Exam 8: Saving, Investment, and the Financial System

Suppose that in a closed economy GDP is equal to 15,000, government purchases are equal to 3,000, consumption equals 10,500, and taxes equal 3,500. What are private saving and public saving?

Jerry has the choice of two bonds, one that pays 5 percent interest and one that pays 2 percent interest. Which of the following is most likely?

Other things being constant, when a firm sells new shares of stock, the

The term crowding out refers to decreases in the interest rate caused by government budget surpluses.

Most entrepreneurs finance their purchases of real capital using their past saving.

Corporations receive no proceeds from the resale of their stock.

Alberta buys a paint sprayer and a lift for her car customizing shop. A macroeconomist would refer to these purchases as investment.

Which of the following statements is correct?

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 1,000, consumption equals 7,500, and government purchases equal 2,000. What is national saving?

Scenario 26-3. Assume the following information for an imaginary, open economy. Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150. -Refer to Scenario 26-3. This economy's government is running a

When the U.S. government is in debt during a given year, it follows that its budget is in deficit for that year.

A high price-earnings ratio for a stock indicates that either the stock is

What is a mutual fund?

A national chain of grocery stores wants to finance the construction of several new stores. The firm has limited internal funds, so it likely will

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that

In which case would people desire to borrow the most?

Financial intermediaries are

Assume the bonds below have the same term and principal and that the state or local government that issues the municipal bond has a good credit rating. Which list has bonds correctly ordered from the one that pays the highest interest rate to the one that pays the lowest interest rate?

World Wide Delivery Service Corporation develops a way to speed up its deliveries and reduce its costs. We would expect that this would

Use the following table to answer the following questions. Table 26-2 -Refer to Table 26-2. Which company had the highest earnings per share?