Question 1

The loanable funds market examines the market outcome of the demand for funds from savers and the supply of funds from borrowers.

Accepted Answer

A) True 
 B)False

Question 2

More so than other financial assets, loans are specifically tailored to meet the needs of the borrower.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions:
Table: Investment Projects  
-(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 15%, the last project undertaken is:

Accepted Answer

A) F. 
B) G. 
C) H. 
D) I. 
A) F. 
B) G. 
C) H. 
D) I.

Question 4

All other things unchanged, a general increase in government borrowing will typically:

Accepted Answer

A) shift the loanable funds demand curve to the left and decrease interest rates. 
B) shift the loanable funds demand curve to the right and increase interest rates. 
C) have no effect on the loanable funds demand curve. 
D) have no effect on the demand for loanable funds. 
A) shift the loanable funds demand curve to the left and decrease interest rates. 
B) shift the loanable funds demand curve to the right and increase interest rates. 
C) have no effect on the loanable funds demand curve. 
D) have no effect on the demand for loanable funds.

Question 5

By doing research on the companies in their portfolios, mutual funds reduce transactions costs for their investors.

Accepted Answer

A) True 
 B)False

Question 6

National savings equals:

Accepted Answer

A) private savings plus consumption spending. 
B) trade balance plus the budget balance. 
C) private savings plus the budget balance. 
D) government spending plus taxes. 
A) private savings plus consumption spending. 
B) trade balance plus the budget balance. 
C) private savings plus the budget balance. 
D) government spending plus taxes.

Question 7

Use the following to answer questions :
Scenario: A Small Economy
Suppose there is no trade and no government in a small economy. GDP is $25 trillion, and consumption spending is $18 trillion this year.
-(Scenario: A Small Economy) Look at the scenario A Small Economy. What is the level of private saving?

Accepted Answer

A) $7 trillion 
B) $18 trillion 
C) $43 trillion 
D) -$7 trillion 
A) $7 trillion 
B) $18 trillion 
C) $43 trillion 
D) -$7 trillion

Question 8

Which of the following assets is the MOST liquid?

Accepted Answer

A) currency 
B) checking account balance 
C) stock in a publicly traded company 
D) a townhouse 
A) currency 
B) checking account balance 
C) stock in a publicly traded company 
D) a townhouse

Question 9

Which of the following is considered investment spending in macroeconomics?

Accepted Answer

A) GM builds a new plant. 
B) Ryan Jones buys GM stock. 
C) Ryan Jones buys GM bonds. 
D) Ryan Jones buys GM stock and bonds. 
A) GM builds a new plant. 
B) Ryan Jones buys GM stock. 
C) Ryan Jones buys GM bonds. 
D) Ryan Jones buys GM stock and bonds.

Question 10

If interest rates decrease, making bonds less attractive, the demand for stock will _____ and the price of stock will _____.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 11

Use the following to answer questions :
Figure: The Market for Loanable Funds III  
-(Figure: The Market for Loanable Funds III) Look at the figure The Market for Loanable Funds III. If the government in a closed economy finances deficits by selling bonds and it decides to decrease defense spending by $200 billion, the decrease in government spending will encourage _____ in additional private investment spending.

Accepted Answer

A) $400 billion 
B) $200 billion 
C) $100 billion 
D) $10 billion 
A) $400 billion 
B) $200 billion 
C) $100 billion 
D) $10 billion

Question 12

If you are paid $5,500 in one year on a $5,000 loan made today, then your annual interest rate is:

Accepted Answer

A) 0.5%. 
B) 10%. 
C) 1%. 
D) 5%. 
A) 0.5%. 
B) 10%. 
C) 1%. 
D) 5%.

Question 13

Which of the following is a requirement to pay in the future?
I. a financial asset
II. a physical asset
III. a liability

Accepted Answer

A) I only 
B) II only 
C) III only 
D) I, II, and III 
A) I only 
B) II only 
C) III only 
D) I, II, and III

Question 14

If interest rates increase, making bonds more attractive, the demand for stock will _____ and the price of stock will _____.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 15

Most human capital is provided by:
I. governments through public education
II. investment spending by private sector firms

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 16

An asset formed by pooling individual loans and selling shares in that pool is called a:

Accepted Answer

A) loan-backed security. 
B) mutual fund. 
C) stock. 
D) bond. 
A) loan-backed security. 
B) mutual fund. 
C) stock. 
D) bond.

