Exam 13: Saving, Investment, and the Financial System

Norberto is opening a bicycle shop, and his monthly expenditures to get the shop up and running exceed his monthly income. Norberto is best described as a

A corporation's earnings are the amount of revenue it receives for the sale of its products

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

A budget deficit

In 2013, XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments. If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding, then what is the price-earnings ratio?

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

We associate the term debt finance with

The price of a stock will rise if

A budget surplus

The slope of the demand for loanable funds curve represents the

If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent, what is the real interest rate?

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,

You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?

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?

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

For a closed economy, GDP is $11 trillion, consumption is $7 trillion, taxes are $2.5 trillion and the government runs a surplus of $1 trillion. What are private saving and national saving?

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

Your brother-in-law wants to buy either stock or bonds in Cedar Valley Furniture, which manufactures wooden furniture. He wants your advice on whether to buy stock or bonds. Explain how each of his quotes below should affect his choice between the stock and the bond. a. "I have reason to believe that people are soon going to find rocking chairs have health benefits." b. "I would like to tell people I am part owner of Cedar Valley Furniture." c. "I do not want to take on much risk."

A decrease in government spending and the enactment of an investment tax credit would definitely cause

In a closed economy, Y - C - G equals . The variable Y is , C is , and G is .