Exam 18: Saving, Investment, and the Financial System

What happens to desired investment spending if the interest rate rises? Is this response relevant to the supply of loanable funds curve or the demand for loanable funds curve?

If people become less optimistic about the future earnings of Hyde Park Jazz Studio, then the price of the company's stock will fall.

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?

A government may use deficit financing to smooth tax rates over time.

Which of the following statements is correct?

Mutual funds are a type of financial intermediary.

Potential buyers of ABC Corporation bonds are concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are not concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct?

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?

Which of the following statements is correct?

If the supply of and demand for loanable funds both shift left, which of the following necessarily happens?

Two of the economy's most important financial intermediaries are

In a closed economy, national saving is

For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components?

When a firm wants to borrow directly from the public to finance the purchase of new equipment, it does so by selling shares of stock.

Which of the following is not correct?

The first element of a financial crisis is

According to the definitions of private and public saving, if Y, C, and G remained the same, an increase in taxes would

If there is a surplus of loanable funds, then

Use the following table to answer the following questions. Table 26-2 -Refer to Table 26-2. For which stocks) isare) the P/E ratio less than what is historically typical?

Given that Monika's income exceeds her expenditures, Monika is best described as a