Exam 26: Saving, investment, and the Financial System

Suppose a closed economy had public saving of $3 trillion and private saving of $2 trillion.What is national saving and investment in this country?

When a country saves a larger portion of its GDP,it will have

Figure 26-1 -In Figure 26-1 which of the following would show the effects of the government going from a budget deficit to a surplus?

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

Which of the following is not correct?

If the nominal interest rate is 10 percent and the inflation rate is 4 percent,then the real interest rate is

Index funds are usually outperformed by mutual funds that are actively managed by professional money managers.

You are required to testify before congress concerning the effects of an increase in the government surplus.Which is the correct thing to say?

Queen City Sausage stock is selling at $40 per share,it has retained earnings of $2.00 per share and dividends of $.50 per share.What is the price-earnings ratio and what is the dividend yield?

Suppose that Congress were to repeal an investment tax credit.What would happen in the market for loanable funds?

The ratio of government debt to GDP was higher during the Reagan Presidency than at any previous time in U.S.history.

Thomas Publishing has a price of $20 a share,outstanding shares of 2.5 million,retained earnings of $1 million dollars,and a dividend yield of 2 percent.It has a price to earnings ratio of

If you know that Colorado Dreams Corporation,a travel equipment and clothing company,has revenues of $30 million and accounting costs of $10 million,you know their earnings are $20 million.

Which of the following is correct?

Using a graph representing the market for loanable funds,show and explain what happens to interest rates and investment if a government goes from a deficit to a surplus.

If the demand for loanable funds shifts left,the equilibrium interest rate

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

Suppose that the government deficit increases,but the interest rate remains the same.Which of the following things might have happened simultaneously to keep interest rates the same?

Draw and label a graph showing equilibrium in the market for loanable funds.

Suppose that in a closed economy GDP is 11,000,consumption is 7,500,and taxes are 2,000.What value of Government purchases would make national savings equal to 1000 and at that value would the government have a deficit or surplus?