Question 1

Interest rates fall and investment falls. Which of the following could explain these changes?

Accepted Answer

A)  The government goes from a surplus to a deficit. 
B)  The government repeals an investment tax credit. 
C)  The government replaces a consumption tax with an income tax. 
D)  None of the above is correct. 
A)  The government goes from a surplus to a deficit. 
B)  The government repeals an investment tax credit. 
C)  The government replaces a consumption tax with an income tax. 
D)  None of the above is correct.

Question 2

An article in the textbook suggests that one method to correct the higher education inefficiency is to

Accepted Answer

A)  provide free higher education to all Americans. 
B)  have college students sell equity in themselves. 
C)  reduce interest rates on student loans. 
D)  increase the number of colleges and universities in the United States. 
A)  provide free higher education to all Americans. 
B)  have college students sell equity in themselves. 
C)  reduce interest rates on student loans. 
D)  increase the number of colleges and universities in the United States.

Question 3

As real interest rates fall, firms desire to

Accepted Answer

A)  buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. 
B)  buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping. 
C)  buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. 
D)  buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping. 
A)  buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. 
B)  buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping. 
C)  buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping. 
D)  buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.

Question 4

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

Accepted Answer

A) True 
 B)False

Question 5

The financial system is important because it helps to match one person's with another person's .

Accepted Answer

The answer of The financial system is important because it...

Question 6

Institutions that help to match one person's saving with another person's investment are collectively called the

Accepted Answer

A)  Federal Reserve system. 
B)  banking system. 
C)  monetary system. 
D)  financial system. 
A)  Federal Reserve system. 
B)  banking system. 
C)  monetary system. 
D)  financial system.

Question 7

A budget surplus

Accepted Answer

A)  occurs when the government has debt equal to zero. 
B)  causes government debt to increase. 
C)  exists when government spending is greater than tax revenues. 
D)  reduces the government's debt. 
A)  occurs when the government has debt equal to zero. 
B)  causes government debt to increase. 
C)  exists when government spending is greater than tax revenues. 
D)  reduces the government's debt.

Question 8

Which of the following statements about mutual funds is correct?

Accepted Answer

A)  A mutual fund is not a financial intermediary. 
B)  A disadvantage of buying mutual funds is a lack of diversification 
C)  People who buy shares from a mutual fund are guaranteed a minimum return. 
D)  On average index funds outperform managed funds. 
A)  A mutual fund is not a financial intermediary. 
B)  A disadvantage of buying mutual funds is a lack of diversification 
C)  People who buy shares from a mutual fund are guaranteed a minimum return. 
D)  On average index funds outperform managed funds.

Question 9

Which of the following would necessarily increase the equilibrium interest rate?

Accepted Answer

A)  The demand for and the supply of loanable funds shift right. 
B)  The demand for and the supply of loanable funds shift left. 
C)  The demand for loanable funds shifts right and the supply of loanable funds shifts left. 
D)  The demand for loanable funds shifts left and the supply of loanable funds shifts right. 
A)  The demand for and the supply of loanable funds shift right. 
B)  The demand for and the supply of loanable funds shift left. 
C)  The demand for loanable funds shifts right and the supply of loanable funds shifts left. 
D)  The demand for loanable funds shifts left and the supply of loanable funds shifts right.

Question 10

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Accepted Answer

A)  earnings. 
B)  retained earnings. 
C)  economic, or real, profit. 
D)  dividend. 
A)  earnings. 
B)  retained earnings. 
C)  economic, or real, profit. 
D)  dividend.

Question 11

The country of Growpaw does not trade with any other country. Its GDP is $20 billion. Its government purchases $3 billion worth of goods and services each year, collects $4 billion in taxes, and provides $2 billion in transfer payments to households. Private saving in Growpaw is $4 billion. What is investment in Growpaw?

Accepted Answer

A)  $5 billion 
B)  $4 billion 
C)  $3 billion 
D)  $11 billion 
A)  $5 billion 
B)  $4 billion 
C)  $3 billion 
D)  $11 billion

Question 12

By definition, government purchases and taxes are zero for a closed economy.

Accepted Answer

A) True 
 B)False

Question 13

What are the basic differences between bonds and stocks?

Accepted Answer

A bond is a certificate of indebtedness

Question 14

Use the following table to answer the following questions.
Table 26-1
  
-Refer to Table 26-1. What was Hershey's earnings per share?

