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Economics Quiz: Saving, Investment, and Gaps

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Economics Quiz: Saving, Investment, and Gaps

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Questions and Answers

In a closed economy, which of the following equations accurately reflects the relationship between saving and investment?

S = C + I + G

S = Y - T - C

S = Y - C - G (correct)

S = T + G - Y

What is typically the role of a saver in the financial system?

To provide funds for loans and investments (correct)

To manage public savings

To trade stocks and bonds

To borrow money for investments

Which of the following statements about bonds is correct?

Bonds yield a variable income based on stock performance.

Bonds are considered fixed income assets. (correct)

Bonds are risk-free investments with guaranteed returns.

Bonds represent ownership in a company.

What is the impact of a trade deficit in an economy?

Imports exceed exports. Signup and view all the answers

Which of the following represents the formula for private saving in a closed economy?

S = (Y - T - C) Signup and view all the answers

What describes an inflationary gap in economic terms?

When the actual output exceeds the potential output. Signup and view all the answers

What characterizes a recessionary situation in the economy?

Actual inflation is less than expected inflation. Signup and view all the answers

Which of the following best defines stagflation?

High price levels coupled with slow economic growth. Signup and view all the answers

In terms of economic output, what does a contractionary gap imply?

Actual output falls short of potential output. Signup and view all the answers

What can be a potential cause of stagflation?

Negative supply shocks impacting production. Signup and view all the answers