ECON 1002 MICROECONOMICS FINAL EXAM
3 STUDY GUIDE WITH FULL SOLUTIONS 2026
◉ 4) This year Pizza Hut makes a total investment of $1.3 billion in
new stores. Its depreciation in this year is $300 million.
Pizza Hut's gross investment is ________ and its net investment is
________.
A) $1.3 billion; $1.0 billion
B) $1.0 billion; $1.3 billion
C) $1.3 billion; $1.6 billion
D) $1.0 billion; $0.7 billion Answer: A
◉ 6) Investment is financed by which of the following?
I. Government spending
II. National saving
III. Borrowing from the rest of the world
A) II and III only
B) I and III only
C) I, II, and III
D) I and II only Answer: A
,◉ 8) In the above figure, the economy is at point a on the initial
supply of loanable funds curve SLF0. What happens if
disposable income decreases?
A) The supply of loanable funds curve would shift leftward to a
curve such as SLF1.
B) The supply of loanable funds curve would shift rightward to a
curve such as SLF2.
C) There would be a movement to a point such as b on supply of
loanable funds curve SLF0.
D) Nothing; the economy would remain at point a. Answer: A
◉ 10) In the above figure, the economy is at point a on the initial
demand for loanable funds curve DLF0. What happens if
the real interest rate rises?
A) There is a movement to a point such as b on the demand for
loanable funds curve DLF0.
B) The demand for loanable funds curve shifts leftward to a curve
such as DLF1.
C) The demand for loanable funds curve shifts rightward to a curve
such as DLF2.
D) none of the above Answer: A
◉ 12) Approximately, the real interest rate ________ the inflation rate
________ the nominal interest rate.
, A) plus; equals B) equals; minus C) equals; plus D) minus; equals
Answer: A
◉ 14) An increase in disposable income shifts the supply of loanable
funds curve
A) rightward and decreases the real interest rate. B) leftward and
decreases the real interest rate.
C) rightward and increases the real interest rate. D) leftward and
increases the real interest rate. Answer: A
◉ 16) When a government has a budget surplus, the surplus
A) must be subtracted from private saving to get total saving.
B) crowds-out private saving.
C) increases the world real interest rate.
D) helps finance investment. Answer: D
◉ 18) Which of the following are included in the supply of loanable
funds?
i. private saving
ii. government budget surplus
iii. international borrowing
A) i, ii and iii. B) i and ii. C) i and iii. D) ii and iii Answer: A
3 STUDY GUIDE WITH FULL SOLUTIONS 2026
◉ 4) This year Pizza Hut makes a total investment of $1.3 billion in
new stores. Its depreciation in this year is $300 million.
Pizza Hut's gross investment is ________ and its net investment is
________.
A) $1.3 billion; $1.0 billion
B) $1.0 billion; $1.3 billion
C) $1.3 billion; $1.6 billion
D) $1.0 billion; $0.7 billion Answer: A
◉ 6) Investment is financed by which of the following?
I. Government spending
II. National saving
III. Borrowing from the rest of the world
A) II and III only
B) I and III only
C) I, II, and III
D) I and II only Answer: A
,◉ 8) In the above figure, the economy is at point a on the initial
supply of loanable funds curve SLF0. What happens if
disposable income decreases?
A) The supply of loanable funds curve would shift leftward to a
curve such as SLF1.
B) The supply of loanable funds curve would shift rightward to a
curve such as SLF2.
C) There would be a movement to a point such as b on supply of
loanable funds curve SLF0.
D) Nothing; the economy would remain at point a. Answer: A
◉ 10) In the above figure, the economy is at point a on the initial
demand for loanable funds curve DLF0. What happens if
the real interest rate rises?
A) There is a movement to a point such as b on the demand for
loanable funds curve DLF0.
B) The demand for loanable funds curve shifts leftward to a curve
such as DLF1.
C) The demand for loanable funds curve shifts rightward to a curve
such as DLF2.
D) none of the above Answer: A
◉ 12) Approximately, the real interest rate ________ the inflation rate
________ the nominal interest rate.
, A) plus; equals B) equals; minus C) equals; plus D) minus; equals
Answer: A
◉ 14) An increase in disposable income shifts the supply of loanable
funds curve
A) rightward and decreases the real interest rate. B) leftward and
decreases the real interest rate.
C) rightward and increases the real interest rate. D) leftward and
increases the real interest rate. Answer: A
◉ 16) When a government has a budget surplus, the surplus
A) must be subtracted from private saving to get total saving.
B) crowds-out private saving.
C) increases the world real interest rate.
D) helps finance investment. Answer: D
◉ 18) Which of the following are included in the supply of loanable
funds?
i. private saving
ii. government budget surplus
iii. international borrowing
A) i, ii and iii. B) i and ii. C) i and iii. D) ii and iii Answer: A
