Question 1

Institutions that help to match one person's saving with another person's investment are collectively called the

Accepted Answer

A)   Federal Reserve system.
B)   banking system.
C)   monetary system.
D)   financial system.E) B) and D)
F) A) and D)

Question 2

As real interest rates fall, firms desire to

Accepted Answer

A)   buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping.
B)   buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.
C)   buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping.
D)   buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.E) C) and D)
F) B) and D)

Question 3

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Accepted Answer

A)   S = I.
B)   S = 0.
C)   I = S + NX.
D)   S = I + NX.E) A) and B)
F) B) and C)

Question 4

What are the basic differences between bonds and stocks?

Accepted Answer

A bond is a certificate of indebtedness ...

Question 5

In a closed economy, public saving is the amount of

Accepted Answer

A)   income that households have left after paying for taxes and consumption.
B)   income that businesses have left after paying for the factors of production.
C)   tax revenue that the government has left after paying for its spending.
D)   spending that the government undertakes in excess of the taxes it collects.E) None of the above
F) C) and D)

Question 6

Interest rates fall and investment falls. Which of the following could explain these changes?

Accepted Answer

A)   The government goes from a surplus to a deficit.
B)   The government repeals an investment tax credit.
C)   The government replaces a consumption tax with an income tax.
D)   None of the above is correct.E) B) and C)
F) A) and C)

Question 7

Which of the following is correct?

Accepted Answer

A)   Joan takes some of her income and buys mutual fund shares. Joan's purchase will be included in the investment category of GDP.
B)   If a share of stock in Virtual Pizza Corporation sells for $77, the earnings per share are $5, and the dividend per share is $2, then the P/E ratio is 11.
C)   In order to use equity finance, a firm must sell about equal values of stocks and bonds.
D)   None of the above is correct.E) B) and D)
F) None of the above

Question 8

Which of the following statements about mutual funds is correct?

Accepted Answer

A)   A mutual fund is not a financial intermediary.
B)   A disadvantage of buying mutual funds is a lack of diversification
C)   People who buy shares from a mutual fund are guaranteed a minimum return.
D)   On average index funds outperform managed funds.E) A) and D)
F) B) and C)

Question 9

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Accepted Answer

A)   earnings.
B)   retained earnings.
C)   economic, or real, profit.
D)   dividend.E) A) and D)
F) B) and C)

Question 10

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

Accepted Answer

A) True 
 B)False

Question 11

The country of Growpaw does not trade with any other country. Its GDP is $20 billion. Its government purchases $3 billion worth of goods and services each year, collects $4 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Growpaw is $4 billion. What is investment in Growpaw?

Accepted Answer

A)   $5 billion
B)   $4 billion
C)   $3 billion
D)   $11 billionE) All of the above
F) A) and B)

Question 12

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

Accepted Answer

A)   retained earnings.
B)   dividends.
C)   interest payments.
D)   capital accounts.E) A) and B)
F) A) and C)

Question 13

By definition, government purchases and taxes are zero for a closed economy.

Accepted Answer

A) True 
 B)False

Question 14

The financial system is important because it helps to match one person's with another person's .

Accepted Answer

The answer of The financial system is important because it...

Question 15

A budget surplus

Accepted Answer

A)   occurs when the government has debt equal to zero.
B)   causes government debt to increase.
C)   exists when government spending is greater than tax revenues.
D)   reduces the government's debt.E) B) and C)
F) All of the above

Question 16

If the Apple corporation sells a bond it is

Accepted Answer

A)   borrowing directly from the public.
B)   borrowing indirectly from the public.
C)   selling shares of ownership directly to the public.
D)   selling shares of ownership indirectly to the public.E) None of the above
F) B) and D)

Question 17

An article in the textbook suggests that one method to correct the higher education inefficiency is to

Accepted Answer

A)   provide free higher education to all Americans.
B)   have college students sell equity in themselves.
C)   reduce interest rates on student loans.
D)   increase the number of colleges and universities in the United States.E) A) and D)
F) A) and C)

Question 18

Use the following table to answer the following questions.
Table 26-1
 
-Refer to Table 26-1. What was Hershey's earnings per share?

