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Cards In This Set
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This year, Alan purchases a home built in the 1950s. Alan's purchase:
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does not count as investment spending.
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Human capital refers to:
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workers' education or training.
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Human capital development often comes from:
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government and private spending for education.
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Domestic savings and foreign savings are:
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sources of funds for investment spending.
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Which of the following is TRUE of an open economy?
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GDP = C + I + G + X – IM
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When government spending is less than net taxes:
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budget surplus
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The budget balance equals:
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taxes minus government spending
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National savings is the sum of:
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private savings plus the budget balance
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If capital inflow is negative, then a country:
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lends more than it borrows from other countries.
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If a country has a positive capital inflow, it:
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borrows more than it lends to foreigners
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In an open economy:
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savings of foreigners may be supporting investment spending.
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A government has a budget deficit in an open economy. This means:
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the government is spending more than its tax revenue.
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When portions of investment spending are financed by a capital inflow:
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interest is being paid to a foreigner for use of those funds.
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In the loanable funds market, borrowers:
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are best represented by the demand for loanable funds.
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Investment spending is undertaken when the rate of return is:
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higher than the equilibrium interest rate.
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