Question 1

Financial crises seldom involve economic downturns.

Accepted Answer

A) True 
 B)False

Question 2

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

Accepted Answer

A)  and quantity of loanable funds rises. 
B)  and quantity of loanable funds falls. 
C)  rises and the quantity of loanable funds falls. 
D)  falls and the quantity of loanable funds rises. 
A)  and quantity of loanable funds rises. 
B)  and quantity of loanable funds falls. 
C)  rises and the quantity of loanable funds falls. 
D)  falls and the quantity of loanable funds rises.

Question 3

When tax code changes increase investment incentives, the _____ for loanable funds curve shifts to the _____. This results in an) _____ in the interest rate and an) _____ in investment.

Accepted Answer

demand, ri

Question 4

The final element of a financial crisis is

Accepted Answer

A)  an economic downturn. 
B)  a decline in confidence in financial institutions. 
C)  declining prices of real estate or other assets. 
D)  a vicious circle. 
A)  an economic downturn. 
B)  a decline in confidence in financial institutions. 
C)  declining prices of real estate or other assets. 
D)  a vicious circle.

Question 5

A restaurant chain announces declining revenues. What's the name of the type of risk that this news raises for holders of this chain's bonds? What does this news to do the interest rate on this chain's bonds?

Accepted Answer

default ri

Question 6

If a firm wants to borrow it can

Accepted Answer

A)  supply bonds by selling them. 
B)  supply bonds by buying them. 
C)  demand bonds by selling them. 
D)  demand bonds by buying them. 
A)  supply bonds by selling them. 
B)  supply bonds by buying them. 
C)  demand bonds by selling them. 
D)  demand bonds by buying them.

Question 7

Use the following table to answer the following questions.
Table 26-1
  
-Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Accepted Answer

A)  $68,770,900 
B)  $6,877,090 
C)  $687,709 
D)  $6,877.1 
A)  $68,770,900 
B)  $6,877,090 
C)  $687,709 
D)  $6,877.1

Question 8

Which of the following would both make the interest rate on a bond higher than otherwise?

Accepted Answer

A)  the interest it pays is taxed and it is long term 
B)  the interest it pays is taxed and it is short term 
C)  the interest it pays is tax exempt and it is long term 
D)  the interest it pays is tax exempt and it is short term 
A)  the interest it pays is taxed and it is long term 
B)  the interest it pays is taxed and it is short term 
C)  the interest it pays is tax exempt and it is long term 
D)  the interest it pays is tax exempt and it is short term

Question 9

Which of the following counts as part of the supply of loanable funds?

Accepted Answer

A)  bank deposits and purchases of bonds 
B)  bank deposits but not purchases of bonds 
C)  purchases of bonds but not bank deposits 
D)  neither purchases of bonds nor bank deposits 
A)  bank deposits and purchases of bonds 
B)  bank deposits but not purchases of bonds 
C)  purchases of bonds but not bank deposits 
D)  neither purchases of bonds nor bank deposits

Question 10

Public saving is T - G, while private saving is Y - T - C.

Accepted Answer

A) True 
 B)False

Question 11

Congress and the President implement an investment tax credit. Which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?

Accepted Answer

The demand for loana

Question 12

Which of the following numbers is not associated with shares of a company's stock?

Accepted Answer

A)  term 
B)  dividend 
C)  price 
D)  price-earnings ratio 
A)  term 
B)  dividend 
C)  price 
D)  price-earnings ratio

Question 13

In a closed economy, private saving is

Accepted Answer

A)  the amount of income that households have left after paying for their taxes and consumption. 
B)  the amount of income that businesses have left after paying for the factors of production. 
C)  the amount of tax revenue that the government has left after paying for its spending. 
D)  always equal to investment. 
A)  the amount of income that households have left after paying for their taxes and consumption. 
B)  the amount of income that businesses have left after paying for the factors of production. 
C)  the amount of tax revenue that the government has left after paying for its spending. 
D)  always equal to investment.

Question 14

If there is a surplus of loanable funds, then

Accepted Answer

A)  the quantity demanded is greater than the quantity supplied and the interest rate will rise. 
B)  the quantity demanded is greater than the quantity supplied and the interest rate will fall. 
C)  the quantity supplied is greater than the quantity demanded and the interest rate will rise. 
D)  the quantity supplied is greater than the quantity demanded and the interest rate will fall. 
A)  the quantity demanded is greater than the quantity supplied and the interest rate will rise. 
B)  the quantity demanded is greater than the quantity supplied and the interest rate will fall. 
C)  the quantity supplied is greater than the quantity demanded and the interest rate will rise. 
D)  the quantity supplied is greater than the quantity demanded and the interest rate will fall.

Question 15

In 2002 mortgage rates fell and mortgage lending increased. Which of the following could explain both of these changes?

Accepted Answer

A)  The demand for loanable funds shifted rightward. 
B)  The demand for loanable funds shifted leftward. 
C)  The supply of loanable funds shifted rightward. 
D)  The supply of loanable funds shifted leftward. 
A)  The demand for loanable funds shifted rightward. 
B)  The demand for loanable funds shifted leftward. 
C)  The supply of loanable funds shifted rightward. 
D)  The supply of loanable funds shifted leftward.

