Question

Increasing the amount of consumption spending and reducing the amount of savings ________ investment expenditures, and ________ long-run economic growth in the economy.

Select one:
a. increases; increases
b. decreases; decreases
c. decreases; increases
d. increases; decreases
Liquidity refers to

Select one:
a. the ease with a stock can be traded for a bond.
b. the ease with which a financial security can be traded for cash.
c. the number of shares of stock a corporation issues.
d. the number of times a dollar changes hands in the creation of GDP in an economy.
In a closed economy, which of the following equations reflects investment? ( Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Select one:
a. Y - C - T
b. C + G - T
c. Y - T + TR
d. Y - C - G
In a closed economy, private saving is equal to which of the following? ( Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Select one:
a. Y - G - T + TR
b. Y + TR - C - T
c. Y - C - T
d. Y - G - T
In a closed economy, public saving is equal to which of the following? ( Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)

Select one:
a. T - G - TR
b. Y - C - T + TR
c. Y - G - T
d. Y - C - T

Answer 1

1) Increasing the amount of consumption spending and reducing the amount of savings decreases investment expenditures, and decreases long-run economic growth in the economy.

2) Liquidity refers to the ease with which a financial security can be traded for cash. The number of times a dollar changes hands in the creation of GDP in an economy is called velocity of money.

3) In a closed economy Y – C – G reflects investment. The taxes and transfer payments are part of the consumption.

4) In a closed economy, private saving is equal to Y – C – T.