Question 1

In one study,people's degree of impatience at age 4 predicted their impatience later in life.

Accepted Answer

A) True 
 B)False

Question 2

Suppose you own a $10,000 zero-coupon bond that you purchased for $9,100.What is the rate of return on this bond?

Accepted Answer

The answer of Suppose you own a $10,000 zero-coupon bond...

Question 3

If the government ceases to tax income earned on savings,other things equal,it is likely that interest rates would fall.

Accepted Answer

A) True 
 B)False

Question 4

If the demand for loanable funds increases,ceteris paribus,the quantity of loanable funds exchanged will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase,decrease,or remain the same. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase,decrease,or remain the same.

Question 5

In economics,investment refers to the:

Accepted Answer

A)  purchase of new capital goods. 
B)  purchase of stocks and bonds. 
C)  amount of personal savings in a bank. 
D)  fund used to settle a debt. 
A)  purchase of new capital goods. 
B)  purchase of stocks and bonds. 
C)  amount of personal savings in a bank. 
D)  fund used to settle a debt.

Question 6

Individuals borrow to smooth consumption.

Accepted Answer

A) True 
 B)False

Question 7

The larger the fraction of government-owned banks a country has:

Accepted Answer

A)  the slower its growth rate of GDP per capita. 
B)  the faster its growth rate of GDP per capita. 
C)  the more volatile its growth rate of GDP per capita. 
D)  the more loans go to their highest-valued uses. 
A)  the slower its growth rate of GDP per capita. 
B)  the faster its growth rate of GDP per capita. 
C)  the more volatile its growth rate of GDP per capita. 
D)  the more loans go to their highest-valued uses.

Question 8

Financial intermediaries:

Accepted Answer

A)  reduce the costs of moving savings from savers to borrowers and investors. 
B)  have liabilities that exceed their assets. 
C)  are inefficient middlemen,raising the cost of economic activity. 
D)  profit by keeping resources in their least valuable uses. 
A)  reduce the costs of moving savings from savers to borrowers and investors. 
B)  have liabilities that exceed their assets. 
C)  are inefficient middlemen,raising the cost of economic activity. 
D)  profit by keeping resources in their least valuable uses.

Question 9

T-bills are usually the safest form of government-issued debt instruments.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following represents loaning money to a firm?

Accepted Answer

A)  buying a bond 
B)  selling a bond 
C)  buying stock 
D)  selling a stock 
A)  buying a bond 
B)  selling a bond 
C)  buying stock 
D)  selling a stock

Question 11

A ceiling on interest rates is likely to result in a shortage in the loanable funds market.

Accepted Answer

A) True 
 B)False

Question 12

An IPO represents the first time a stock is made available to the public.

Accepted Answer

A) True 
 B)False

Question 13

What is an example of impatience in economic behavior?

Accepted Answer

A)  taking the first job you are offered 
B)  insisting on getting a physical exam every year 
C)  asking for your grade right after finishing a test 
D)  eating a healthy diet every day 
A)  taking the first job you are offered 
B)  insisting on getting a physical exam every year 
C)  asking for your grade right after finishing a test 
D)  eating a healthy diet every day

Question 14

Which of the following is NOT a reason individuals typically choose to save?

Accepted Answer

A)  to smooth their consumption over the life cycle 
B)  to offset fluctuations in income 
C)  as a way to transfer income from good times to bad times 
D)  to increase investment 
A)  to smooth their consumption over the life cycle 
B)  to offset fluctuations in income 
C)  as a way to transfer income from good times to bad times 
D)  to increase investment

Question 15

Which of the following is NOT a reason firms and individuals borrow?

Accepted Answer

A)  They want to smooth consumption. 
B)  Debt is often necessary for large purchases. 
C)  They believe their return will be greater than the interest rate. 
D)  They desire to have equal income and spending every period. 
A)  They want to smooth consumption. 
B)  Debt is often necessary for large purchases. 
C)  They believe their return will be greater than the interest rate. 
D)  They desire to have equal income and spending every period.

Question 16

In the lifecycle theory of saving,one's consumption path is _____ one's income path.

Accepted Answer

A)  more volatile than 
B)  less volatile than 
C)  as volatile as 
D)  equal to 
A)  more volatile than 
B)  less volatile than 
C)  as volatile as 
D)  equal to

Question 17

When the U.S.government borrows,it sells:

Accepted Answer

A)  federal paper. 
B)  treasury bonds. 
C)  government stocks. 
D)  federal paper,treasury bonds,and government stocks. 
A)  federal paper. 
B)  treasury bonds. 
C)  government stocks. 
D)  federal paper,treasury bonds,and government stocks.

Question 18

A person who is impatient tends to save less.

Accepted Answer

A) True 
 B)False

Question 19

The process in which bank loans are bundled together and sold on the market as financial assets is called:

Accepted Answer

A)  securitization. 
B)  grouping. 
C)  aggregation. 
D)  consolidation. 
A)  securitization. 
B)  grouping. 
C)  aggregation. 
D)  consolidation.

Question 20

When business firms become more pessimistic about the state of the economy,the interest rate _____ and the quantity of borrowing and lending _____.

Accepted Answer

A)  increases;increases 
B)  increases;decreases 
C)  decreases;decreases 
D)  decreases;increases 
A)  increases;increases 
B)  increases;decreases 
C)  decreases;decreases 
D)  decreases;increases

Exam 9: Saving,investment,and the Financial System

In one study,people's degree of impatience at age 4 predicted their impatience later in life.

Suppose you own a $10,000 zero-coupon bond that you purchased for $9,100.What is the rate of return on this bond?

If the government ceases to tax income earned on savings,other things equal,it is likely that interest rates would fall.

If the demand for loanable funds increases,ceteris paribus,the quantity of loanable funds exchanged will:

In economics,investment refers to the:

Individuals borrow to smooth consumption.

The larger the fraction of government-owned banks a country has:

Financial intermediaries:

T-bills are usually the safest form of government-issued debt instruments.

Which of the following represents loaning money to a firm?

A ceiling on interest rates is likely to result in a shortage in the loanable funds market.

An IPO represents the first time a stock is made available to the public.

What is an example of impatience in economic behavior?

Which of the following is NOT a reason individuals typically choose to save?

Which of the following is NOT a reason firms and individuals borrow?

In the lifecycle theory of saving,one's consumption path is _____ one's income path.

When the U.S.government borrows,it sells:

A person who is impatient tends to save less.

The process in which bank loans are bundled together and sold on the market as financial assets is called:

When business firms become more pessimistic about the state of the economy,the interest rate _____ and the quantity of borrowing and lending _____.

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

When business firms become more pessimistic about the state of the economy,the interest rate _ and the quantity of borrowing and lending _.