Question 1

Short-term bonds are generally

Accepted Answer

A)  less risky than long-term bonds and so they feature higher interest rates. 
B)  less risky than long-term bonds and so they feature lower interest rates. 
C)  more risky than long-term bonds and so they feature higher interest rates. 
D)  more risky than long-term bonds and so they feature lower interest rates. 
A)  less risky than long-term bonds and so they feature higher interest rates. 
B)  less risky than long-term bonds and so they feature lower interest rates. 
C)  more risky than long-term bonds and so they feature higher interest rates. 
D)  more risky than long-term bonds and so they feature lower interest rates.

Question 2

If there is a shortage 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 3

Higher education subsidies in the form of the federal government's student loan program have the potential to

Accepted Answer

A)  reduce the number of people that attend college. 
B)  reduce the number of universities and colleges in the future. 
C)  create a credit bubble and debt crisis. 
D)  reduce the default risk on student loans. 
A)  reduce the number of people that attend college. 
B)  reduce the number of universities and colleges in the future. 
C)  create a credit bubble and debt crisis. 
D)  reduce the default risk on student loans.

Question 4

A perpetuity is distinguished from other bonds in that it

Accepted Answer

A)  pays continuously compounded interest. 
B)  pays interest only when it matures. 
C)  never matures. 
D)  will be used to purchase another bond when it matures unless the owner specifies otherwise. 
A)  pays continuously compounded interest. 
B)  pays interest only when it matures. 
C)  never matures. 
D)  will be used to purchase another bond when it matures unless the owner specifies otherwise.

Question 5

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Accepted Answer

A)  Each one of these is equal to national saving. 
B)  Each one of these is equal to public saving. 
C)  The first of these is private saving; the second one is public saving. 
D)  The first of these is public saving; the second one is private saving. 
A)  Each one of these is equal to national saving. 
B)  Each one of these is equal to public saving. 
C)  The first of these is private saving; the second one is public saving. 
D)  The first of these is public saving; the second one is private saving.

Question 6

Which of the following statements is correct?

Accepted Answer

A)  As a group, economists see no purpose in distinguishing between the nominal interest rate and the real interest rate. 
B)  The interest rate that is usually reported is the nominal interest rate. 
C)  If the nominal interest rate increases and the inflation rate remains unchanged, then the real interest rate decreases. 
D)  All of the above are correct. 
A)  As a group, economists see no purpose in distinguishing between the nominal interest rate and the real interest rate. 
B)  The interest rate that is usually reported is the nominal interest rate. 
C)  If the nominal interest rate increases and the inflation rate remains unchanged, then the real interest rate decreases. 
D)  All of the above are correct.

Question 7

The primary advantage of mutual funds is that they

Accepted Answer

A)  always provide the highest return. 
B)  always allow people to "beat the market." 
C)  allow people to diversify and reduce risk. 
D)  allow people to diversify, which increases risk and return. 
A)  always provide the highest return. 
B)  always allow people to "beat the market." 
C)  allow people to diversify and reduce risk. 
D)  allow people to diversify, which increases risk and return.

Question 8

In the small closed economy of San Lorena, the currency is the denar. Statistics for last year show that private saving was 60 billion denars, taxes were 80 billion denars, government purchases of goods and services were 70 billion denars, there were no transfer payments by the government, and GDP was 400 billion denars. What were consumption and investment in San Lorena?

Accepted Answer

A)  270 billion denars, 50 billion denars 
B)  250 billion denars, 60 billion denars 
C)  260 billion denars, 70 billion denars 
D)  None of the above is correct. 
A)  270 billion denars, 50 billion denars 
B)  250 billion denars, 60 billion denars 
C)  260 billion denars, 70 billion denars 
D)  None of the above is correct.

Question 9

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

Accepted Answer

A)  The government went from surplus to deficit. 
B)  The government instituted an investment tax credit. 
C)  The government reduced the tax rate on savings. 
D)  None of the above is correct. 
A)  The government went from surplus to deficit. 
B)  The government instituted an investment tax credit. 
C)  The government reduced the tax rate on savings. 
D)  None of the above is correct.

Question 10

Scenario 26-2. Assume the following information for an imaginary, closed economy.
GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion.
-Refer to Scenario 26-2. For this economy, national saving is equal to

Accepted Answer

A)  $1.1 trillion. 
B)  $2.9 trillion. 
C)  $1.2 trillion. 
D)  $1.7 trillion. 
A)  $1.1 trillion. 
B)  $2.9 trillion. 
C)  $1.2 trillion. 
D)  $1.7 trillion.

Question 11

Mutual funds

Accepted Answer

A)  provide diversification. Shareholders assume all of the risk associated with the mutual fund. 
B)  provide diversification. Government insurance eliminates the risk of mutual fund shareholders. 
C)  do not provide diversification. Shareholders assume all of the risk associated with the mutual fund 
D)  do not provide diversification. Government insurance eliminates the risk of mutual fund shareholders. 
A)  provide diversification. Shareholders assume all of the risk associated with the mutual fund. 
B)  provide diversification. Government insurance eliminates the risk of mutual fund shareholders. 
C)  do not provide diversification. Shareholders assume all of the risk associated with the mutual fund 
D)  do not provide diversification. Government insurance eliminates the risk of mutual fund shareholders.

