Question 1

Suppose that the government finds a major defect in one of a company's products and demands that it be taken off the market.What would we expect?

Accepted Answer

A)  The supply of the stock and the price will both rise. 
B)  The supply of the stock and the price will both fall. 
C)  The demand for the stock and the price will both rise. 
D)  The demand for the stock and the price will both fall. 
A)  The supply of the stock and the price will both rise. 
B)  The supply of the stock and the price will both fall. 
C)  The demand for the stock and the price will both rise. 
D)  The demand for the stock and the price will both fall.

Question 2

Public saving is equal to national saving minus private saving.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  The debt and interest rates will rise. 
B)  The debt and interest rates will fall. 
C)  The debt will rise,and interest rates will fall. 
D)  The debt will fall,and interest rates will rise. 
A)  The debt and interest rates will rise. 
B)  The debt and interest rates will fall. 
C)  The debt will rise,and interest rates will fall. 
D)  The debt will fall,and interest rates will rise.

Question 4

In a closed economy,what does (Y - T - C)represent?

Accepted Answer

A)  national saving 
B)  government tax revenue 
C)  public saving 
D)  private saving 
A)  national saving 
B)  government tax revenue 
C)  public saving 
D)  private saving

Question 5

Approximately how many firms are included in the S&P / TSX stock index?

Accepted Answer

A)  200 
B)  300 
C)  400 
D)  500 
A)  200 
B)  300 
C)  400 
D)  500

Question 6

Suppose a country repeals its investment tax credit.What is most likely to happen in the market for loanable funds?

Accepted Answer

A)  The demand for and the supply of loanable funds would shift to the right. 
B)  The demand for and the supply of loanable funds would shift to the left. 
C)  The supply of loanable funds would shift to the right,and the demand for loanable funds would shift to the left. 
D)  The supply of loanable funds would remain unchanged,and the demand for loanable funds would shift to the left. 
A)  The demand for and the supply of loanable funds would shift to the right. 
B)  The demand for and the supply of loanable funds would shift to the left. 
C)  The supply of loanable funds would shift to the right,and the demand for loanable funds would shift to the left. 
D)  The supply of loanable funds would remain unchanged,and the demand for loanable funds would shift to the left.

Question 7

Which statement best defines financial intermediaries?

Accepted Answer

A)  They are the same as financial markets. 
B)  They are individuals who make a profit by buying a stock low and selling it high. 
C)  They are a more general name for financial assets,such as stocks,bonds,and chequing accounts. 
D)  They are financial institutions through which savers can indirectly provide funds to borrowers. 
A)  They are the same as financial markets. 
B)  They are individuals who make a profit by buying a stock low and selling it high. 
C)  They are a more general name for financial assets,such as stocks,bonds,and chequing accounts. 
D)  They are financial institutions through which savers can indirectly provide funds to borrowers.

Question 8

Bailey wants to start her own dental practice,but her expenditures exceed her income.Which statement best describes Lucy?

Accepted Answer

A)  She is a saver who demands money from the financial system. 
B)  She is a saver who supplies money to the financial system. 
C)  She is a borrower who demands money from the financial system. 
D)  She is a borrower who supplies money to the financial system. 
A)  She is a saver who demands money from the financial system. 
B)  She is a saver who supplies money to the financial system. 
C)  She is a borrower who demands money from the financial system. 
D)  She is a borrower who supplies money to the financial system.

Question 9

Who purchased the correct asset to meet their objective?

Accepted Answer

A)  Michelle wanted to be a part owner of Mamma Rosa's Pizza,so she purchased a bond issued by Mamma Rosa's Pizza. 
B)  Tim wanted a high return,even if it meant taking some risk,so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric. 
C)  Jennifer wanted to buy equity in Honda,so she purchased bonds sold by Honda. 
D)  George wanted to lend money at a specified rate of interest to Research In Motion (RIM),so he purchased RIM stock. 
A)  Michelle wanted to be a part owner of Mamma Rosa's Pizza,so she purchased a bond issued by Mamma Rosa's Pizza. 
B)  Tim wanted a high return,even if it meant taking some risk,so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric. 
C)  Jennifer wanted to buy equity in Honda,so she purchased bonds sold by Honda. 
D)  George wanted to lend money at a specified rate of interest to Research In Motion (RIM),so he purchased RIM stock.

Question 10

Assuming that all else remains equal,when people become more optimistic about a company's future,what is most likely to happen to the company's stock?

Accepted Answer

A)  The supply of the stock and the price will both rise. 
B)  The supply of the stock and the price will both fall. 
C)  The demand for the stock and the price will both rise. 
D)  The demand for the stock and the price will both fall. 
A)  The supply of the stock and the price will both rise. 
B)  The supply of the stock and the price will both fall. 
C)  The demand for the stock and the price will both rise. 
D)  The demand for the stock and the price will both fall.

Question 11

In a closed economy,what does national saving equal?

Accepted Answer

A)  income minus consumption 
B)  income minus the sum of consumption and government expenditures 
C)  income minus consumption minus taxes 
D)  income minus government expenditures 
A)  income minus consumption 
B)  income minus the sum of consumption and government expenditures 
C)  income minus consumption minus taxes 
D)  income minus government expenditures

Question 12

Which statement best explains why the debt-to-GDP ratio is important?

