ECON131 FINAL EXAM CH 18 ECONOMICS COURSE
2025/2026 | VERIFIED QUESTIONS AND ANSWERS
GRADED A+ | MICRO & MACROECONOMICS CONCEPTS
STUDY GUIDE | GUARANTEED SUCCESS
1. When a government records a budget surplus, the national savings and
investment
identity is written as:
A. S = I + (G - T) + (X - M)
B. S + (M - X) + (T - G) = I
C. S - (G - T) = I - (X - M)
D. S + (T - G) = 1 + (X - M) - CORRECT ANSWER - B. S + (M-X) + (T-G)=
I
2. When a government records a trade surplus, the national savings and
investment
identity is written as:
A. S = (G - T) + (X - M) - I
B. S - (G - T) = I - (X - M)
C. S = I + (G - T) + (X - M)
D. S + (G - T) = I - (X - M) - CORRECT ANSWER - C. S = I + (G-T) + (X-
M)
3. A prolonged period of budget deficits may lead to ___________________.
A. outflows of financial capital abroad
B. lower inflation
C. lower economic growth
D. increasing exchange rates - CORRECT ANSWER - C. lower economic
growth
, 4. A ___________________________________ can lead to disruptive
economic
patterns and heavy strains on a country's banking and financial system.
A. prolonged period of trade surpluses
B. sustained pattern of large trade deficits
C. prolonged period of budget surpluses
D. sustained pattern of large budget deficits - CORRECT ANSWER - D.
sustained pattern of large budget deficits
5. An increase in government borrowing can:
A. allow private investment to expand.
B. crowd out private investment in physical capital.
C. increase the incentive to invest in technology.
D. cause a substantial decrease in interest rates. - CORRECT ANSWER - B.
crowd out private investment in physical capital
1. A country's economic data indicates that there has been a substantial
reduction in the
financial capital available to private sector firms. Which of the following most
likely had
the greatest influence on this economy?
A. especially large and sustained household saving
B. increased borrowing by private firms
C. reduction in influx of funds for foreign financial investors
D. especially large and sustained government borrowing - CORRECT
ANSWER - D. especially large and sustained government borrowing.
6. If a country's economic data shows private savings of $500 million,
government
2025/2026 | VERIFIED QUESTIONS AND ANSWERS
GRADED A+ | MICRO & MACROECONOMICS CONCEPTS
STUDY GUIDE | GUARANTEED SUCCESS
1. When a government records a budget surplus, the national savings and
investment
identity is written as:
A. S = I + (G - T) + (X - M)
B. S + (M - X) + (T - G) = I
C. S - (G - T) = I - (X - M)
D. S + (T - G) = 1 + (X - M) - CORRECT ANSWER - B. S + (M-X) + (T-G)=
I
2. When a government records a trade surplus, the national savings and
investment
identity is written as:
A. S = (G - T) + (X - M) - I
B. S - (G - T) = I - (X - M)
C. S = I + (G - T) + (X - M)
D. S + (G - T) = I - (X - M) - CORRECT ANSWER - C. S = I + (G-T) + (X-
M)
3. A prolonged period of budget deficits may lead to ___________________.
A. outflows of financial capital abroad
B. lower inflation
C. lower economic growth
D. increasing exchange rates - CORRECT ANSWER - C. lower economic
growth
, 4. A ___________________________________ can lead to disruptive
economic
patterns and heavy strains on a country's banking and financial system.
A. prolonged period of trade surpluses
B. sustained pattern of large trade deficits
C. prolonged period of budget surpluses
D. sustained pattern of large budget deficits - CORRECT ANSWER - D.
sustained pattern of large budget deficits
5. An increase in government borrowing can:
A. allow private investment to expand.
B. crowd out private investment in physical capital.
C. increase the incentive to invest in technology.
D. cause a substantial decrease in interest rates. - CORRECT ANSWER - B.
crowd out private investment in physical capital
1. A country's economic data indicates that there has been a substantial
reduction in the
financial capital available to private sector firms. Which of the following most
likely had
the greatest influence on this economy?
A. especially large and sustained household saving
B. increased borrowing by private firms
C. reduction in influx of funds for foreign financial investors
D. especially large and sustained government borrowing - CORRECT
ANSWER - D. especially large and sustained government borrowing.
6. If a country's economic data shows private savings of $500 million,
government
