Question 1

Which of the following is not true with regard to mutual funds?

Accepted Answer

A) ​Some mutual funds allow investors to invest in all stocks in a given market. 
B) ​Mutual fund returns are greater than those for an individual who selects his/her own stocks. 
C) ​They allow individuals to spread risk across many different companies. 
D) ​Investors gain access to the services of a financial expert. 
A) ​Some mutual funds allow investors to invest in all stocks in a given market. 
B) ​Mutual fund returns are greater than those for an individual who selects his/her own stocks. 
C) ​They allow individuals to spread risk across many different companies. 
D) ​Investors gain access to the services of a financial expert.

Question 2

Which of the following is true?

Accepted Answer

A) ​In 2007, the default rate on fixed rate mortgages was lower than that on ARMs. 
B) ​From 2006-2008, housing construction decreased in the U.S. 
C) ​Zero-down mortgages decreased the incentive for homeowners to prevent defaulting on their homes. 
D) ​all of the above 
A) ​In 2007, the default rate on fixed rate mortgages was lower than that on ARMs. 
B) ​From 2006-2008, housing construction decreased in the U.S. 
C) ​Zero-down mortgages decreased the incentive for homeowners to prevent defaulting on their homes. 
D) ​all of the above

Question 3

Most economists believe that the financial crisis of 2008 began because of problems in the ____ industry.

Accepted Answer

A) ​computer 
B) ​automotive 
C) ​housing 
D) ​banking 
A) ​computer 
B) ​automotive 
C) ​housing 
D) ​banking

Question 4

In the loanable funds market which of the following is true?

Accepted Answer

A) ​Borrowers represent supply and government represents demand. 
B) ​Borrowers represent supply and banks represent demand. 
C) ​Banks represent supply and savers represent demand. 
D) ​Savers represent supply and borrowers represent demand. 
A) ​Borrowers represent supply and government represents demand. 
B) ​Borrowers represent supply and banks represent demand. 
C) ​Banks represent supply and savers represent demand. 
D) ​Savers represent supply and borrowers represent demand.

Question 5

In a closed economy, the formula for private saving is: Sprivate = Y - C - T + TR

Accepted Answer

A) True 
 B)False

Question 6

Which of the following was not a reason for the significant decline in housing prices in 2007?

Accepted Answer

A) ​overbuilding 
B) ​strict regulation 
C) ​excessive previous appreciation 
D) ​aggressive mortgages 
A) ​overbuilding 
B) ​strict regulation 
C) ​excessive previous appreciation 
D) ​aggressive mortgages

Question 7

Which of the following statements is true with regard to the Fed's response to the economic crisis of 2008?

Accepted Answer

A) ​Although the Fed lowered its interest rates to nearly zero, there are other actions it can take to improve the economy. 
B) ​Because the Fed lowered its interest rates to nearly zero, there are no other actions it can take to improve the economy. 
C) ​Since the Fed did not lower its interest rates to near zero, there are still other actions it can take to improve the economy. 
D) ​none of the above 
A) ​Although the Fed lowered its interest rates to nearly zero, there are other actions it can take to improve the economy. 
B) ​Because the Fed lowered its interest rates to nearly zero, there are no other actions it can take to improve the economy. 
C) ​Since the Fed did not lower its interest rates to near zero, there are still other actions it can take to improve the economy. 
D) ​none of the above

Question 8

Would a relatively high P/E ratio lead us to conclude that a stock is overvalued or undervalued? Why or why not?

Accepted Answer

If a stock's price to earnings ratio is

Question 9

Why are real interest rates more important than nominal interest rates with regard to analyzing the supply and demand of loanable funds?

Accepted Answer

Nominal interest rates only indicate the

Question 10

According to the crowding-out effect, a budget deficit will lead to:

Accepted Answer

A) ​reduced investment spending and a reduction in long-term economic growth. 
B) ​reduced investment spending and an increase in long-term economic growth. 
C) ​increased investment spending and a reduction in long-term economic growth. 
D) ​increased investment spending and an increase in long-term economic growth. 
A) ​reduced investment spending and a reduction in long-term economic growth. 
B) ​reduced investment spending and an increase in long-term economic growth. 
C) ​increased investment spending and a reduction in long-term economic growth. 
D) ​increased investment spending and an increase in long-term economic growth.

Question 11

A rational individual would rather receive $1,000 today than receive $1,100 in one year if the applicable nominal interest rate was 12%.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a government sponsored enterprise that funds or guarantees a substantial number of mortgage loans in the U.S.?

Accepted Answer

A) ​Fannie Mae 
B) ​Freddy Mac 
C) ​both A and B above 
D) ​neither A nor B above 
A) ​Fannie Mae 
B) ​Freddy Mac 
C) ​both A and B above 
D) ​neither A nor B above

Question 13

Which of the following is likely to increase the equilibrium real interest rate?