Accepted Answer

A)   $29.90
B)   $2.79
C)   $1.50
D)   $0.36E) C) and D)
F) A) and D)

Question 19

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Accepted Answer

A)   The supply of loanable funds would shift rightward and investment would increase.
B)   The supply of loanable funds would shift leftward and investment would decrease.
C)   The demand for loanable funds would shift rightward and investment would increase.
D)   The demand for loanable funds would shift leftward and investment would decrease.E) B) and C)
F) A) and B)

Question 20

Which of the following would necessarily increase the equilibrium interest rate?

Accepted Answer

A)   The demand for and the supply of loanable funds shift right.
B)   The demand for and the supply of loanable funds shift left.
C)   The demand for loanable funds shifts right and the supply of loanable funds shifts left.
D)   The demand for loanable funds shifts left and the supply of loanable funds shifts right.E) A) and C)
F) A) and D)

Exam 8: Saving, Investment, and the Financial System

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Correct Answer
verified

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Correct Answer
verified

What are the basic differences between bonds and stocks?

Correct Answer
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A bond is a certificate of indebtedness ...
View Answer

Correct Answer
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By definition, government purchases and taxes are zero for a closed economy.

Correct Answer
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If the Apple corporation sells a bond it is

Correct Answer
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All or part of a firm's profits may be paid out to the firm's stockholders in the form of

Correct Answer
verified

Institutions that help to match one person's saving with another person's investment are collectively called the

Correct Answer
verified

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

Correct Answer
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Which of the following would necessarily increase the equilibrium interest rate?

Correct Answer
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Which of the following statements about mutual funds is correct?

Correct Answer
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The financial system is important because it helps to match one person's with another person's .

Correct Answer
verified

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

Correct Answer
verified

As real interest rates fall, firms desire to

Correct Answer
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A budget surplus

Correct Answer
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An article in the textbook suggests that one method to correct the higher education inefficiency is to

Correct Answer
verified

In a closed economy, public saving is the amount of

Correct Answer
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Which of the following is correct?

Correct Answer
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The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Correct Answer
verified

Interest rates fall and investment falls. Which of the following could explain these changes?

Correct Answer
verified

Exam 8: Saving, Investment, and the Financial System

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Correct AnswerverifiedShow Answer

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Correct AnswerverifiedShow Answer

What are the basic differences between bonds and stocks?

Correct AnswerverifiedA bond is a certificate of indebtedness ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

By definition, government purchases and taxes are zero for a closed economy.

Correct AnswerverifiedShow Answer

If the Apple corporation sells a bond it is

Correct AnswerverifiedShow Answer

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

Correct AnswerverifiedShow Answer

Institutions that help to match one person's saving with another person's investment are collectively called the

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

Correct AnswerverifiedShow Answer

Which of the following would necessarily increase the equilibrium interest rate?

Correct AnswerverifiedShow Answer

Which of the following statements about mutual funds is correct?

Correct AnswerverifiedShow Answer

The financial system is important because it helps to match one person's with another person's .

Correct AnswerverifiedShow Answer

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

Correct AnswerverifiedShow Answer

As real interest rates fall, firms desire to

Correct AnswerverifiedShow Answer

A budget surplus

Correct AnswerverifiedShow Answer

An article in the textbook suggests that one method to correct the higher education inefficiency is to

Correct AnswerverifiedShow Answer

In a closed economy, public saving is the amount of

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Correct AnswerverifiedShow Answer

Interest rates fall and investment falls. Which of the following could explain these changes?

Correct AnswerverifiedShow Answer

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A bond is a certificate of indebtedness ...
View Answer

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