Question 1

Adjustable rate mortgages with extremely low initial interest rates which enable high risk buyers to purchase homes are known as:

Accepted Answer

A) ​upside down mortgages. 
B) ​ARMs. 
C) ​sub-prime loans. 
D) ​mortgage backed securities. 
A) ​upside down mortgages. 
B) ​ARMs. 
C) ​sub-prime loans. 
D) ​mortgage backed securities. C

Question 2

The crowding-out effect indicates that increased government borrowing will lead to:

Accepted Answer

A) ​an increase in consumption by households and an increase in investment spending by firms. 
B) ​an increase in consumption by households and a decrease in investment spending by firms. 
C) ​a decrease in consumption by households and an increase in investment spending by firms. 
D) ​a decrease in consumption by households and a decrease in investment spending by firms. 
A) ​an increase in consumption by households and an increase in investment spending by firms. 
B) ​an increase in consumption by households and a decrease in investment spending by firms. 
C) ​a decrease in consumption by households and an increase in investment spending by firms. 
D) ​a decrease in consumption by households and a decrease in investment spending by firms. D

Question 3

A consumption tax would lead to an increase in the supply of loanable funds and a decrease in real interest rates.

Accepted Answer

A) True 
 B)False  True

Question 4

In 2005, the percentages of mortgages that were considered sub-prime:

Accepted Answer

A) ​increased dramatically. 
B) ​increased minimally. 
C) ​decreased minimally. 
D) ​decreased dramatically. 
A) ​increased dramatically. 
B) ​increased minimally. 
C) ​decreased minimally. 
D) ​decreased dramatically.

Question 5

A government budget deficit will lead to:

Accepted Answer

A) ​an increase in the supply of loanable funds and an increase in real interest rates. 
B) ​a decrease in the supply of loanable funds and an increase in real interest rates. 
C) ​an increase in the supply of loanable funds and a decrease in real interest rates. 
D) ​a decrease in the supply of loanable funds and a decrease in real interest rates. 
A) ​an increase in the supply of loanable funds and an increase in real interest rates. 
B) ​a decrease in the supply of loanable funds and an increase in real interest rates. 
C) ​an increase in the supply of loanable funds and a decrease in real interest rates. 
D) ​a decrease in the supply of loanable funds and a decrease in real interest rates.

Question 6

A rational individual would rather receive $5,000 today than receive $6,000 in one year if the applicable nominal interest rate was 10%.

Accepted Answer

A) True 
 B)False

Question 7

The 2008 financial crisis was caused by the decline of real estate values as well as several other factors.

Accepted Answer

A) True 
 B)False

Question 8

Explain how a consumption tax could lead to a decrease in real interest rates.

Accepted Answer

A tax on consumption would discourage in

Question 9

Stocks and bonds are both considered securities.

Accepted Answer

A) True 
 B)False

Question 10

Private saving equals:

Accepted Answer

A) ​Y - C - T + TR 
B) ​Y + C + T + TR 
C) ​Y + C + T - TR 
D) ​Y + C - T - TR 
A) ​Y - C - T + TR 
B) ​Y + C + T + TR 
C) ​Y + C + T - TR 
D) ​Y + C - T - TR

Question 11

An increase in the ____ interest rate will lead to an increase in the ____.

Accepted Answer

A) ​nominal; demand for loanable funds 
B) ​nominal; supply of loanable funds 
C) ​real; quantity of loanable funds supplied 
D) ​real; quantity of loanable funds demanded 
A) ​nominal; demand for loanable funds 
B) ​nominal; supply of loanable funds 
C) ​real; quantity of loanable funds supplied 
D) ​real; quantity of loanable funds demanded

Question 12

Because of fixed interest rates, there is no risk involved with holding corporate bonds.

Accepted Answer

A) True 
 B)False

Question 13

A stock is an obligation issued by a corporation that promises the holder to receive fixed annual interest payments and payment of the principal upon maturity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true regarding bonds?

