Question 1

If a firm sells a total of 100 shares of stock, then

Accepted Answer

A)  the supply of, and demand for, those shares determine the price per share. 
B)  each share represents ownership of 1 percent of the firm. 
C)  the firm is engaging in equity finance. 
D)  All of the above are correct. 
A)  the supply of, and demand for, those shares determine the price per share. 
B)  each share represents ownership of 1 percent of the firm. 
C)  the firm is engaging in equity finance. 
D)  All of the above are correct.

Question 2

The sale of either stocks or bonds to raise money is known as equity finance.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Which of the following is a certificate of indebtedness?

Accepted Answer

A)  both stocks and bonds 
B)  stocks but not bonds 
C)  bonds but not stocks 
D)  neither stocks nor bonds 
A)  both stocks and bonds 
B)  stocks but not bonds 
C)  bonds but not stocks 
D)  neither stocks nor bonds

Question 5

Institutions that help to match one person's saving with another person's investment are collectively called the

Accepted Answer

A)  Federal Reserve system. 
B)  banking system. 
C)  monetary system. 
D)  financial system. 
A)  Federal Reserve system. 
B)  banking system. 
C)  monetary system. 
D)  financial system.

Question 6

The interest rate will and the quantity of loanable funds invested will when the government decreases the budget deficit.

Accepted Answer

The answer of The interest rate will and the quantity...

Question 7

Use the following table to answer the following questions.
Table 26-2
  
-Refer to Table 26-2. Which company had the lowest earnings per share?

Accepted Answer

A)  Boeing Co. 
B)  Eli Lilly and Co. 
C)  Kraft 
D)  Kellogg Co. 
A)  Boeing Co. 
B)  Eli Lilly and Co. 
C)  Kraft 
D)  Kellogg Co.

Question 8

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 9

The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

Accepted Answer

The claim that an increase in the intere

Question 10

Compared to stocks, bonds offer the holder

Accepted Answer

A)  lower risk and lower potential return. 
B)  lower risk and higher potential return. 
C)  higher risk and lower potential return. 
D)  higher risk and higher potential return. 
A)  lower risk and lower potential return. 
B)  lower risk and higher potential return. 
C)  higher risk and lower potential return. 
D)  higher risk and higher potential return.

Question 11

Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures on goods and services of $30 billion. County B has private savings of $60 billion, and investment expenditures of $40 billion. Country C has GDP of $300 billion, investment of $90, consumption of $180 billion, taxes of $60 billion and transfers of $20 billion. From this information, we know that

Accepted Answer

A)  country A has the largest government budget deficit. 
B)  country B has the largest government budget deficit. 
C)  country C has the largest government budget deficit. 
D)  The government budget deficit is equal in all three countries. 
A)  country A has the largest government budget deficit. 
B)  country B has the largest government budget deficit. 
C)  country C has the largest government budget deficit. 
D)  The government budget deficit is equal in all three countries.

Question 12

Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget

Accepted Answer

A)  will make investment rise. 
B)  will make the rate of interest rise. 
C)  will make public saving rise. 
D)  All of the above are correct. 
A)  will make investment rise. 
B)  will make the rate of interest rise. 
C)  will make public saving rise. 
D)  All of the above are correct.

Question 13

Which of the following expressions must be equal to national saving for a closed economy?

Accepted Answer

A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y 
A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y

Question 14

If a share of stock in Skylight Chili sells for $75, the retained earnings per share are $5, and the dividend per share is $2, then the price-earnings ratio is 15.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same, if the government decreases transfer payments, then

Accepted Answer

A)  both the interest rate and the equilibrium quantity of loanable funds fall. 
B)  both the interest rate and the equilibrium quantity of loanable funds rise. 
C)  the interest rate rises and the equilibrium quantity of loanable funds falls. 
D)  the interest rate falls and the equilibrium quantity of loanable funds rises. 
A)  both the interest rate and the equilibrium quantity of loanable funds fall. 
B)  both the interest rate and the equilibrium quantity of loanable funds rise. 
C)  the interest rate rises and the equilibrium quantity of loanable funds falls. 
D)  the interest rate falls and the equilibrium quantity of loanable funds rises.

Question 16

The real interest rate is the

Accepted Answer

A)  interest rate corrected for inflation. 
B)  interest rate as usually reported by banks. 
C)  difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors. 
D)  difference between the average dividend yield on stocks and the average interest rate on bonds. 
A)  interest rate corrected for inflation. 
B)  interest rate as usually reported by banks. 
C)  difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors. 
D)  difference between the average dividend yield on stocks and the average interest rate on bonds.

Question 17

A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

Accepted Answer

The answer of A higher interest rate makes more attractive....

Question 18

In 2009, the U.S. government's budget deficit increased substantially. Other things the same, this means the

Accepted Answer

A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left. 
A)  supply of loanable funds shifted to the right. 
B)  supply of loanable funds shifted to the left. 
C)  demand for loanable funds shifted to the right. 
D)  demand for loanable funds shifted to the left.

Question 19

A perpetuity is

Accepted Answer

A)  a financial intermediary that has existed throughout recorded history. 
B)  an instrument of equity finance. 
C)  a stock that pays dividends forever. 
D)  a bond that pays interest forever. 
A)  a financial intermediary that has existed throughout recorded history. 
B)  an instrument of equity finance. 
C)  a stock that pays dividends forever. 
D)  a bond that pays interest forever.

Question 20

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.

Exam 13: Saving, Investment, and the Financial System

If a firm sells a total of 100 shares of stock, then

The sale of either stocks or bonds to raise money is known as equity finance.

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

Which of the following is a certificate of indebtedness?

Institutions that help to match one person's saving with another person's investment are collectively called the

The interest rate will and the quantity of loanable funds invested will when the government decreases the budget deficit.

Use the following table to answer the following questions. Table 26-2 -Refer to Table 26-2. Which company had the lowest earnings per share?

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 model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

Compared to stocks, bonds offer the holder

Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget

Which of the following expressions must be equal to national saving for a closed economy?

If a share of stock in Skylight Chili sells for $75, the retained earnings per share are $5, and the dividend per share is $2, then the price-earnings ratio is 15.

Other things the same, if the government decreases transfer payments, then

The real interest rate is the

A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

In 2009, the U.S. government's budget deficit increased substantially. Other things the same, this means the

A perpetuity is

We interpret the meaning of "loanable funds" as the

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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