Exam 13: Saving, Investment, and the Financial System

Which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why. a. a U.S. government bond or a Venezuelan government bond b. a U.S. government bond or a municipal bond with the same term and issued by a creditworthy municipality. c. a 6-month Treasury bill or a 20-year Treasury bond d. a Microsoft bond or a bond issued by a new recording company

The source of the supply of loanable funds

Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. -Refer to Figure 26-5. Starting at point A, a change in tax laws that encouraged households to save more would likely cause

Which of the following statements is correct?

The supply of loanable funds slopes

National saving

Late in the 2000-2009 decade, real estate prices in the U.S. fell by a greater percentage than they had fallen since the

The income that households have left after paying their taxes and paying for their consumption is known as .

Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders. This failure is referred to as a

When the government goes from running a balanced budget to running a budget surplus,

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

Which of the following is correct?

Because of differences in tax treatment, municipal bonds pay a higher interest rate than do corporate bonds.

What does the maturity of a bond indicate?

An increase in the budget deficit shifts the demand for loanable funds to the right.

A stock index is

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

In the terminology of macroeconomics, what's the difference between a saver and an investor?

A bond buyer is a

Other things the same, as the maturity of a bond becomes longer, the bond will pay