Question 1

The primary advantage of mutual funds is that they

Accepted Answer

A)  always make a return that "beats the market." 
B)  allow people with small amounts of money to diversify. 
C)  provide customers with a medium of exchange. 
D)  All of the above are correct. 
A)  always make a return that "beats the market." 
B)  allow people with small amounts of money to diversify. 
C)  provide customers with a medium of exchange. 
D)  All of the above are correct.

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Stocks,bonds,and deposits are all similar in that each provides a common medium of exchange. 
B)  Most buyers of stocks and bonds prefer those issued by large and familiar companies. 
C)  Banks charge borrowers a slightly lower interest rate than they pay to depositors. 
D)  None of the above is correct. 
A)  Stocks,bonds,and deposits are all similar in that each provides a common medium of exchange. 
B)  Most buyers of stocks and bonds prefer those issued by large and familiar companies. 
C)  Banks charge borrowers a slightly lower interest rate than they pay to depositors. 
D)  None of the above is correct.

Question 3

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 1,000 and at that value would the government have a deficit or surplus?

Accepted Answer

A)  2,500,deficit 
B)  2,500,surplus 
C)  1,000,deficit 
D)  1,000,surplus 
A)  2,500,deficit 
B)  2,500,surplus 
C)  1,000,deficit 
D)  1,000,surplus

Question 4

Which of the following is not an important stock exchange in the United States?

Accepted Answer

A)  New York Stock Exchange 
B)  American Stock Exchange 
C)  Chicago Mercantile Exchange 
D)  NASDAQ 
A)  New York Stock Exchange 
B)  American Stock Exchange 
C)  Chicago Mercantile Exchange 
D)  NASDAQ

Question 5

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating.Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?

Accepted Answer

A)  corporate bond,municipal bond,U.S.government bond 
B)  corporate bond,U.S.government bond,municipal bond 
C)  municipal bond,U.S.government bond,corporate bond 
D)  U.S.government bond,municipal bond,corporate bond 
A)  corporate bond,municipal bond,U.S.government bond 
B)  corporate bond,U.S.government bond,municipal bond 
C)  municipal bond,U.S.government bond,corporate bond 
D)  U.S.government bond,municipal bond,corporate bond

Question 6

A corporation's earnings are

Accepted Answer

A)  the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants minus the dividends paid out. 
B)  the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists minus the dividends paid out. 
C)  the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants. 
D)  the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists. 
A)  the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants minus the dividends paid out. 
B)  the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists minus the dividends paid out. 
C)  the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants. 
D)  the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists.

Question 7

According to the definitions of national saving and public saving,if Y,C,and G remained the same,an increase in taxes would

Accepted Answer

A)  raise national saving and public saving. 
B)  raise national saving and raise public saving. 
C)  leave national saving and public saving unchanged. 
D)  leave national saving unchanged and raise public saving. 
A)  raise national saving and public saving. 
B)  raise national saving and raise public saving. 
C)  leave national saving and public saving unchanged. 
D)  leave national saving unchanged and raise public saving.

Question 8

A U.S.Treasury bond is a

Accepted Answer

A)  store of value and common medium of exchange. 
B)  store of value,but not a common medium of exchange. 
C)  a common medium of exchange,but not a store of value. 
D)  neither a store of value nor a common medium of exchange. 
A)  store of value and common medium of exchange. 
B)  store of value,but not a common medium of exchange. 
C)  a common medium of exchange,but not a store of value. 
D)  neither a store of value nor a common medium of exchange.

Question 9

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 10

Which of the following statements is correct?

Accepted Answer

A)  A large,well-known corporation such as Intel generally would use financial intermediation to finance expansion of its facilities. 
B)  On average,managed funds outperform indexed funds. 
C)  Unlike corporate bonds and stocks,checking accounts are a medium of exchange. 
D)  A mutual fund is a financial market. 
A)  A large,well-known corporation such as Intel generally would use financial intermediation to finance expansion of its facilities. 
B)  On average,managed funds outperform indexed funds. 
C)  Unlike corporate bonds and stocks,checking accounts are a medium of exchange. 
D)  A mutual fund is a financial market.

Question 11

Which of the following expressions must be equal to national saving for a closed economy?

Accepted Answer

A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y 
A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y

Question 12

Other things the same,if the government increases transfer payments to households,then the effect of this on the government's budget

Accepted Answer

A)  will make investment rise. 
B)  will make the rate of interest rise. 
C)  will make public saving rise. 
D)  All of the above are correct. 
A)  will make investment rise. 
B)  will make the rate of interest rise. 
C)  will make public saving rise. 
D)  All of the above are correct.