Question 17

One difference between a closed and an open economy is that:

Accepted Answer

A) in the latter, foreign savings complement domestic savings in financing investment spending. 
B) in the latter, the government is more open to the idea of financing investment spending than in the former. 
C) in the former, foreign savings complement domestic savings in financing investment spending. 
D) in the former, foreign savings finance more investment spending than in the latter. 
A) in the latter, foreign savings complement domestic savings in financing investment spending. 
B) in the latter, the government is more open to the idea of financing investment spending than in the former. 
C) in the former, foreign savings complement domestic savings in financing investment spending. 
D) in the former, foreign savings finance more investment spending than in the latter.

Question 18

Banks are nonprofit financial intermediaries that collect the savings of their members and invest those funds in a diversified portfolio of assets to provide income to members when they retire.

Accepted Answer

A) True 
 B)False

Question 19

When a corporation issues a bond, it is an asset for the corporation and a liability for the purchaser of the bond.

Accepted Answer

A) True 
 B)False

Question 20

If a country has a positive capital inflow, it:

Accepted Answer

A) borrows more than it lends to foreigners. 
B) has an inflow amount equal to its X + IM. 
C) lends more than it borrows from foreigners. 
D) has an outflow amount equal to X + IM. 
A) borrows more than it lends to foreigners. 
B) has an inflow amount equal to its X + IM. 
C) lends more than it borrows from foreigners. 
D) has an outflow amount equal to X + IM.

The loanable funds market examines the market outcome of the demand for funds from savers and the supply of funds from borrowers.

More so than other financial assets, loans are specifically tailored to meet the needs of the borrower.

Use the following to answer questions: Table: Investment Projects -(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 15%, the last project undertaken is:

All other things unchanged, a general increase in government borrowing will typically:

By doing research on the companies in their portfolios, mutual funds reduce transactions costs for their investors.

National savings equals:

Which of the following assets is the MOST liquid?

Which of the following is considered investment spending in macroeconomics?

If interest rates decrease, making bonds less attractive, the demand for stock will _ and the price of stock will _.

If you are paid $5,500 in one year on a $5,000 loan made today, then your annual interest rate is:

Which of the following is a requirement to pay in the future? I. a financial asset II. a physical asset III. a liability

If interest rates increase, making bonds more attractive, the demand for stock will _ and the price of stock will _.

Most human capital is provided by: I. governments through public education II. investment spending by private sector firms

An asset formed by pooling individual loans and selling shares in that pool is called a:

One difference between a closed and an open economy is that:

Banks are nonprofit financial intermediaries that collect the savings of their members and invest those funds in a diversified portfolio of assets to provide income to members when they retire.

When a corporation issues a bond, it is an asset for the corporation and a liability for the purchaser of the bond.

If a country has a positive capital inflow, it:

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 10: Savings, Investment Spending, and the Financial System

The loanable funds market examines the market outcome of the demand for funds from savers and the supply of funds from borrowers.

More so than other financial assets, loans are specifically tailored to meet the needs of the borrower.

Use the following to answer questions: Table: Investment Projects -(Table: Investment Projects) Look at the table Investment Projects. If the market interest rate is 15%, the last project undertaken is:

All other things unchanged, a general increase in government borrowing will typically:

By doing research on the companies in their portfolios, mutual funds reduce transactions costs for their investors.

National savings equals:

Which of the following assets is the MOST liquid?

Which of the following is considered investment spending in macroeconomics?

If interest rates decrease, making bonds less attractive, the demand for stock will _____ and the price of stock will _____.

If you are paid $5,500 in one year on a $5,000 loan made today, then your annual interest rate is:

Which of the following is a requirement to pay in the future? I. a financial asset II. a physical asset III. a liability

If interest rates increase, making bonds more attractive, the demand for stock will _____ and the price of stock will _____.

Most human capital is provided by: I. governments through public education II. investment spending by private sector firms

An asset formed by pooling individual loans and selling shares in that pool is called a:

One difference between a closed and an open economy is that:

Banks are nonprofit financial intermediaries that collect the savings of their members and invest those funds in a diversified portfolio of assets to provide income to members when they retire.

When a corporation issues a bond, it is an asset for the corporation and a liability for the purchaser of the bond.

If a country has a positive capital inflow, it:

First Principles

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

If interest rates decrease, making bonds less attractive, the demand for stock will _ and the price of stock will _.

If interest rates increase, making bonds more attractive, the demand for stock will _ and the price of stock will _.