Exam 13: Saving, Investment, and the Financial System

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If the government budget deficit increases, which curve in the market for loanable funds shifts, which direction does it shift, and what happens to the interest rate?

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If the nominal interest rate is 7 percent and the rate of inflation is 3 percent, then the real interest rate is

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Which of the following is both a financial institution and a financial intermediary?

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Bonds issued by state and local governments are called _____ bonds. Bonds issued by financially shaky corporations are called _____ bonds. Of these two, which type of bond usually pays a relatively higher interest rate?

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It is claimed that mutual funds have two advantages. The first is that mutual funds allow people with small amounts of money to diversify. The second is that mutual funds provide the skills of professional money managers who buy stocks they believe will be the most profitable and thereby increase the return that mutual fund depositors earn on their savings.

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Which of the following statements about mutual funds is correct?

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The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million. In 2013, Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent. If the price­earnings ratio is 20, then Biggie's total earnings in 2013 amounted to

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If the budget deficit increases then

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ABC Co. sells newly issued bonds. JLG Co. sells newly issued stocks. Which company is raising funds in financial markets?

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A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 2.5 percent. The price of a share of this stock is

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Which of the following is correct?

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If the demand for loanable funds shifts to the right, then initially there is a

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Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves.   -Refer to Figure 26-3. A shift of the supply curve from S1 to S2 is called -Refer to Figure 26-3. A shift of the supply curve from S1 to S2 is called

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The sale of stocks

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If there is a shortage of loanable funds, then

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Which of the following is correct?

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In a closed economy, national saving equals

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The final element of a financial crisis is

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In the Coen Brothers' movie The Hudsucker Proxy the board of directors picks someone to run the company who they believe will make poor decisions. If things turn out as they plan,

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Mutual funds are a type of financial intermediary.

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