Accepted Answer

A)  If GDP is rising slower than debt,the government is,in some sense,living within its means. 
B)  A declining debt-to-GDP ratio raises concerns about a country's financial difficulties. 
C)  It is a better measure than the level of debt because it takes into account a country's political stability. 
D)  It allows international comparisons of how indebted countries are. 
A)  If GDP is rising slower than debt,the government is,in some sense,living within its means. 
B)  A declining debt-to-GDP ratio raises concerns about a country's financial difficulties. 
C)  It is a better measure than the level of debt because it takes into account a country's political stability. 
D)  It allows international comparisons of how indebted countries are.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Other things the same,the higher the rate of saving and investment in a country,the higher the standard of living will be.

Accepted Answer

A) True 
 B)False

Question 15

Generally,when economists talk of the "interest rate," what are they talking about?

Accepted Answer

A)  the real interest rate 
B)  the current nominal interest rate 
C)  the real interest rate minus the inflation rate 
D)  the equilibrium nominal interest rate 
A)  the real interest rate 
B)  the current nominal interest rate 
C)  the real interest rate minus the inflation rate 
D)  the equilibrium nominal interest rate

Question 16

Buskins Corporation has issued 2 million shares.Its earnings were $10 million of which it retained $4 million.What was the dividend per share?

Accepted Answer

A)  $2 
B)  $3 
C)  $5 
D)  $8 
A)  $2 
B)  $3 
C)  $5 
D)  $8

Question 17

Consider a closed economy.Use the supply and demand for loanable funds model to predict the effects of the following events on interest rates and investment.
a.The government introduces a tax credit for savings accounts of up to $5000 per year.
b.The government introduces a tax credit for savings accounts of up to $5000 per year,and at the same time it repeals an investment tax exemption provision.
c.The government raises the tax rates.
d.The government issues bonds worth $10 billion.

Accepted Answer

a.Since saving is now less taxed,one wou

Question 18

In the language of macroeconomics,what is considered "investment"?

Accepted Answer

A)  the purchase of an annual pass to the gym 
B)  the purchase of new tools and machinery 
C)  the purchase of stocks,bonds,or mutual funds 
D)  the purchase of durable goods 
A)  the purchase of an annual pass to the gym 
B)  the purchase of new tools and machinery 
C)  the purchase of stocks,bonds,or mutual funds 
D)  the purchase of durable goods

Question 19

Generally,if people expect a company to have higher future profits,the price of the stock will be driven down.

Accepted Answer

A) True 
 B)False

Question 20

What will happen to the interest on a bond as the bond's term increases?

Accepted Answer

A)  The bond will pay less interest because it has less risk. 
B)  The bond will pay less interest because it has more risk. 
C)  The bond will pay more interest because it has more risk. 
D)  The bond will pay more interest because it has less risk. 
A)  The bond will pay less interest because it has less risk. 
B)  The bond will pay less interest because it has more risk. 
C)  The bond will pay more interest because it has more risk. 
D)  The bond will pay more interest because it has less risk.

Suppose that the government finds a major defect in one of a company's products and demands that it be taken off the market.What would we expect?

Public saving is equal to national saving minus private saving.

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

In a closed economy,what does (Y - T - C)represent?

Approximately how many firms are included in the S&P / TSX stock index?

Suppose a country repeals its investment tax credit.What is most likely to happen in the market for loanable funds?

Which statement best defines financial intermediaries?

Bailey wants to start her own dental practice,but her expenditures exceed her income.Which statement best describes Lucy?

Who purchased the correct asset to meet their objective?

Assuming that all else remains equal,when people become more optimistic about a company's future,what is most likely to happen to the company's stock?

In a closed economy,what does national saving equal?

Which statement best explains why the debt-to-GDP ratio is important?

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

Other things the same,the higher the rate of saving and investment in a country,the higher the standard of living will be.

Generally,when economists talk of the "interest rate," what are they talking about?

Buskins Corporation has issued 2 million shares.Its earnings were $10 million of which it retained $4 million.What was the dividend per share?

In the language of macroeconomics,what is considered "investment"?

Generally,if people expect a company to have higher future profits,the price of the stock will be driven down.

What will happen to the interest on a bond as the bond's term increases?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small 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

Five Debates Over Macroeconomic Policy

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Exam 8: Saving, investment, and the Financial System

Suppose that the government finds a major defect in one of a company's products and demands that it be taken off the market.What would we expect?

Public saving is equal to national saving minus private saving.

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

In a closed economy,what does (Y - T - C)represent?

Approximately how many firms are included in the S&P / TSX stock index?

Suppose a country repeals its investment tax credit.What is most likely to happen in the market for loanable funds?

Which statement best defines financial intermediaries?

Bailey wants to start her own dental practice,but her expenditures exceed her income.Which statement best describes Lucy?

Who purchased the correct asset to meet their objective?

Assuming that all else remains equal,when people become more optimistic about a company's future,what is most likely to happen to the company's stock?

In a closed economy,what does national saving equal?

Which statement best explains why the debt-to-GDP ratio is important?

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

Other things the same,the higher the rate of saving and investment in a country,the higher the standard of living will be.

Generally,when economists talk of the "interest rate," what are they talking about?

Buskins Corporation has issued 2 million shares.Its earnings were $10 million of which it retained $4 million.What was the dividend per share?

In the language of macroeconomics,what is considered "investment"?

Generally,if people expect a company to have higher future profits,the price of the stock will be driven down.

What will happen to the interest on a bond as the bond's term increases?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small 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

Five Debates Over Macroeconomic Policy

Filters