Exam 8: Saving, Investment, and the Financial System

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

Which of the following happens when a person buys shares in a mutual fund?

Which of the following would most likely happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Which of the following would a macroeconomist consider as investment?

When the federal government is in debt, it follows that it has a deficit.

If Parliament instituted an investment tax credit, the demand for loanable funds would shift right.

Which of the following is a characteristic of the bond market?

Suppose Microsoft sells a bond. What is the company doing?

Which of the following people purchased the correct asset to meet their objective?

Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures on goods and services of $30 billion. Country B has private savings of $60 billion, and investment expenditures of $50 billion. Country C has GDP of $300 billion, investment of $70 billion, consumption of $180 billion, taxes of $60 billion, and transfers of $20 billion. Based on this information, which country has a $10 billion deficit?

A decrease in taxes on interest income would increase the interest rate.

If the government's expenditures exceeded its receipts, what would it most likely do?

What is a medium of exchange?

Compared to bonds, what does stock offer the holder?

Which of the following bonds is most likely to default?

When will a change in the tax laws that increases the supply of loanable funds have a bigger effect on investment?

Table 8-1 -Refer to Table 8-1. In dollar terms, which company paid the highest dividend per share?

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

Suppose the Canadian government allowed taxpayers to earn their first $5000 of interest free of income tax. How would this shift the supply of, or demand for, loanable funds?

If Parliament reduced the tax rate on interest income, which of the following would most likely happen to investment and saving?