Accepted Answer

A) ​greater tax benefits for IRAs 
B) ​technological improvement creating profitable investment opportunities 
C) ​elimination of an investment tax credit for corporations 
D) ​an increased consumption tax 
A) ​greater tax benefits for IRAs 
B) ​technological improvement creating profitable investment opportunities 
C) ​elimination of an investment tax credit for corporations 
D) ​an increased consumption tax

Question 14

What is the present value of $5,000 to be received in one year if the current market interest rate is 6.0%?

Accepted Answer

A) ​$3,125 
B) ​$4,717 
C) ​$4,923 
D) ​$5,300 
A) ​$3,125 
B) ​$4,717 
C) ​$4,923 
D) ​$5,300

Question 15

If the real interest rate is below equilibrium, which of the following is likely to occur?

Accepted Answer

A) ​Lenders will raise their interest rates which will encourage saving. 
B) ​Lenders will raise their interest rates which will encourage borrowing. 
C) ​Lenders will lower their interest rates which will encourage saving. 
D) ​Lenders will lower their interest rates which will encourage borrowing. 
A) ​Lenders will raise their interest rates which will encourage saving. 
B) ​Lenders will raise their interest rates which will encourage borrowing. 
C) ​Lenders will lower their interest rates which will encourage saving. 
D) ​Lenders will lower their interest rates which will encourage borrowing.

Question 16

In a closed economy, the formula for public saving is: Sprivate = T + G + TR

Accepted Answer

A) True 
 B)False

Question 17

List the various reasons that contributed to the financial crisis that occurred in 2008.

Accepted Answer

Low interest rates from 2002 to 2004 cau

Question 18

Which of the following was not a reason for the financial collapse in 2008?

Accepted Answer

A) ​inaccurate ratings by S&P and Moody's 
B) ​government promoting aggressive mortgage lending 
C) ​pooling of mortgage backed securities 
D) ​the absence of financial leveraging in the banking industry 
A) ​inaccurate ratings by S&P and Moody's 
B) ​government promoting aggressive mortgage lending 
C) ​pooling of mortgage backed securities 
D) ​the absence of financial leveraging in the banking industry

Question 19

A government budget deficit will have a:

Accepted Answer

A) ​positive effect on public saving causing a rightward shift in the supply of loanable funds. 
B) ​positive effect on public saving causing a leftward shift in the supply of loanable funds. 
C) ​negative effect on public saving causing a rightward shift in the supply of loanable funds. 
D) ​negative effect on public saving causing a leftward shift in the supply of loanable funds. 
A) ​positive effect on public saving causing a rightward shift in the supply of loanable funds. 
B) ​positive effect on public saving causing a leftward shift in the supply of loanable funds. 
C) ​negative effect on public saving causing a rightward shift in the supply of loanable funds. 
D) ​negative effect on public saving causing a leftward shift in the supply of loanable funds.

Question 20

Which of the following will increase the demand for loanable funds?

Accepted Answer

A) ​a newly established consumption tax 
B) ​a decrease in the real interest rate 
C) ​an increase in the real interest rate 
D) ​creation of an investment tax credit for businesses 
A) ​a newly established consumption tax 
B) ​a decrease in the real interest rate 
C) ​an increase in the real interest rate 
D) ​creation of an investment tax credit for businesses

Exam 13: Monopoly and Antitrust

Which of the following is not true with regard to mutual funds?

Which of the following is true?

Most economists believe that the financial crisis of 2008 began because of problems in the ____ industry.

In the loanable funds market which of the following is true?

In a closed economy, the formula for private saving is: Sprivate = Y - C - T + TR

Which of the following was not a reason for the significant decline in housing prices in 2007?

Which of the following statements is true with regard to the Fed's response to the economic crisis of 2008?

Would a relatively high P/E ratio lead us to conclude that a stock is overvalued or undervalued? Why or why not?

Why are real interest rates more important than nominal interest rates with regard to analyzing the supply and demand of loanable funds?

According to the crowding-out effect, a budget deficit will lead to:

A rational individual would rather receive $1,000 today than receive $1,100 in one year if the applicable nominal interest rate was 12%.

Which of the following is a government sponsored enterprise that funds or guarantees a substantial number of mortgage loans in the U.S.?

Which of the following is likely to increase the equilibrium real interest rate?

What is the present value of $5,000 to be received in one year if the current market interest rate is 6.0%?

If the real interest rate is below equilibrium, which of the following is likely to occur?

In a closed economy, the formula for public saving is: Sprivate = T + G + TR

List the various reasons that contributed to the financial crisis that occurred in 2008.

Which of the following was not a reason for the financial collapse in 2008?

A government budget deficit will have a:

Which of the following will increase the demand for loanable funds?

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

In a closed economy, the formula for private saving is: S_private = Y - C - T + TR

In a closed economy, the formula for public saving is: S_private = T + G + TR