Question 16

Which of the following events could explain an increase in interest rates together with an increase in investment?

Accepted Answer

A)  The government runs a larger deficit. 
B)  The government institutes an investment tax credit. 
C)  The government replaces the income tax with a consumption tax. 
D)  None of the above is correct. 
A)  The government runs a larger deficit. 
B)  The government institutes an investment tax credit. 
C)  The government replaces the income tax with a consumption tax. 
D)  None of the above is correct.

Question 17

In 2009, the U.S. government's budget deficit increased substantially. Other things the same, this means the

Accepted Answer

A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left. 
A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left.

Question 18

If there is a surplus of loanable funds, then

Accepted Answer

A)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. 
B)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. 
C)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. 
D)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium. 
A)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium. 
B)  the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium. 
C)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium. 
D)  the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

Question 19

A low price-earnings ratio indicates that either the stock is

Accepted Answer

A)  undervalued or people are relatively optimistic about the corporation's prospects. 
B)  overvalued or people are relatively optimistic about the corporation's prospects. 
C)  overvalued or people are relatively pessimistic about the corporation's prospects. 
D)  undervalued or people are relatively pessimistic about the corporation's prospects. 
A)  undervalued or people are relatively optimistic about the corporation's prospects. 
B)  overvalued or people are relatively optimistic about the corporation's prospects. 
C)  overvalued or people are relatively pessimistic about the corporation's prospects. 
D)  undervalued or people are relatively pessimistic about the corporation's prospects.

Question 20

Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an income tax that includes a tax on interest income. This would make equilibrium

Accepted Answer

A)  interest rates and the equilibrium quantity of loanable funds rise. 
B)  interest rates rise and the equilibrium quantity of loanable funds fall. 
C)  interest rates fall and the equilibrium quantity of loanable funds rise. 
D)  interest rates and the equilibrium quantity of loanable funds fall. 
A)  interest rates and the equilibrium quantity of loanable funds rise. 
B)  interest rates rise and the equilibrium quantity of loanable funds fall. 
C)  interest rates fall and the equilibrium quantity of loanable funds rise. 
D)  interest rates and the equilibrium quantity of loanable funds fall.

Financial crises seldom involve economic downturns.

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

When tax code changes increase investment incentives, the ___ for loanable funds curve shifts to the _. This results in an) _ in the interest rate and an) ___ in investment.

The final element of a financial crisis is

A restaurant chain announces declining revenues. What's the name of the type of risk that this news raises for holders of this chain's bonds? What does this news to do the interest rate on this chain's bonds?

If a firm wants to borrow it can

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Which of the following would both make the interest rate on a bond higher than otherwise?

Which of the following counts as part of the supply of loanable funds?

Public saving is T - G, while private saving is Y - T - C.

Congress and the President implement an investment tax credit. Which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?

Which of the following numbers is not associated with shares of a company's stock?

In a closed economy, private saving is

If there is a surplus of loanable funds, then

In 2002 mortgage rates fell and mortgage lending increased. Which of the following could explain both of these changes?

Which of the following events could explain an increase in interest rates together with an increase in investment?

In 2009, the U.S. government's budget deficit increased substantially. Other things the same, this means the

If there is a surplus of loanable funds, then

A low price-earnings ratio indicates that either the stock is

Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an income tax that includes a tax on interest income. This would make equilibrium

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

Filters

Exam 8: Saving, Investment, and the Financial System

Financial crises seldom involve economic downturns.

If the supply for loanable funds shifts to the left, then the equilibrium interest rate

When tax code changes increase investment incentives, the _____ for loanable funds curve shifts to the _____. This results in an) _____ in the interest rate and an) _____ in investment.

The final element of a financial crisis is

A restaurant chain announces declining revenues. What's the name of the type of risk that this news raises for holders of this chain's bonds? What does this news to do the interest rate on this chain's bonds?

If a firm wants to borrow it can

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Which of the following would both make the interest rate on a bond higher than otherwise?

Which of the following counts as part of the supply of loanable funds?

Public saving is T - G, while private saving is Y - T - C.

Congress and the President implement an investment tax credit. Which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?

Which of the following numbers is not associated with shares of a company's stock?

In a closed economy, private saving is

If there is a surplus of loanable funds, then

In 2002 mortgage rates fell and mortgage lending increased. Which of the following could explain both of these changes?

Which of the following events could explain an increase in interest rates together with an increase in investment?

In 2009, the U.S. government's budget deficit increased substantially. Other things the same, this means the

If there is a surplus of loanable funds, then

A low price-earnings ratio indicates that either the stock is

Suppose a country has only a sales tax. Now suppose it replaces the sales tax with an income tax that includes a tax on interest income. This would make equilibrium

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

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the 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

Six Debates Over Macroeconomic Policy

Filters

When tax code changes increase investment incentives, the ___ for loanable funds curve shifts to the _. This results in an) _ in the interest rate and an) ___ in investment.