Question 1

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will

Accepted Answer

A) demand funds from the financial system by buying bonds. 
B) demand funds from the financial system by selling bonds. 
C) supply funds to the financial system by buying bonds. 
D) supply funds to the financial system by selling bonds. 
A) demand funds from the financial system by buying bonds. 
B) demand funds from the financial system by selling bonds. 
C) supply funds to the financial system by buying bonds. 
D) supply funds to the financial system by selling bonds.

Question 2

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

Accepted Answer

A) and quantity of loanable funds rises. 
B) and quantity of loanable funds falls. 
C) rises and the quantity of loanable funds falls. 
D) falls and the quantity of loanable funds rises. 
A) and quantity of loanable funds rises. 
B) and quantity of loanable funds falls. 
C) rises and the quantity of loanable funds falls. 
D) falls and the quantity of loanable funds rises.

Question 3

A policy that induces people to save more shifts

Accepted Answer

A) the supply of loanable funds and raises interest rates. 
B) the supply of loanable funds and reduces interest rates. 
C) the demand for loanable funds and raises interest rates. 
D) the demand for loanable funds and reduces interest rates. 
A) the supply of loanable funds and raises interest rates. 
B) the supply of loanable funds and reduces interest rates. 
C) the demand for loanable funds and raises interest rates. 
D) the demand for loanable funds and reduces interest rates.

Question 4

If federal tax rates increased, what would happen to the interest rate on municipal bonds?

Accepted Answer

the intere

Question 5

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold. What type of risk for bondholders falls? What happens to the interest rate on this company's bonds?

Accepted Answer

default ri

Question 6

Which of the following involves financial intermediation?

Accepted Answer

A) a bank makes a loan 
B) a household buys stock issued by a corporation 
C) a foreign government purchases U.S. government bonds 
D) All of the above are correct. 
A) a bank makes a loan 
B) a household buys stock issued by a corporation 
C) a foreign government purchases U.S. government bonds 
D) All of the above are correct.

Question 7

The Dow Jones Industrial Average is now based on the prices of the stocks of

Accepted Answer

A) 30 major U.S. corporations. 
B) 100 major U.S. corporations. 
C) 500 representative U.S. corporations. 
D) 1,000 representative U.S. corporations. 
A) 30 major U.S. corporations. 
B) 100 major U.S. corporations. 
C) 500 representative U.S. corporations. 
D) 1,000 representative U.S. corporations.

Question 8

The bond market, the stock market, banks, pension funds, and insurance companies are all financial

Accepted Answer

A) systems. 
B) markets. 
C) institutions. 
D) intermediaries. 
A) systems. 
B) markets. 
C) institutions. 
D) intermediaries.

Question 9

In a closed economy, if Y and T remained the same, but G rose and C fell but by less than the rise in G, what would happen to public and national saving?

Accepted Answer

A) public and national saving would rise 
B) public and national saving would fall 
C) public saving would rise and national saving would fall 
D) public saving would fall and national saving would rise 
A) public and national saving would rise 
B) public and national saving would fall 
C) public saving would rise and national saving would fall 
D) public saving would fall and national saving would rise

Question 10

If a firm wants to borrow it can

Accepted Answer

A) supply bonds by selling them. 
B) supply bonds by buying them. 
C) demand bonds by selling them. 
D) demand bonds by buying them. 
A) supply bonds by selling them. 
B) supply bonds by buying them. 
C) demand bonds by selling them. 
D) demand bonds by buying them.

Question 11

Public saving is the difference between _____ and _____.

Accepted Answer

tax revenue, governm

Question 12

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Accepted Answer

A) the demand for existing shares of stock in this company to decrease, so the price would fall. 
B) the demand for existing shares of stock in this company to increase, so the price would rise. 
C) the supply of existing shares of stock in this company to decrease, so the price would fall. 
D) the supply of existing shares of stock in this company to increase, so the price would rise. 
A) the demand for existing shares of stock in this company to decrease, so the price would fall. 
B) the demand for existing shares of stock in this company to increase, so the price would rise. 
C) the supply of existing shares of stock in this company to decrease, so the price would fall. 
D) the supply of existing shares of stock in this company to increase, so the price would rise.

