Exam 13: Saving, Investment, and the Financial System

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. -Refer to Figure 26-4. If the equilibrium quantity of loanable funds is $56 billion and if the rate of inflation is 4 percent, then the equilibrium real interest rate is

Which of the following is not an important stock exchange in the United States?

Which of the following could explain an increase in the equilibrium interest rate and a decrease in the equilibrium quantity of loanable funds?

Suppose the economy is closed with national saving of $3 trillion, consumption of $10 trillion, and government purchases of $4 trillion. What is GDP?

Which of the following statements is correct?

Last quarter in a closed economy GDP was 200,000. Expenditures on capital goods such as business equipment and structures was 19,000, inventory rose 1,000, and new construction of homes was 8,000. Consumption was 135,000 and taxes were 32,000. What was public saving?

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. -Refer to Figure 26-4. Regard the position of the Supply curve as fixed, as on the graph. If the real interest rate is 4 percent, the inflation rate is 2 percent, and the market for loanable funds is in equilibrium, then the position of the demand-for-loanable-funds curve must be

If the supply of and demand for loanable funds both shift left, which of the following necessarily happens?

What is the main function of the financial system?

According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?

A municipal bond is

Suppose the Move It! exercise chain has revenues of $45 million, accounting costs of $15 million, and currently has issued 10 million shares of stocks selling at $90 each. Compute the price-earning ratio. Show your work. Is this ratio relatively high or low? What might an increase in the price-earnings ratio indicate?

Which of the following people purchased the correct asset to meet his or her objective?

All financial intermediaries are financial institutions, but not all financial institutions are financial intermediaries.

In a closed economy, what remains after paying for consumption and government purchases is

Mutual funds

If an economy is closed and if it has no government, then

As a money management fee, mutual funds usually charge their customers

The old adage, "Don't put all your eggs in one basket," is very similar to a modern bit of advice concerning financial matters: