Exam 13: Saving, Investment, and the Financial System

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. For this economy, GDP equals

An increase in the quantity of loanable funds traded means that

Which of the following is correct?

The supply of loanable funds would shift to the right if either

Which of the following is not a nonsensical headline?

The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

Which of the following is not correct?

Most entrepreneurs finance their purchases of real capital using their past saving.

Financial intermediaries are

On a graph that depicts the market for loanable funds, the nominal interest rate is measured along the vertical axis.

and are the two most important financial intermediaries.

In a closed economy, private saving is

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that

Retained earnings are

Owners of municipal bonds

Which of the following statements is not correct?

Which of the following statements about the term of a bond is correct?

Suppose the government ran a budget surplus in 2010 and a larger surplus in 2011. The loanable funds model would predict that, as a result of the increase in the surplus,

In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then

You are thinking of buying a bond from Bluestone Corporation. You know that this bond is long term and you know that Bluestone's business ventures are risky and uncertain. You then consider another bond with a shorter term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?