Question 13

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

Accepted Answer

A) and quantity of loanable funds rises. 
B) and quantity of loanable funds falls. 
C) rises and the quantity of loanable funds falls. 
D) falls and the quantity of loanable funds rises. 
A) and quantity of loanable funds rises. 
B) and quantity of loanable funds falls. 
C) rises and the quantity of loanable funds falls. 
D) falls and the quantity of loanable funds rises.

Question 14

The income that households have left after paying their taxes and paying for their consumption is known as _____.

Accepted Answer

The answer of The income that households have left after...

Question 15

A stock index is

Accepted Answer

A) an average of a group of stock prices. 
B) an average of a group of stock yields. 
C) a measure of the risk relative to the profitability of corporations. 
D) a report in a newspaper or other media outlet on the price of the stock and earnings of the corporation that issued the stock. 
A) an average of a group of stock prices. 
B) an average of a group of stock yields. 
C) a measure of the risk relative to the profitability of corporations. 
D) a report in a newspaper or other media outlet on the price of the stock and earnings of the corporation that issued the stock.

Question 16

A decrease in government spending and the enactment of an investment tax credit would definitely cause

Accepted Answer

A) the quantity of loanable funds traded to increase. 
B) the interest rate to increase. 
C) the quantity of loanable funds traded to decrease. 
D) the interest rate to decrease. 
A) the quantity of loanable funds traded to increase. 
B) the interest rate to increase. 
C) the quantity of loanable funds traded to decrease. 
D) the interest rate to decrease.

Question 17

Stock in Frozen Dreams, an ice cream manufacturer, has a price to earnings ratio of 24. Is this comparatively high or low? What are two explanations for the size of this company's price to earnings ratio?

Accepted Answer

Its price to earnings ratio is

Question 18

When the government budget deficit rises, national saving is reduced, interest rates rise, and investment falls.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an example of financial intermediation?

Accepted Answer

A) John buys shares of stock issued by a fast food company. 
B) A foreign government buys bonds issued by the U.S. Treasury. 
C) Susan makes a deposit at a bank and the bank uses this money to make an auto loan to Ferguson. 
D) None of the above is correct. 
A) John buys shares of stock issued by a fast food company. 
B) A foreign government buys bonds issued by the U.S. Treasury. 
C) Susan makes a deposit at a bank and the bank uses this money to make an auto loan to Ferguson. 
D) None of the above is correct.

Question 20

Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?

Accepted Answer

A) $3 trillion 
B) $9 trillion 
C) $11 trillion 
D) $17 trillion 
A) $3 trillion 
B) $9 trillion 
C) $11 trillion 
D) $17 trillion

Exam 26: Saving, Investment, and the Financial System

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

A policy that induces people to save more shifts

If federal tax rates increased, what would happen to the interest rate on municipal bonds?

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold. What type of risk for bondholders falls? What happens to the interest rate on this company's bonds?

Which of the following involves financial intermediation?

The Dow Jones Industrial Average is now based on the prices of the stocks of

The bond market, the stock market, banks, pension funds, and insurance companies are all financial

In a closed economy, if Y and T remained the same, but G rose and C fell but by less than the rise in G, what would happen to public and national saving?

If a firm wants to borrow it can

Public saving is the difference between _____ and _____.

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

The income that households have left after paying their taxes and paying for their consumption is known as _____.

A stock index is

A decrease in government spending and the enactment of an investment tax credit would definitely cause

Stock in Frozen Dreams, an ice cream manufacturer, has a price to earnings ratio of 24. Is this comparatively high or low? What are two explanations for the size of this company's price to earnings ratio?

When the government budget deficit rises, national saving is reduced, interest rates rise, and investment falls.

Which of the following is an example of financial intermediation?

Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Public saving is the difference between _ and _.