Macroeconomics Review

Front 1

saving

Back 1

current income minus spending on current needs

Front 2

saving rate

Back 2

saving divided by income

Front 3

flow

Back 3

a measure that is defined per unit of time

Front 4

stock

Back 4

a measure that is defined at a point in time

Front 5

wealth

Back 5

the value of assets minus liabilities

Front 6

assets

Back 6

anything of value that one owns

Front 7

liabilities

Back 7

the debts one owes

Front 8

capital gains

Back 8

increases in the value of existing assets

Front 9

capital losses

Back 9

decreases in the values of existing assets

Front 10

life-cycle saving

Back 10

saving to meet long-term objectives, such as retirement, college attendance, or the purchase of a home

Front 11

precautionary saving

Back 11

saving for protection against unexpected setbacks, such as the loss of a job or a medical emergency

Front 12

bequest saving

Back 12

saving done for the purpose of leaving an inheritance

Front 13

national saving

Back 13

the saving of the entire economy, equal to GDP less consumption expenditures and government purchases of goods and services, or Y-C-G

Front 14

transfer payments

Back 14

payments the government makes to the public for which it receives no current goods or services in return

Front 15

private saving

Back 15

the saving of the private sector of the economy is equal to the after-tax income of the private sector minus consumption expenditures (Y-C-G); can be further broken down into household saving and business saving

Front 16

public saving

Back 16

the saving of the government sector is equal to net tax payments minus government purchases (T-G)

Front 17

government budget deficit

Back 17

the excess of government spending over tax collections (G-T)

Front 18

government budget surplus

Back 18

the excess of government tax collections over government spending (T-G); equals public saving

Front 19

factors that affect investment:

Back 19

1)a decline in the price of new capital goods
2)a decline in the real interest rate
3)technological improvement that raises the marginal product of capital
4)lower taxes on the revenues generated by capital
5)a higher relative price for the firms output

Front 20

__________ are current income minus spending on current needs.

Back 20

savings

Front 21

__________ are anything of value that one owns.

Back 21

assets

Front 22

Stock is a measure that is defined at a point in time. True/False?

Back 22

true

Front 23

Saving is a stock concept. True/False?

Back 23

false

Front 24

Saving to meet long-term objectives, such as retirement, is known as life-cycle saving. True/False?

Back 24

true

Front 25

If taxes are $1,000, consumption is $25,000, government purchases are $25 million, and private sector income is $30,000, then private saving is $__________.

Back 25

$4000

Front 26

If government purchases are $25 million, net taxes are $25 million, consumption expenditures are $100 million, and income is $150 million, then national saving is $__________.

Back 26

$25 million

Front 27

If the government collects $1 billion in taxes, spends $1.5 billion on its purchases, and consumption is $2 billion, then the government is running a budget deficit. True/False?

Back 27

True

Front 28

The value of the marginal product of the new capital determines business investment. True/False?

Back 28

true

Front 29

A technological breakthrough raises the marginal product of new capital goods, desired investment, the damand for savings, and the real interest rate. True/False?

Back 29

true

Front 30

A decrease in the governments budget deficit decreases the real interest rate. True/False?

Back 30

true