Accepted Answer

A)  $29.90 
B)  $2.79 
C)  $1.50 
D)  $0.36 
A)  $29.90 
B)  $2.79 
C)  $1.50 
D)  $0.36

Question 15

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

Accepted Answer

A)  retained earnings. 
B)  dividends. 
C)  interest payments. 
D)  capital accounts. 
A)  retained earnings. 
B)  dividends. 
C)  interest payments. 
D)  capital accounts.

Question 16

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Accepted Answer

A)  The supply of loanable funds would shift rightward and investment would increase. 
B)  The supply of loanable funds would shift leftward and investment would decrease. 
C)  The demand for loanable funds would shift rightward and investment would increase. 
D)  The demand for loanable funds would shift leftward and investment would decrease. 
A)  The supply of loanable funds would shift rightward and investment would increase. 
B)  The supply of loanable funds would shift leftward and investment would decrease. 
C)  The demand for loanable funds would shift rightward and investment would increase. 
D)  The demand for loanable funds would shift leftward and investment would decrease.

Question 17

Which of the following is correct?

Accepted Answer

A)  Joan takes some of her income and buys mutual fund shares. Joan's purchase will be included in the investment category of GDP. 
B)  If a share of stock in Virtual Pizza Corporation sells for $77, the earnings per share are $5, and the dividend per share is $2, then the P/E ratio is 11. 
C)  In order to use equity finance, a firm must sell about equal values of stocks and bonds. 
D)  None of the above is correct. 
A)  Joan takes some of her income and buys mutual fund shares. Joan's purchase will be included in the investment category of GDP. 
B)  If a share of stock in Virtual Pizza Corporation sells for $77, the earnings per share are $5, and the dividend per share is $2, then the P/E ratio is 11. 
C)  In order to use equity finance, a firm must sell about equal values of stocks and bonds. 
D)  None of the above is correct.

Question 18

If the Apple corporation sells a bond it is

Accepted Answer

A)  borrowing directly from the public. 
B)  borrowing indirectly from the public. 
C)  selling shares of ownership directly to the public. 
D)  selling shares of ownership indirectly to the public. 
A)  borrowing directly from the public. 
B)  borrowing indirectly from the public. 
C)  selling shares of ownership directly to the public. 
D)  selling shares of ownership indirectly to the public.

Question 19

In a closed economy, public saving is the amount of

Accepted Answer

A)  income that households have left after paying for taxes and consumption. 
B)  income that businesses have left after paying for the factors of production. 
C)  tax revenue that the government has left after paying for its spending. 
D)  spending that the government undertakes in excess of the taxes it collects. 
A)  income that households have left after paying for taxes and consumption. 
B)  income that businesses have left after paying for the factors of production. 
C)  tax revenue that the government has left after paying for its spending. 
D)  spending that the government undertakes in excess of the taxes it collects.

Question 20

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Accepted Answer

A)  S = I. 
B)  S = 0. 
C)  I = S + NX. 
D)  S = I + NX. 
A)  S = I. 
B)  S = 0. 
C)  I = S + NX. 
D)  S = I + NX.

Interest rates fall and investment falls. Which of the following could explain these changes?

An article in the textbook suggests that one method to correct the higher education inefficiency is to

As real interest rates fall, firms desire to

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

The financial system is important because it helps to match one person's with another person's .

Institutions that help to match one person's saving with another person's investment are collectively called the

A budget surplus

Which of the following statements about mutual funds is correct?

Which of the following would necessarily increase the equilibrium interest rate?

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

By definition, government purchases and taxes are zero for a closed economy.

What are the basic differences between bonds and stocks?

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Which of the following is correct?

If the Apple corporation sells a bond it is

In a closed economy, public saving is the amount of

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

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

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Exam 8: Saving, Investment, and the Financial System

Interest rates fall and investment falls. Which of the following could explain these changes?

An article in the textbook suggests that one method to correct the higher education inefficiency is to

As real interest rates fall, firms desire to

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

The financial system is important because it helps to match one person's with another person's .

Institutions that help to match one person's saving with another person's investment are collectively called the

A budget surplus

Which of the following statements about mutual funds is correct?

Which of the following would necessarily increase the equilibrium interest rate?

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

By definition, government purchases and taxes are zero for a closed economy.

What are the basic differences between bonds and stocks?

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income?

Which of the following is correct?

If the Apple corporation sells a bond it is

In a closed economy, public saving is the amount of

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

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