesupplyofloanablefunds,then a.crowdingoutwouldnotbeaconsequenceofanincreaseinthebudgetdeficit. b.higherinterestrateswouldnotbeaconsequenceofanincreaseinthebudgetdeficit. c.anincreaseinthebudgetdeficitwouldcausethedemandforloanablefundstodecrease. d.wewouldbemakingonlyasemanticchangeinhowweanalyzetheeffectsofgovernmentbudgetdeficits.