A network of stock exchanges where shares of public companies are traded

A group of institutions in the economy that help match the saving of one person with the investment of another

A collection of government agencies that directly set household interest rates

The central bank's tool for printing and distributing physical currency

A stock exchange where shares of companies are listed

A bond market where corporations issue certificates of indebtedness

A commercial bank that accepts deposits and uses them to make loans

An online trading platform for buying and selling equity securities

Offer a lower interest rate, since default is rare

Be issued exclusively by municipal governments

Offer a higher interest rate to compensate lenders for the increased risk

Be automatically indexed to a measure of inflation

Are issued only by municipal governments

Carry very low interest rates due to their safety

Are issued by corporations with very strong credit ratings

Carry very high interest rates to compensate for their high default risk

Higher interest rates because their interest is tax-exempt

Lower interest rates because their interest is tax-exempt

The same interest rate but with a longer maturity

Interest rates that are automatically indexed to inflation

A guaranteed fixed stream of income from the firm

A claim to partial ownership in the firm

A certificate of indebtedness issued by the firm

The right to set the firm's interest payments

The firm's accounting profits from the previous fiscal year only

Government regulators who set daily price ceilings

The supply of and demand for the stock in the market

A fixed value equal to the firm's initial public offering price

The Federal Funds Interest Rate Index

The Dow Jones Industrial Average

The Gross Domestic Product Index

The Consumer Price Index

Guarantee a fixed rate of return regardless of market conditions

Allow investors to pool funds and diversify their holdings, reducing risk

Provide tax-exempt interest income on all their investments

Are insured against losses by the central bank

Set the interest rates in the loanable funds market

Take in deposits from savers and use them to make loans to borrowers

Issue new shares of stock on behalf of corporations

Determine the prices of bonds on the secondary market

Private saving minus public saving

Public saving minus private saving

Private saving plus public saving

Private saving multiplied by public saving

Positive, because the government must repay debt

Equal to government spending

Zero, by definition of the deficit

Negative, because tax revenue is less than government spending

, meaning saving equals investment

, since saving is double-counted

whenever government runs a deficit

because of capital depreciation

Investment spending by firms

Government spending

Saving by households and other economic agents

Imports of foreign goods

Consumption spending by households

Investment by firms and households

Government budget surpluses

Exports of domestic goods

There is a surplus of loanable funds and the interest rate falls further

Quantity supplied exceeds quantity demanded

There is a shortage of loanable funds and the interest rate tends to rise

Investment automatically equals saving with no further adjustment

Shift the supply of loanable funds to the right, lowering the equilibrium interest rate

Shift the demand for loanable funds to the right, raising the interest rate

Shift the supply of loanable funds to the left, raising the interest rate

Shift the demand for loanable funds to the left, lowering the interest rate

Reduce the demand for loanable funds and lower the interest rate

Increase the demand for loanable funds and raise the equilibrium interest rate

Shift the supply of loanable funds to the left

Have no effect on the loanable funds market

Supply of loanable funds increases and the interest rate falls

Supply of loanable funds decreases and the equilibrium interest rate rises

Demand for loanable funds decreases and the interest rate falls

Both supply and demand increase by the same amount

Increased private investment caused by lower interest rates

Reduced private investment caused by higher interest rates when the government borrows heavily

Increased government spending replacing private consumption

Reduced exports due to a stronger domestic currency

Reduce the supply of loanable funds and raise the interest rate

Increase the supply of loanable funds, lower the interest rate, and stimulate investment

Increase the demand for loanable funds and raise the interest rate

Have no effect on the loanable funds market

trillion

trillion

trillion

trillion

Borrowers cannot obtain loans because troubled lenders are not confident in their creditworthiness

Banks refuse to accept any new deposits from customers

The government sharply reduces the budget deficit

Stock prices rise sharply over a short period of time

Consistent, because lower taxes automatically lead to a smaller deficit

Inconsistent, because cutting taxes with G unchanged would raise, not lower, the deficit

Consistent if the economy is in a deep recession

Inconsistent only if interest rates are rising