An increase in the interest rate will stimulate firms' investment spending.

An increase in the interest rate will stimulate firms' investment spending.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

The crowding-out effect indicates that an increase in a fiscal deficit financed by borrowing will increase interest rates and thereby crowd out some domestic investment spending.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?
 a. The dollar will depreciate; the current account will move toward a deficit.
  b. The dollar will depreciate; the current account will move toward a surplus.
  c. The dollar will appreciate; the current account will move toward a deficit.
  d. The dollar will appreciate; the current account will move toward a surplus.

QUESTION 4

Real investment spending for the past 35 years is less volatile than real personal consumption.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

External debt refers to the portion of the national debt owned by private individuals and internal debt refers to that part owned by the public sector.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

A weak U.S. dollar is one that has:
 a. c and e.
  b. d and e.
  c. depreciated.
  d. appreciated.
  e. helped U.S. exporters.

QUESTION 7

An increase in consumer wealth shifts the consumption function upward.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 8

Bonds owned by financial institutions represent ownership of the national debt by the private sector.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 9

Which of the following changes in the exchange rate represents an appreciation of the dollar?
 a. 100 yen = 1 to 90 yen = 1 b. 1 yen = .10 to 1 yen = .08
  c. 1 peso = 10 to 1 peso = 11 d. 200 francs = 10 to 190 francs = 10