Question 1

Choose the statement that is incorrect about trust and loan companies.

Accepted Answer

A) Trust and loan companies hold more than 70 percent of the total assets of the Canadian financial services sector. 
B) The largest trust and loan companies are owned by banks. 
C) Trust and loan companies accept deposits and make personal loans and mortgage loans. 
D) Trust and loan companies administer estates. 
E) Trust and loan companies administer trusts and pension plans. 
A) Trust and loan companies hold more than 70 percent of the total assets of the Canadian financial services sector. 
B) The largest trust and loan companies are owned by banks. 
C) Trust and loan companies accept deposits and make personal loans and mortgage loans. 
D) Trust and loan companies administer estates. 
E) Trust and loan companies administer trusts and pension plans.

Question 2

Elena owns a Canada Savings Bond with a a price of $5,000,which pays $500 per year.The price of the bond rises in the bond market to $7,500.What is the new interest rate on the bond?

Accepted Answer

A) 5% 
B) 6.67% 
C) 10% 
D) 20% 
E) 500% 
A) 5% 
B) 6.67% 
C) 10% 
D) 20% 
E) 500%

Question 3

If a country has a shortage of loanable funds at the world real interest rate ________.

Accepted Answer

A) the country increases its net exports 
B) the country decreases its net exports 
C) the demand for loanable funds in this country decreases 
D) world suppliers of loanable funds move funds to this country 
E) the world interest rate falls 
A) the country increases its net exports 
B) the country decreases its net exports 
C) the demand for loanable funds in this country decreases 
D) world suppliers of loanable funds move funds to this country 
E) the world interest rate falls

Question 4

If we import more than we export from the rest of the world we

Accepted Answer

A) are a net borrower of funds from the rest of the world. 
B) are a net lender of funds to the rest of the world. 
C) are running a trade surplus. 
D) are helping to finance investment in the rest of the world. 
E) have a surplus of funds at the world equilibrium interest rate. 
A) are a net borrower of funds from the rest of the world. 
B) are a net lender of funds to the rest of the world. 
C) are running a trade surplus. 
D) are helping to finance investment in the rest of the world. 
E) have a surplus of funds at the world equilibrium interest rate.

Question 5

When the real interest rate increases,

Accepted Answer

A) the supply of loanable funds curve shifts rightward. 
B) the supply of loanable funds curve shifts leftward. 
C) there is a movement up along the supply of loanable funds curve. 
D) there is a movement down along the supply of loanable funds curve. 
E) the demand for loanable funds curve shifts leftward. 
A) the supply of loanable funds curve shifts rightward. 
B) the supply of loanable funds curve shifts leftward. 
C) there is a movement up along the supply of loanable funds curve. 
D) there is a movement down along the supply of loanable funds curve. 
E) the demand for loanable funds curve shifts leftward.

Question 6

If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,then ________.

Accepted Answer

A) the real interest rate will rise 
B) the supply of loanable funds increases 
C) people will save more 
D) the real interest rate will fall 
E) the demand for loanable funds increases 
A) the real interest rate will rise 
B) the supply of loanable funds increases 
C) people will save more 
D) the real interest rate will fall 
E) the demand for loanable funds increases

Question 7

When a government has a budget surplus,the surplus

Accepted Answer

A) helps finance investment. 
B) crowds-out private saving. 
C) must be subtracted from private saving. 
D) increases the world real interest rate. 
E) decreases the demand for loanable funds. 
A) helps finance investment. 
B) crowds-out private saving. 
C) must be subtracted from private saving. 
D) increases the world real interest rate. 
E) decreases the demand for loanable funds.

Question 8

In January 2011,Tim's Gyms,Inc.owned machines valued at $1 million.During the year,the market value of the machines fell by 10 percent.During 2011,Tim spent $200,000 on new machines.During 2011,Tim's net investment was

Accepted Answer

A) $1 million. 
B) $300,000. 
C) $200,000. 
D) $100,000. 
E) $1.1 million. 
A) $1 million. 
B) $300,000. 
C) $200,000. 
D) $100,000. 
E) $1.1 million.

Question 9

If the Ricardo-Barro effect occurs,________ in private saving finances the government budget deficit and the real interest rate ________.

Accepted Answer

A) an increase;remains the same 
B) a decrease;increases 
C) an increase;falls 
D) a decrease;remains the same 
E) an increase;rises 
A) an increase;remains the same 
B) a decrease;increases 
C) an increase;falls 
D) a decrease;remains the same 
E) an increase;rises

Question 10

Table 23.2.1
   
Refer to the table below to answer the following questions
-Refer to Table 23.2.1.Private saving is

Accepted Answer

A) -$15 million. 
B) $40 million. 
C) $25 million. 
D) $20 million. 
E) $80 million. 
A) -$15 million. 
B) $40 million. 
C) $25 million. 
D) $20 million. 
E) $80 million.

Question 11

If the world real interest rate falls,then a country that is a net foreign lender

Accepted Answer

A) increases the amount of its lending. 
B) does not change the amount of its lending. 
C) decreases the amount of its lending. 
D) changes from being a net foreign lender to a net foreign borrower. 
E) none of the above. 
A) increases the amount of its lending. 
B) does not change the amount of its lending. 
C) decreases the amount of its lending. 
D) changes from being a net foreign lender to a net foreign borrower. 
E) none of the above.

Question 12

If China's government increases its budget surplus,there is ________ in the supply of loanable funds,private saving ________ and investment ________.

Accepted Answer

A) an increase;decreases;increases 
B) a decrease;increases;increases 
C) an increase;increases;increases 
D) a decrease;decreases;increases 
E) an increase;decreases;is crowded out 
A) an increase;decreases;increases 
B) a decrease;increases;increases 
C) an increase;increases;increases 
D) a decrease;decreases;increases 
E) an increase;decreases;is crowded out

Question 13

The key Canadian financial institutions include all of the following except ________.