Question 13

World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs.We would expect that this would

Accepted Answer

A)  raise the demand for existing shares of the stock,causing the price to rise. 
B)  decrease the demand for existing shares of the stock,causing the price to fall. 
C)  raise the supply of the existing shares of stock,causing the price to rise. 
D)  raise the supply of the existing shares of stock,causing the price to fall. 
A)  raise the demand for existing shares of the stock,causing the price to rise. 
B)  decrease the demand for existing shares of the stock,causing the price to fall. 
C)  raise the supply of the existing shares of stock,causing the price to rise. 
D)  raise the supply of the existing shares of stock,causing the price to fall.

Question 14

Which of the following statements about the term of a bond is correct?

Accepted Answer

A)  Term refers to the various characteristics of a bond,including its interest rate and tax treatment. 
B)  The term of a bond is determined entirely by its credit risk. 
C)  The term of a bond is determined entirely by how much sales charge the buyer of the bond pays when he or she purchases the bond. 
D)  Interest rates on long-term bonds are usually higher than interest rates on short-term bonds. 
A)  Term refers to the various characteristics of a bond,including its interest rate and tax treatment. 
B)  The term of a bond is determined entirely by its credit risk. 
C)  The term of a bond is determined entirely by how much sales charge the buyer of the bond pays when he or she purchases the bond. 
D)  Interest rates on long-term bonds are usually higher than interest rates on short-term bonds.

Question 15

The slope of the supply of loanable funds curve represents the

Accepted Answer

A)  positive relation between the real interest rate and investment. 
B)  positive relation between the real interest rate and saving. 
C)  negative relation between the real interest rate and investment. 
D)  negative relation between the real interest rate and saving. 
A)  positive relation between the real interest rate and investment. 
B)  positive relation between the real interest rate and saving. 
C)  negative relation between the real interest rate and investment. 
D)  negative relation between the real interest rate and saving.

Question 16

In a closed economy,public saving is the

Accepted Answer

A)  amount of income that households have left after paying for taxes and consumption. 
B)  amount of income that businesses have left after paying for the factors of production. 
C)  amount of tax revenue that the government has left after paying for its spending. 
D)  sum of A,B,and C. 
A)  amount of income that households have left after paying for taxes and consumption. 
B)  amount of income that businesses have left after paying for the factors of production. 
C)  amount of tax revenue that the government has left after paying for its spending. 
D)  sum of A,B,and C.

Question 17

ABC Co.sells newly issued bonds.JLG Co.sells newly issued stocks.Which company is raising funds in financial markets?

Accepted Answer

A)  only ABC 
B)  only JLG 
C)  both ABC and JLG 
D)  neither ABC nor JLG 
A)  only ABC 
B)  only JLG 
C)  both ABC and JLG 
D)  neither ABC nor JLG

Question 18

Larry buys stock in A to Z Express Company.Curly Corporation builds a new factory.Whose transaction would be an act of investment in the language of macroeconomics?

Accepted Answer

A)  only Larry's 
B)  only Curly Corporation's 
C)  Larry's and Curly Corporation's 
D)  neither Larry's nor Curly Corporation's 
A)  only Larry's 
B)  only Curly Corporation's 
C)  Larry's and Curly Corporation's 
D)  neither Larry's nor Curly Corporation's

Question 19

In a closed economy,national saving equals

Accepted Answer

A)  investment. 
B)  income minus the sum of consumption and government purchases. 
C)  private saving plus public saving. 
D)  All of the above are correct. 
A)  investment. 
B)  income minus the sum of consumption and government purchases. 
C)  private saving plus public saving. 
D)  All of the above are correct.

Question 20

Given that Lekeisha's income exceeds her expenditures,Lekeisha is best described as a

Accepted Answer

A)  saver or as a supplier of funds. 
B)  saver or as a demander of funds. 
C)  borrower or as a supplier of funds. 
D)  borrower or as a demander of funds. 
A)  saver or as a supplier of funds. 
B)  saver or as a demander of funds. 
C)  borrower or as a supplier of funds. 
D)  borrower or as a demander of funds.

Exam 26: Saving, investment, and the Financial System

The primary advantage of mutual funds is that they

Which of the following statements is correct?

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 1,000 and at that value would the government have a deficit or surplus?

Which of the following is not an important stock exchange in the United States?

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating.Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?

A corporation's earnings are

According to the definitions of national saving and public saving,if Y,C,and G remained the same,an increase in taxes would

A U.S.Treasury bond is a

A policy that induces people to save more shifts

Which of the following statements is correct?

Which of the following expressions must be equal to national saving for a closed economy?

Other things the same,if the government increases transfer payments to households,then the effect of this on the government's budget

World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs.We would expect that this would

Which of the following statements about the term of a bond is correct?

The slope of the supply of loanable funds curve represents the

In a closed economy,public saving is the

ABC Co.sells newly issued bonds.JLG Co.sells newly issued stocks.Which company is raising funds in financial markets?

Larry buys stock in A to Z Express Company.Curly Corporation builds a new factory.Whose transaction would be an act of investment in the language of macroeconomics?

In a closed economy,national saving equals

Given that Lekeisha's income exceeds her expenditures,Lekeisha is best described as a

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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