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Which of the following equations represents GDP for a closed economy?


A) Y = C + I + G + T
B) S = I - G
C) I = Y - C + G
D) Y = C + I + G

E) B) and C)
F) A) and B)

Correct Answer

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Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. -Refer to Figure 26-5. Starting at point A, the enactment of an investment tax credit would likely cause A) the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% point C) . B) the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% point B) . C) the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% point E) . D) the quantity of loanable funds traded to increase to $125 and the interest rate to fall to 5% point D) . -Refer to Figure 26-5. Starting at point A, the enactment of an investment tax credit would likely cause


A) the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% point C) .
B) the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% point B) .
C) the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% point E) .
D) the quantity of loanable funds traded to increase to $125 and the interest rate to fall to 5% point D) .

E) A) and B)
F) A) and C)

Correct Answer

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The term loanable funds refers to all income that is not used for consumption or government expenditures.

A) True
B) False

Correct Answer

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The term loanable funds refers to all income that is not used for consumption.

A) True
B) False

Correct Answer

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Crowding out occurs when


A) investment declines because a budget deficit makes interest rates rise.
B) investment declines because a budget deficit makes interest rates fall.
C) investment increases because a budget surplus makes interest rates rise.
D) investment increases because a budget surplus makes interest rates fall.

E) All of the above
F) A) and B)

Correct Answer

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