Question 12

We interpret the meaning of "loanable funds" as the

Accepted Answer

A)  flow of resources available from private saving. 
B)  flow of resources available to fund private investment. 
C)  resources borrowed by private investors and by government. 
D)  resources lent by private investors and by government. 
A)  flow of resources available from private saving. 
B)  flow of resources available to fund private investment. 
C)  resources borrowed by private investors and by government. 
D)  resources lent by private investors and by government.

Question 13

Last quarter in a closed economy GDP was 200,000. Expenditures on capital goods such as business equipment and structures was 19,000, inventory rose 1,000, and new construction of homes was 8,000. Consumption was 135,000 and taxes were 32,000. What was public saving?

Accepted Answer

A)  -4,000 
B)  -5,000 
C)  -14,000 
D)  -6,000 
A)  -4,000 
B)  -5,000 
C)  -14,000 
D)  -6,000

Question 14

Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

Accepted Answer

Robert is

Question 15

The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million. In 2013, Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent. If the price­earnings ratio is 20, then Biggie's total earnings in 2013 amounted to

Accepted Answer

A)  $15.6 million. 
B)  $250 million. 
C)  $160 million. 
D)  $625 million. 
A)  $15.6 million. 
B)  $250 million. 
C)  $160 million. 
D)  $625 million.

Question 16

As a money management fee, mutual funds usually charge their customers

Accepted Answer

A)  between 0.5 and 2.0 percent of assets each year. 
B)  between 1.5 and 3.0 percent of assets each year. 
C)  nothing, because they receive commissions from the firms whose stock they buy. 
D)  a flat fee of about $50. 
A)  between 0.5 and 2.0 percent of assets each year. 
B)  between 1.5 and 3.0 percent of assets each year. 
C)  nothing, because they receive commissions from the firms whose stock they buy. 
D)  a flat fee of about $50.

Question 17

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Accepted Answer

A)  their consumption expenditures are being financed by someone else's saving. 
B)  their consumption expenditures are being financed by someone else's investment. 
C)  their investments are being financed by someone else's saving. 
D)  their saving is being financed by someone else's investment. 
A)  their consumption expenditures are being financed by someone else's saving. 
B)  their consumption expenditures are being financed by someone else's investment. 
C)  their investments are being financed by someone else's saving. 
D)  their saving is being financed by someone else's investment.

Question 18

Scenario 26-1. Assume the following information for an imaginary, closed economy.
GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000.
-Refer to Scenario 26-1. For this economy, consumption amounts to

Accepted Answer

A)  $68,000. 
B)  $38,000. 
C)  $53,000. 
D)  $60,000. 
A)  $68,000. 
B)  $38,000. 
C)  $53,000. 
D)  $60,000.

Question 19

The prices of stock traded on exchanges are determined by

Accepted Answer

A)  the Corporate Stock Administration. 
B)  the administrators of NASDAQ. 
C)  the supply of, and demand for, the stock. 
D)  All of the above are correct. 
A)  the Corporate Stock Administration. 
B)  the administrators of NASDAQ. 
C)  the supply of, and demand for, the stock. 
D)  All of the above are correct.

Question 20

Municipal bonds pay a relatively

Accepted Answer

A)  low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax. 
B)  low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax. 
C)  high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay. 
D)  high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax. 
A)  low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax. 
B)  low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax. 
C)  high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay. 
D)  high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.

Short-term bonds are generally

If there is a shortage of loanable funds, then

Higher education subsidies in the form of the federal government's student loan program have the potential to

A perpetuity is distinguished from other bonds in that it

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Which of the following statements is correct?

The primary advantage of mutual funds is that they

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

Scenario 26-2. Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion. -Refer to Scenario 26-2. For this economy, national saving is equal to

Mutual funds

We interpret the meaning of "loanable funds" as the

Last quarter in a closed economy GDP was 200,000. Expenditures on capital goods such as business equipment and structures was 19,000, inventory rose 1,000, and new construction of homes was 8,000. Consumption was 135,000 and taxes were 32,000. What was public saving?

Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million. In 2013, Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent. If the priceearnings ratio is 20, then Biggie's total earnings in 2013 amounted to

As a money management fee, mutual funds usually charge their customers

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. For this economy, consumption amounts to

The prices of stock traded on exchanges are determined by

Municipal bonds pay a relatively

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

Short-term bonds are generally

If there is a shortage of loanable funds, then

Higher education subsidies in the form of the federal government's student loan program have the potential to

A perpetuity is distinguished from other bonds in that it

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Which of the following statements is correct?

The primary advantage of mutual funds is that they

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

Scenario 26-2. Assume the following information for an imaginary, closed economy. GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion. -Refer to Scenario 26-2. For this economy, national saving is equal to

Mutual funds

We interpret the meaning of "loanable funds" as the

Last quarter in a closed economy GDP was 200,000. Expenditures on capital goods such as business equipment and structures was 19,000, inventory rose 1,000, and new construction of homes was 8,000. Consumption was 135,000 and taxes were 32,000. What was public saving?

Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million. In 2013, Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent. If the price­earnings ratio is 20, then Biggie's total earnings in 2013 amounted to

As a money management fee, mutual funds usually charge their customers

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. For this economy, consumption amounts to

The prices of stock traded on exchanges are determined by

Municipal bonds pay a relatively

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

The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million. In 2013, Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent. If the priceearnings ratio is 20, then Biggie's total earnings in 2013 amounted to