We Would Expect That Nations That Devote a Larger Share

question 15

Multiple Choice

We would expect that nations that devote a larger share of GDP to gross private domestic investment

• A)to be highly industrialized nations.
• B)to have a higher savings rate.
• C)to have higher growth rate e in potential real GDP.
• D)to have less volatile fluctuations in economic activity.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, as dictated by central banking authorities.

Excess Reserves

These are bank reserves held in excess of what is required by regulations, which can be lent out to generate income.

New Loans

Financial amounts borrowed by individuals, businesses, or governments, typically from banks or financial institutions, that have not previously existed in the market.

Required Reserve Ratio

The fraction of deposits that banks are mandated by the central bank to keep on hand as reserves, rather than loaning out.