Question 1

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Accepted Answer

A)  greater investment. 
B)  a higher interest rate. 
C)  higher public saving. 
D)  All of the above are correct. 
A)  greater investment. 
B)  a higher interest rate. 
C)  higher public saving. 
D)  All of the above are correct.

Question 2

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Accepted Answer

A)  the demand for existing shares of stock in this company to decrease, so the price would fall. 
B)  the demand for existing shares of stock in this company to increase, so the price would rise. 
C)  the supply of existing shares of stock in this company to decrease, so the price would fall. 
D)  the supply of existing shares of stock in this company to increase, so the price would rise. 
A)  the demand for existing shares of stock in this company to decrease, so the price would fall. 
B)  the demand for existing shares of stock in this company to increase, so the price would rise. 
C)  the supply of existing shares of stock in this company to decrease, so the price would fall. 
D)  the supply of existing shares of stock in this company to increase, so the price would rise.

Question 3

Which of the following is correct?

Accepted Answer

A)  In a closed economy, equilibrium in the market for loanable funds occurs where saving = investment. 
B)  Investment is the source for the supply of loanable funds. 
C)  If there is a surplus in the market for loanable funds, the interest rate rises. 
D)  All of the above are correct 
A)  In a closed economy, equilibrium in the market for loanable funds occurs where saving = investment. 
B)  Investment is the source for the supply of loanable funds. 
C)  If there is a surplus in the market for loanable funds, the interest rate rises. 
D)  All of the above are correct

Question 4

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 5

Which of the following is included in the demand for loanable funds?

Accepted Answer

A)  investment and government borrowing 
B)  investment but not government borrowing 
C)  government borrowing but not investment 
D)  neither government borrowing nor investment 
A)  investment and government borrowing 
B)  investment but not government borrowing 
C)  government borrowing but not investment 
D)  neither government borrowing nor investment

Question 6

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Accepted Answer

The answer of A does not engage in international trade...

Question 7

In a closed economy, investment must be equal to private saving.

Accepted Answer

A) True 
 B)False

Question 8

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future.

Accepted Answer

A) True 
 B)False

Question 9

The country of Meditor, a small country with a closed economy, uses the merit as its currency. Recent national income statistics showed that it had GDP of $600 million merits, no government transfer payments, taxes of $150 million merits, a budget surplus of $40 billion merits, and investment of $100 billion merits. What were its consumption and government expenditures on goods and services?

Accepted Answer

A)  $460 million merits and $150 million merits 
B)  $310 million merits and $190 million merits 
C)  $350 million merits and $190 million merits 
D)  $390 million merits and $110 million merits 
A)  $460 million merits and $150 million merits 
B)  $310 million merits and $190 million merits 
C)  $350 million merits and $190 million merits 
D)  $390 million merits and $110 million merits

Question 10

XDF Corporation had a P/E ratio of 25, earnings per share of $4, and retained earnings per share of $3. What was its dividend yield?

Accepted Answer

A)  4% 
B)  3% 
C)  1% 
D)  None of the above is correct. 
A)  4% 
B)  3% 
C)  1% 
D)  None of the above is correct.

Question 11

Draw and label a graph showing equilibrium in the market for loanable funds.

Accepted Answer

Market for

Question 12

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

Accepted Answer

A)  budget deficit of $75. 
B)  budget deficit of $80. 
C)  budget deficit of $50. 
D)  budget deficit of $100. 
A)  budget deficit of $75. 
B)  budget deficit of $80. 
C)  budget deficit of $50. 
D)  budget deficit of $100.

Question 13

A is a certificate of indebtedness and a is a claim to partial ownership in a firm.

Accepted Answer

The answer of A is a certificate of indebtedness and...

Question 14

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves.  
-Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called

Accepted Answer

A)  an increase in the demand for loanable funds, and that increase would originate from people who had some extra income they wanted to lend. 
B)  an increase in the demand for loanable funds, and that increase would originate from households and firms who wish to borrow to make investments. 
C)  a decrease in the demand for loanable funds, and that decrease would originate from people who had some extra income they wanted to lend. 
D)  a decrease in the demand for loanable funds, and that decrease would originate from households and firms who wish to borrow to make investments. 
A)  an increase in the demand for loanable funds, and that increase would originate from people who had some extra income they wanted to lend. 
B)  an increase in the demand for loanable funds, and that increase would originate from households and firms who wish to borrow to make investments. 
C)  a decrease in the demand for loanable funds, and that decrease would originate from people who had some extra income they wanted to lend. 
D)  a decrease in the demand for loanable funds, and that decrease would originate from households and firms who wish to borrow to make investments.

Question 15

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 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

National saving is the sum of and . In a closed economy it is equal to in equilibrium.

Accepted Answer

private saving, publ

Question 18

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 19

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Accepted Answer

A)  1.25%. 
B)  5.0%. 
C)  3.4%. 
D)  10.6%. 
A)  1.25%. 
B)  5.0%. 
C)  3.4%. 
D)  10.6%.

Question 20

Owners of municipal bonds

Accepted Answer

A)  are not required to pay federal income tax on the interest income. 
B)  usually receive a higher interest rate compared to bonds issued by corporations. 
C)  usually receive a higher interest rate compared to stock issued by corporations. 
D)  pay taxes on the dividends earned from these bonds. 
A)  are not required to pay federal income tax on the interest income. 
B)  usually receive a higher interest rate compared to bonds issued by corporations. 
C)  usually receive a higher interest rate compared to stock issued by corporations. 
D)  pay taxes on the dividends earned from these bonds.

Exam 18: Saving, Investment, and the Financial System

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Which of the following is correct?

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

Which of the following is included in the demand for loanable funds?

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

In a closed economy, investment must be equal to private saving.

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future.

XDF Corporation had a P/E ratio of 25, earnings per share of $4, and retained earnings per share of $3. What was its dividend yield?

Draw and label a graph showing equilibrium in the market for loanable funds.

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

A is a certificate of indebtedness and a is a claim to partial ownership in a firm.

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called

In a closed economy, private saving is

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

National saving is the sum of and . In a closed economy it is equal to in equilibrium.

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

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Owners of municipal bonds

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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