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1
Holding other factors constant, if new technology comes online that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will _____ and the equilibrium quantity of national saving and investment will ____.
A)increase; increase
B)increase; decrease
C)increase; not change
D)decrease; increase
E)decrease; decrease
2
You are given the following information about the economy:
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Private saving is _____ and national saving is ______.
A)300; -200
B)700; 0
C)1,000; 0
D)1,000; 1,500
E)1,000; 2,000
3
Elaine owns a beautiful diamond ring she purchased for $2,500. When she has it appraised she learns it is now worth $2,000. Based on this information:
A)Elaine's saving this year has increased by $500.
B)Elaine's saving this year has decreased by $500.
C)Elaine has a $500 capital gain.
D)Elaine has a $500 capital loss.
E)Elaine's wealth is unchanged.
4
Bob decides to save more because he has heard rumors that his employer will be merging with another firm and many employees may lose their jobs. This is an example of the _____ motive for saving.
A)life-cycle
B)public
C)private
D)precautionary
E)bequest
5
An entrepreneur is considering how many limousines to purchase when he starts up a limousine service. Below are his estimate of the number of limousine rentals the service will make during a year, depending on the number of limousines available.
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After paying all non-interest expenses, the owner expects to net $10 per rental. Each limousine costs $50,000. How many limousines should he purchase if the real interest rate is 5.5%?
A)0
B)1
C)2
D)3
E)4
6
If household saving increases by $3 million, business saving decreases by $2 million, and the government budget deficit decreases by $1 million, then private saving ____ and public saving _______.
A)increases; increases
B)increases; decreases
C)does not change; increases
D)does not change; decreases
E)decreases; increases
7
These data are available for Econland:
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Public saving in Econland equals:
A)-7
B)7
C)16
D)17
E)29
8
Charles has the following assets and liabilities:
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What is Charles's wealth?
A)$206,000
B)$208,000
C)$210,000
D)$312,000
E)$416,000
9
Which of the following is a flow?
A)money
B)wealth
C)the outstanding balance on a student loan
D)saving
E)a share of stock
10
If Miranda saves $100 from her weekly salary and uses this the $100 to pay down her credit card balances, her wealth:
A)increases by $100.
B)increases by $50.
C)does not change.
D)decreases by $50.
E)decreases by $100.





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