Question 1

Assuming the market for loanable funds is in equilibrium,use the following numbers to determine the quantity of loanable funds supplied.

Accepted Answer

A)  $2.2 trillion 
B)  $2.5 trillion 
C)  $3.9 trillion 
D)  $5.2 trillion 
A)  $2.2 trillion 
B)  $2.5 trillion 
C)  $3.9 trillion 
D)  $5.2 trillion A

Question 2

A bond is a

Accepted Answer

A)  financial intermediary. 
B)  certificate of indebtedness. 
C)  certificate of partial ownership in an enterprise. 
D)  None of the above is correct. 
A)  financial intermediary. 
B)  certificate of indebtedness. 
C)  certificate of partial ownership in an enterprise. 
D)  None of the above is correct. B

Question 3

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

Accepted Answer

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

Question 4

The supply of loanable funds would shift to the right if either

Accepted Answer

A)  tax reforms encouraged greater saving or the budget deficit became smaller. 
B)  tax reforms encouraged greater saving or investment tax credits were increased. 
C)  the budget deficit became larger or investment tax credits were increased. 
D)  the budget deficit became larger or tax reforms discouraged saving. 
A)  tax reforms encouraged greater saving or the budget deficit became smaller. 
B)  tax reforms encouraged greater saving or investment tax credits were increased. 
C)  the budget deficit became larger or investment tax credits were increased. 
D)  the budget deficit became larger or tax reforms discouraged saving.

Question 5

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?

Accepted Answer

A)  The demand for loanable funds shifted rightward. 
B)  The demand for loanable funds shifted leftward. 
C)  The supply of loanable funds shifted rightward. 
D)  The supply of loanable funds shifted leftward. 
A)  The demand for loanable funds shifted rightward. 
B)  The demand for loanable funds shifted leftward. 
C)  The supply of loanable funds shifted rightward. 
D)  The supply of loanable funds shifted leftward.

Question 6

A stock's dividend yield is the

Accepted Answer

A)  dividend as a percentage of the price per share. 
B)  stock price as a percentage of the dividend. 
C)  dividend as a percentage of the retained earnings per share. 
D)  retained earnings per share as the percentage of the dividend. 
A)  dividend as a percentage of the price per share. 
B)  stock price as a percentage of the dividend. 
C)  dividend as a percentage of the retained earnings per share. 
D)  retained earnings per share as the percentage of the dividend.

Question 7

The country of Meditor uses the merit as its currency.Recent national income statistics showed that it had GDP of $700 million merits,no government transfer payments,taxes of $210 million merits,a budget surplus of $60 billion merits,and investment of $100 billion merits.What were its consumption and government expenditures on goods and services?

Accepted Answer

A)  450 million merits and $150 million merits 
B)  410 million merits and $150 million merits 
C)  330 million merits and $270 million merits 
D)  290 million merits and $270 million merits 
A)  450 million merits and $150 million merits 
B)  410 million merits and $150 million merits 
C)  330 million merits and $270 million merits 
D)  290 million merits and $270 million merits

Question 8

Dependable Appliances had a P/E ratio of 25,earnings per share of $4,and retained earnings per share of $3.What was its dividend yield?

Accepted Answer

A)  4% 
B)  3% 
C)  1% 
D)  None of the above is correct. 
A)  4% 
B)  3% 
C)  1% 
D)  None of the above is correct.

Question 9

If you were to start a business delivering documents,you might need to purchase cell phones,bicycles,desks,and chairs.

Accepted Answer

A)  These purchases are called capital investment.If you raise the funds from others to purchase them you are a saver. 
B)  These purchases are called capital investment.If you raise the funds from others to purchase them you are a borrower. 
C)  These purchases are called consumption.If you raise the funds from others to purchase them you are a saver. 
D)  These purchases are called consumption.If you raise the funds from others to purchase them you are a borrower. 
A)  These purchases are called capital investment.If you raise the funds from others to purchase them you are a saver. 
B)  These purchases are called capital investment.If you raise the funds from others to purchase them you are a borrower. 
C)  These purchases are called consumption.If you raise the funds from others to purchase them you are a saver. 
D)  These purchases are called consumption.If you raise the funds from others to purchase them you are a borrower.

Question 10

If Congress instituted an investment tax credit,the interest rate would

Accepted Answer

A)  rise and saving would rise. 
B)  fall and saving would fall. 
C)  rise and saving would fall. 
D)  fall and saving would rise. 
A)  rise and saving would rise. 
B)  fall and saving would fall. 
C)  rise and saving would fall. 
D)  fall and saving would rise.

Question 11

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

Accepted Answer

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

Question 12

Suppose a small closed economy has GDP of $5 billion,consumption of $3 billion,and government expenditures of $1 billion.Then investment and national saving are both $1 billion.