Accepted Answer

A) commercial banks 
B) trust and loan companies 
C) credit unions and caisses populaires 
D) pension funds 
E) ATMs 
A) commercial banks 
B) trust and loan companies 
C) credit unions and caisses populaires 
D) pension funds 
E) ATMs

Question 14

According to the Ricardo-Barro effect,

Accepted Answer

A) government deficits raise the real interest rate. 
B) taxpayers fail to foresee that government deficits imply higher future taxes. 
C) households increase personal saving when governments run budget deficits. 
D) government budget deficits increase households' expected future disposable income. 
E) a government deficit decreases the supply of loanable funds. 
A) government deficits raise the real interest rate. 
B) taxpayers fail to foresee that government deficits imply higher future taxes. 
C) households increase personal saving when governments run budget deficits. 
D) government budget deficits increase households' expected future disposable income. 
E) a government deficit decreases the supply of loanable funds.

Question 15

Suppose the market for loanable funds is in equilibrium.If expected profit falls,the equilibrium real interest rate ________ and the quantity of loanable funds ________.

Accepted Answer

A) falls;decreases 
B) falls;increases 
C) rises;increases 
D) rises;decreases 
E) falls;increases or decreases but we don't know for sure 
A) falls;decreases 
B) falls;increases 
C) rises;increases 
D) rises;decreases 
E) falls;increases or decreases but we don't know for sure

Question 16

A decrease in disposable income ________.

Accepted Answer

A) has no effect on the supply of loanable funds curve 
B) shifts the supply of loanable funds curve rightward 
C) shifts the supply of loanable funds curve leftward 
D) creates a movement up along the supply of loanable funds curve 
E) creates a movement down along the supply of loanable funds curve 
A) has no effect on the supply of loanable funds curve 
B) shifts the supply of loanable funds curve rightward 
C) shifts the supply of loanable funds curve leftward 
D) creates a movement up along the supply of loanable funds curve 
E) creates a movement down along the supply of loanable funds curve

Question 17

Southton has investment of $100,private saving of $90,net taxes of $25,government expenditure of $30,exports of $25 and imports of $10.What is national saving?

Accepted Answer

A) $85 
B) $90 
C) $95 
D) $100 
E) $105 
A) $85 
B) $90 
C) $95 
D) $100 
E) $105

Question 18

Net investment equals

Accepted Answer

A) capital minus depreciation. 
B) gross investment minus depreciation. 
C) the total quantity of plant, equipment, and buildings. 
D) gross investment/depreciation. 
E) wealth minus saving. 
A) capital minus depreciation. 
B) gross investment minus depreciation. 
C) the total quantity of plant, equipment, and buildings. 
D) gross investment/depreciation. 
E) wealth minus saving.

Question 19

The government of Greece is running a large budget deficit.With no Ricardo-Barro effect,which of the following events will occur?
I.The supply curve of loanable funds will shift leftward.
II.A higher real interest rate crowds out investment.
III.Saving increases.

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III

Question 20

A country's exports are $490 billion and its imports are $529 billion.Choose the correct statement.
I.The country is a net foreign borrower.
II.The Ricardo-Barro effect holds in this country.
III.This country does not have an equilibrium in its loanable funds market.

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I and II only 
E) I, II, and III

Exam 23: Finance, Saving, and Investment

Choose the statement that is incorrect about trust and loan companies.

Elena owns a Canada Savings Bond with a a price of $5,000,which pays $500 per year.The price of the bond rises in the bond market to $7,500.What is the new interest rate on the bond?

If a country has a shortage of loanable funds at the world real interest rate ________.

If we import more than we export from the rest of the world we

When the real interest rate increases,

If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,then ________.

When a government has a budget surplus,the surplus

In January 2011,Tim's Gyms,Inc.owned machines valued at $1 million.During the year,the market value of the machines fell by 10 percent.During 2011,Tim spent $200,000 on new machines.During 2011,Tim's net investment was

If the Ricardo-Barro effect occurs,________ in private saving finances the government budget deficit and the real interest rate ________.

Table 23.2.1 Refer to the table below to answer the following questions -Refer to Table 23.2.1.Private saving is

If the world real interest rate falls,then a country that is a net foreign lender

If China's government increases its budget surplus,there is ________ in the supply of loanable funds,private saving ________ and investment ________.

The key Canadian financial institutions include all of the following except ________.

According to the Ricardo-Barro effect,

Suppose the market for loanable funds is in equilibrium.If expected profit falls,the equilibrium real interest rate ________ and the quantity of loanable funds ________.

A decrease in disposable income ________.

Southton has investment of $100,private saving of $90,net taxes of $25,government expenditure of $30,exports of $25 and imports of $10.What is national saving?

Net investment equals

The government of Greece is running a large budget deficit.With no Ricardo-Barro effect,which of the following events will occur? I.The supply curve of loanable funds will shift leftward. II.A higher real interest rate crowds out investment. III.Saving increases.

A country's exports are $490 billion and its imports are $529 billion.Choose the correct statement. I.The country is a net foreign borrower. II.The Ricardo-Barro effect holds in this country. III.This country does not have an equilibrium in its loanable funds market.

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

If the Ricardo-Barro effect occurs, in private saving finances the government budget deficit and the real interest rate .

If China's government increases its budget surplus,there is in the supply of loanable funds,private saving and investment .

Suppose the market for loanable funds is in equilibrium.If expected profit falls,the equilibrium real interest rate and the quantity of loanable funds .