2. Other than the four sectors in a closed society, what is the fifth sector for an open society?

3. A typical security in the money market is a. corporate stock b. corporate bond c. corporate commercial paper d. corporate mortgage

4. Explain who loses when the dollar strengthens:

5. Provide a general historic description of the predominant source and use of funds for thrifts.

6. Provide a general historic description of the predominant source and use of funds for pension plans.

7. Explain why/how contributions to mutual funds are often considered riskier than contributions to pension funds.

8. How do the customers of a finance company differ from the customers of banks generally?

Which accounts are closed at the end of an accounting period?

Select one:

a. Neither Interest Expense nor Paid-in-Capital from Stock Warrants

b. Both Interest Expense and Paid-in-Capital from Stock Warrants

c. Interest Expense, but not Paid-in-Capital from Stock Warrants

d. Paid-in-Capital from Stock Warrants, but not Interest Expense

An Economic Model of National Income in a Closed Private Economy in the Short Run

(We are assuming for this model that there is no trade, no government, and no business saving.)

C = 280 + 0.80*Y        Consumption Function [$Billion/year]

I = 620                         Planned Investment (Purchase of new capital goods and services) [$Billion/year]

Y                                 National Income [$Billion/year]

Part 1. What is the aggregate expenditure function in this model?

Part 2. Suppose firms expect to sell, and produce, 4725 $B worth of goods and services. There would be an unplanned change to inventories. What is the size of this unplanned change and how would you predict that firms would respond to this unplanned change in inventories?

Part 3. What are the equilibrium levels of GDP, Consumption, and Savings in this model?

Part 4. Find the value of the expenditure multiplier in this economy.

Part 5. If investment increases from 620 to 660, find the new equilibrium level of GDP.

Consider a closed economy described by the following:

Y = 2,000

G = 700

T = 500

C = 100 + 0.6(Y – T)

I = 750 – 50r

a.       Find consumption.

b.       Find the equilibrium interest rate.

c. Find investment.

d. Find private saving, public saving, and national saving.

Suppose in a closed economy, the government lowers taxes by 100 billion. If the marginal propensity to consume is 0.8 and the government purchases remain unchanged, what happens to the following? That is, do they rise or fall? By how much?

a.       Public saving.

b.       Disposable income.

c.       Household consumption.

d.       Private saving.

e.       National saving.

f.        Investment.

The following table contains data for a hypothetical closed economy that uses the dollar as its currency.

Suppose GDP in this country is $925 million. Enter the amount for consumption.

Fill the blank above for Consumption(CC)

Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table.

Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table.

Based on your calculations, the government is running a budget .......................... .

The following table contains data for a hypothetical closed economy that uses the dollar as its currency.

Suppose GDP in this country is $1,680 million. Enter the amount for consumption.

Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table.

Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table.

Based on your calculations, the government is running a budget

Consider the long-run model of a closed economy with a marginal propensity to consume of 0.8.
Suppose the government cuts taxes by $100 billion while holding government purchases constant. What
happens to the following variables? Explain and calculate the amount of change for each variable.
a. Public saving (Sg):
b. Private saving (Sp):
c. National Saving (S):
d. Investment (I)

The owner's drawing account is closed to the Income Summary account in order to properly determine net income (or loss) for the period. *

True

False

Closing entries are made to close the permanent accounts. *

True

False

Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure. *

True

False

The owner's drawing account is a permanent account whose balance is carried forward to the next accounting period. *

True

False

To close net income to owner's capital, Income Summary is debited and Owner's Capital credited. *

True

False

In one closing entry, Owner's Drawing is credited and Income Summary is debited. *

True

False

The post-closing trial balance will contain only owner's equity statement accounts and balance sheet accounts. *

True

False