Accepted Answer

A) True 
 B)False

Question 13

In the first part of this decade the U.S.government went from a surplus to a deficit.Other things the same,this means the

Accepted Answer

A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left. 
A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left.

Question 14

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market?

Accepted Answer

A)  an increase in the supply of or a decrease in the demand for loanable funds 
B)  an increase in the supply of or an increase in the demand for loanable funds 
C)  a decrease in the supply of or a decrease in the demand for loanable funds 
D)  a decrease in the supply of or an increase in the demand for loanable funds 
A)  an increase in the supply of or a decrease in the demand for loanable funds 
B)  an increase in the supply of or an increase in the demand for loanable funds 
C)  a decrease in the supply of or a decrease in the demand for loanable funds 
D)  a decrease in the supply of or an increase in the demand for loanable funds

Question 15

Which of the following is a certificate of indebtedness?

Accepted Answer

A)  stocks and bonds 
B)  stocks but not bonds 
C)  bonds but not stocks 
D)  neither stocks nor bonds 
A)  stocks and bonds 
B)  stocks but not bonds 
C)  bonds but not stocks 
D)  neither stocks nor bonds

Question 16

For an imaginary closed economy,T = $5,000;S = $11,000;C = $50,000;and the government is running a budget deficit of $1,000.Then

Accepted Answer

A)  private saving = $10,000 and GDP = $54,000. 
B)  private saving = $10,000 and GDP = $58,000. 
C)  private saving = $12,000 and GDP = $67,000. 
D)  private saving = $12,000 and GDP = $72,000. 
A)  private saving = $10,000 and GDP = $54,000. 
B)  private saving = $10,000 and GDP = $58,000. 
C)  private saving = $12,000 and GDP = $67,000. 
D)  private saving = $12,000 and GDP = $72,000.

Question 17

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

Accepted Answer

A)  The demand and supply of loanable funds would shift right. 
B)  The demand and supply of loanable funds would shift left. 
C)  The supply of loanable funds would shift right. 
D)  The demand for loanable funds would shift left. 
A)  The demand and supply of loanable funds would shift right. 
B)  The demand and supply of loanable funds would shift left. 
C)  The supply of loanable funds would shift right. 
D)  The demand for loanable funds would shift left.

Question 18

Lacey,a financial advisor,has told her clients the following things.Which of her statements is not correct?

Accepted Answer

A)  "U.S.government bonds generally have a higher rate of interest than municipal bonds." 
B)  "The interest received on corporate bonds is taxable." 
C)  "U.S.government bonds have the lowest default risk." 
D)  "If you purchase a bond,you must hold it until it matures." 
A)  "U.S.government bonds generally have a higher rate of interest than municipal bonds." 
B)  "The interest received on corporate bonds is taxable." 
C)  "U.S.government bonds have the lowest default risk." 
D)  "If you purchase a bond,you must hold it until it matures."

Question 19

If there is a surplus of loanable funds,then

Accepted Answer

A)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. 
B)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. 
C)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. 
D)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium. 
A)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. 
B)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. 
C)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. 
D)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

Question 20

The economy's two most important financial markets are

Accepted Answer

A)  the investment market and the saving market. 
B)  the bond market and the stock market. 
C)  banks and the stock market. 
D)  financial markets and financial institutions. 
A)  the investment market and the saving market. 
B)  the bond market and the stock market. 
C)  banks and the stock market. 
D)  financial markets and financial institutions.

Exam 26: Saving, investment, and the Financial System

Assuming the market for loanable funds is in equilibrium,use the following numbers to determine the quantity of loanable funds supplied.

A bond is a

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

The supply of loanable funds would shift to the right if either

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?

A stock's dividend yield is the

Dependable Appliances had a P/E ratio of 25,earnings per share of $4,and retained earnings per share of $3.What was its dividend yield?

If you were to start a business delivering documents,you might need to purchase cell phones,bicycles,desks,and chairs.

If Congress instituted an investment tax credit,the interest rate would

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

Suppose a small closed economy has GDP of $5 billion,consumption of $3 billion,and government expenditures of $1 billion.Then investment and national saving are both $1 billion.

In the first part of this decade the U.S.government went from a surplus to a deficit.Other things the same,this means the

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market?

Which of the following is a certificate of indebtedness?

For an imaginary closed economy,T = $5,000;S = $11,000;C = $50,000;and the government is running a budget deficit of $1,000.Then

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

Lacey,a financial advisor,has told her clients the following things.Which of her statements is not correct?

If there is a surplus of loanable funds,then

The economy's two most important financial markets are

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

Application: 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 of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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