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In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue.
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True
False
If there is a surplus of loanable funds, then neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium.
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True
False
An increase in the budget deficit would cause a shortage of loanable funds at the original interest rate, which would lead to falling interest rates and a decrease in investment
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True
False
Credit risk refers to a bond’s probability of default and because they are low risk and attractive to buyers, U.S. government bonds usually pay a low rate of interest.
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True
False
Suppose that in a closed economy the value of GDP is equal to $64 billion. Taxes are equal to $16 billion, consumption equals $40 billion, government expenditures equal $12 billion and public saving equals $4 billion. The amount of national saving is $12 billion.
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True
False
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