(D) III and IV only (e) I and II only

56. The price paid for the rental of borrowed funds is commonly referred to as the

1. Inflation rate.

2. Exchange rate.

3. Interest rate.

4. Aggregate price level.

5. Discount rate.

57. Social security payments are counted as part of

1. Government purchases.

2. Transfers.

3. Net exports.

4. Consumption.

5. GDP

58. An example of a transfer payment is

1. Wages.

2. Profit.

3. Rent.

4. Government purchases.

5. Unemployment benefits.

59. Payments to government employees is a part of

    1. Consumption

    2. Transfer payments

    3. Government purchases

    4. Profit

    5. Wages

60. In a closed economy, which is in equilibrium, investment is equal to

(A) Private saving.

(B) Public saving.

(C) Private saving plus public saving.

(D) Disposable income minus consumption.

61. In equilibrium total investment equals:

(A) Private saving.

(B) Public saving.

(C) National saving.

(D) Foreign savings

(E) None of the above.

62. If disposable income is 4.000, consumption is 3.500, government spending is 1.000 and tax revenues are 800, private saving is equal to:

(A) 300 (B) 500 (C) 700 (D) 1.000 (E) 2.000

63. The government is running a budget deficit if

(A) Government spending is greater than tax revenue.

(B) Tax revenue is greater than government spending.

(C) Tax revenue is greater than consumption spending.

(D) Tax revenue is greater than investment spending.

64. Private saving is equal to

(A) Income - consumption.

(B) Income - consumption - taxes.

(C) Income - consumption - government spending.

(D) Income - consumption - government spending - taxes.

65. Public saving is equal to:

(A) Taxes plus government transfers minus government purchases.

(B) Taxes minus government transfers minus government purchases.

(C) Taxes plus government transfers plus government purchases.

(D) The government budget deficit.

66. National saving is equal to

(A) Income - consumption.

(B) Income - consumption - taxes.

(C) Income - consumption - government spending.

(D) Income - consumption - government spending - taxes.

67. Which of the following statements about national saving is false?

(A) National saving is the total amount of savings deposits in banks.

(B) National saving is the sum of private saving plus public saving.

(C) National saving reflects the output that remains after the demand of consumers

and the government has been satisfied.

(D) National saving equals investment at the equilibrium interest rate.

68. In a closed economy with total output and taxes fixed. if government spending rises

(A) Consumption falls.

(B) National saving rises.

(C) Personal saving falls.

(D) Investment falls.

69. In a closed economy with total income fixed a reduction in taxes will cause

    1. Consumption to rise and investment to fall.

    2. Consumption and investment both to rise.

    3. Consumption to fall and investment to rise.

    4. Consumption and investment both to fall.

    5. No changes in consumption and investment.

70. In a closed economy aggregate output must be equal to

(A) Consumption.

(B) Consumption + investment.

(C) Consumption + investment + government purchases.

(D) Consumption + investment + government purchases - taxes.

71. In a model in which there is a household, business, government and foreign sector, value of aggregate output is the sum of

(A) Consumption, gross investment, government spending for goods and services, and net exports

(B) Consumption, net investment, government spending for goods and services, and net exports

(C) Consumption, gross investment, government spending for goods and services, and gross exports

(D) Wages, rent, interest, profit and depreciation

72. In an economy with both foreign trade and a government sector, the excess of private saving over investment (S -I) is equal to

(A) Net exports.

(B) Net investment.

(C) The trade surplus.

(D) The budget deficit.

(E) The trade surplus plus the budget deficit.

73. The price of one country's currency in terms of another's is called

1. The exchange rate.

2. The interest rate.

3. The Dow Jones industrial average.

4. The discount rate.

5. None of the above.

74. Which of the following are leakages from the circular flow?

(A) Consumption and saving.

(B) Saving and imports.

(C) Imports and exports.

(D) Exports and saving.

(E) Taxes and investment.