Exam 8: Saving, Investment, and the Financial System

If a share of stock in Skylight Chili Ltd. sells for $75, the retained earnings per share are $5, and the divided per share is $2, then the price/earnings ratio is 15.

What does a low P/E for a stock indicate?

How is a perpetuity distinguished from other bonds?

In the language of macroeconomics, what is considered "investment"?

In a closed economy, how does national saving compare with investment?

Which statement best describes the pattern in the returns of index funds?

Which term refers to the situation when the tax revenue of the federal government exceeds government spending?

Which term refers to institutions that help to match one person's saving with another person's investment?

Suppose that investment rises and interest rates fall. Which statement best explains these changes?

-Refer to Table 8-2. Which company had the lowest dollar dividend?

Suppose a country repeals its investment tax credit. What is most likely to happen in the market for loanable funds?

Suppose that consumption is 9500, taxes are 2000, and government expenditures are 3500. If national saving is 2500 and the economy is closed, what is the GDP?

Which of the following terms refers to the profits NOT paid out to shareholders?

-Refer to Table 8-2. Which company had the lowest earnings per share?

What would most likely happen in the market for loanable funds if the government were to increase the tax on interest income?

If the nominal interest rate is 10 percent and the rate of inflation is 2 percent, what is the real interest rate?

What do people who buy newly issued shares in a corporation such as Diaronex provide?

What would an increase in the budget deficit most likely cause?

Which of the following most likely determines the price of shares traded on exchanges?

Suppose Parliament instituted an investment tax credit. What would most likely happen in the market for loanable funds?