Accepted Answer

A) ​Other things equal, bondholders have greater financial security than stockholders. 
B) ​The possibility of a bond's value increasing greatly is limited compared to stocks. 
C) ​The legal obligation to bondholders is of higher priority than that of stockholders. 
D) ​Higher market interest rates represent a risk to bondholders. 
E) ​all of the above 
A) ​Other things equal, bondholders have greater financial security than stockholders. 
B) ​The possibility of a bond's value increasing greatly is limited compared to stocks. 
C) ​The legal obligation to bondholders is of higher priority than that of stockholders. 
D) ​Higher market interest rates represent a risk to bondholders. 
E) ​all of the above

Question 15

Which of the following must be true?

Accepted Answer

A) ​Savings must equal investment in an open economy. 
B) ​Savings must equal investment in a closed economy. 
C) ​Savings must equal consumption in an open economy. 
D) ​Savings must equal consumption in a closed economy. 
A) ​Savings must equal investment in an open economy. 
B) ​Savings must equal investment in a closed economy. 
C) ​Savings must equal consumption in an open economy. 
D) ​Savings must equal consumption in a closed economy.

Question 16

If the government runs a deficit, which of the following will be true?

Accepted Answer

A) T > G - TR B) T G + TR D) T < G + TR A) T > G - TR B) T G + TR D) T < G + TR

Question 17

The term "saving" is a flow concept while the term "savings" is a stock concept.

Accepted Answer

A) True 
 B)False

Question 18

A bond can be:

Accepted Answer

A) ​partial ownership in a corporation. 
B) ​a debt obligation of a company. 
C) ​a debt obligation of a government or government agency. 
D) ​both B and C above 
A) ​partial ownership in a corporation. 
B) ​a debt obligation of a company. 
C) ​a debt obligation of a government or government agency. 
D) ​both B and C above

Question 19

The concept that it is very difficult to consistently pick winners in the stock market without inside information is known as:

Accepted Answer

A) ​a random walk. 
B) ​a double coincidence of wants. 
C) ​the crowding out effect. 
D) ​arbitrage. 
A) ​a random walk. 
B) ​a double coincidence of wants. 
C) ​the crowding out effect. 
D) ​arbitrage.

Question 20

Public saving equals:

Accepted Answer

A) ​TR - G - T 
B) ​Y - C- T + TR 
C) ​Y + C + T + TR 
D) ​T - G -TR 
A) ​TR - G - T 
B) ​Y - C- T + TR 
C) ​Y + C + T + TR 
D) ​T - G -TR

Exam 13: Monopoly and Antitrust

Adjustable rate mortgages with extremely low initial interest rates which enable high risk buyers to purchase homes are known as:

The crowding-out effect indicates that increased government borrowing will lead to:

A consumption tax would lead to an increase in the supply of loanable funds and a decrease in real interest rates.

In 2005, the percentages of mortgages that were considered sub-prime:

A government budget deficit will lead to:

A rational individual would rather receive $5,000 today than receive $6,000 in one year if the applicable nominal interest rate was 10%.

The 2008 financial crisis was caused by the decline of real estate values as well as several other factors.

Explain how a consumption tax could lead to a decrease in real interest rates.

Stocks and bonds are both considered securities.

Private saving equals:

An increase in the ____ interest rate will lead to an increase in the ____.

Because of fixed interest rates, there is no risk involved with holding corporate bonds.

A stock is an obligation issued by a corporation that promises the holder to receive fixed annual interest payments and payment of the principal upon maturity.

Which of the following is true regarding bonds?

Which of the following must be true?

If the government runs a deficit, which of the following will be true?

The term "saving" is a flow concept while the term "savings" is a stock concept.

A bond can be:

The concept that it is very difficult to consistently pick winners in the stock market without inside information is known as:

Public saving equals:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

An increase in the interest rate will lead to an increase in the .