Question 1

Other things the same,when the interest rate rises,

Accepted Answer

A)   people would want to lend more,making the supply of loanable funds increase.
B)   people would want to lend less,making the supply of loanable funds decrease.
C)   people would want to lend more,making the quantity of loanable funds supplied increase.
D)   people would want to lend less,making the quantity of loanable funds supplied decrease.E) A) and C)
F) A) and B)

Question 2

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

Accepted Answer

A)   "Buy low-risk bonds."
B)   "Use a medium of exchange."
C)   "Diversify."
D)   "Intermediate."E) B) and D)
F) B) and C)

Question 3

At the broadest level,the financial system moves the economy's scarce resources from

Accepted Answer

A)   the rich to the poor.
B)   financial institutions to business firms and government.
C)   households to financial institutions.
D)   savers to borrowers.E) A) and B)
F) C) and D)

Question 4

Figure 18-2.The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. 
-Refer to Figure 18-2.What is measured along the horizontal axis of the graph?

Accepted Answer

A)   the quantity of loanable funds
B)   the size of the government budget deficit or surplus
C)   the real interest rate
D)   the nominal interest rateE) A) and B)
F) A) and C)

Question 5

A change in the tax laws that increases the supply of loanable funds will have a smaller effect on investment when

Accepted Answer

A)   the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic.
B)   the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic.
C)   both the demand for and supply of loanable funds are more elastic.
D)   both the demand for and supply of loanable funds are more inelastic.E) None of the above
F) A) and B)

Question 6

Alpha Corporation has a price of $5 a share,outstanding shares of 2.5 million,retained earnings of $1 million dollars,and a dividend yield of 2 percent.It has a price-earnings ratio which is

Accepted Answer

A)   high,perhaps indicating that people expect future earnings to rise.
B)   high,perhaps indicating that people expect future earnings to fall.
C)   low,perhaps indicating that people expect future earnings to rise.
D)   low,perhaps indicating that people expect future earnings to fall.E) All of the above
F) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Table 18-2
 
-Refer to Table 18-2.Which company had the highest dollar dividend?

Accepted Answer

A)   Boeing Co.
B)   Eli Lilly and Co.
C)   H.J.Heinz and Co.
D)   Kellog Co.E) C) and D)
F) B) and C)

Question 9

All else equal,when people become more optimistic about a company's future,the

Accepted Answer

A)   supply of the stock and the price will both rise.
B)   supply of the stock and the price will both fall.
C)   demand for the stock and the price will both rise.
D)   demand for the stock and the price will both fall.E) A) and B)
F) A) and C)

Question 10

If the inflation rate is 2 percent and the real interest rate is 3 percent,then the nominal interest rate is

Accepted Answer

A)   5 percent.
B)   1 percent.
C)   1.5 percent
D)   0.67 percent.E) A) and C)
F) B) and C)

Question 11

Which of the following would a macroeconomist consider as investment?

Accepted Answer

A)   Marisa purchases a bond issued by Proctor and Gamble Corp.
B)   Karlee purchases stock issued by Texas Instruments,Inc.
C)   Charlie builds a new coffee shop.
D)   All of the above are correct.E) A) and D)
F) A) and B)

Question 12

Suppose a closed economy had public saving of $2 trillion and private saving of $4 trillion.What are national saving and investment for this country?

Accepted Answer

A)   $6 trillion,$6 trillion
B)   $6 trillion,$2 trillion
C)   $1 trillion,$4 trillion
D)   $2 trillion,$2 trillionE) B) and C)
F) A) and C)

Question 13

In a closed economy,what does (T - G) represent?

Accepted Answer

A)   national saving
B)   investment
C)   private saving
D)   public savingE) A) and D)
F) A) and B)

Question 14

A national chain of grocery stores wants to finance the construction of several new stores.The firm has limited internal funds,so it likely will

Accepted Answer

A)   demand the required funds by buying bonds.
B)   demand the required funds by selling bonds.
C)   supply the required funds by buying bonds.
D)   supply the required funds by selling bonds.E) All of the above
F) B) and C)

Question 15

Figure 18-1.The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves. 
-Refer to Figure 18-1.Which of the following events would shift the supply curve from S1 to S2?

Accepted Answer

A)   In response to tax reform,firms are encouraged to invest more than they previously invested.
B)   In response to tax reform,households are encouraged to save more than they previously saved.
C)   Government goes from running a balanced budget to running a budget deficit.
D)   Any of the above events would shift the supply curve from S1 to S2.E) B) and C)
F) A) and C)

Question 16

Which of the following equations represents GDP for an open economy?

Accepted Answer

A)   Y = C + I + G + NX
B)   NX = I - G
C)   I = Y - C + G + NX
D)   Y = C + I + GE) A) and B)
F) None of the above

Question 17

Which of the following is correct?

Accepted Answer

A)   Some bonds have terms as short as a few months.
B)   Because they are so risky,junk bonds pay a low rate of interest.
C)   Corporations buy bonds to raise funds.
D)   All of the above are correct.E) B) and D)
F) A) and D)

Question 18

The price of a stock will rise if

Accepted Answer

A)   the managers of a stock exchange decide the price should be higher.
B)   the demand for the stock rises.
C)   the supply of the stock rises.
D)   None of the above are correct.E) B) and C)
F) None of the above

Question 19

Other things the same,an increase in the budget deficit

Accepted Answer

A)   shifts the demand for loanable funds right,so the interest rate rises.
B)   shifts the demand for loanable funds left,so the interest rate falls.
C)   shifts the supply of loanable funds right,so the interest rate falls.
D)   shifts the supply of loanable funds left,so the interest rate rises.E) None of the above
F) A) and B)

Question 20

Scenario 18-3.Assume the following information for an imaginary,open economy.
Consumption = $1,000; investment = $300; net exports = $100;
taxes = $230; private saving = $200; and national saving = $150.
-Refer to Scenario 18-3.For this economy,GDP equals

Accepted Answer

A)   $1,400.
B)   $1,430.
C)   $1,580
D)   $1,680.E) A) and D)
F) B) and C)

Exam 18: Saving,investment,and the Financial System

The price of a stock will rise if

Correct AnswerverifiedShow Answer

Scenario 18-3.Assume the following information for an imaginary,open economy. Consumption = $1,000; investment = $300; net exports = $100; taxes = $230; private saving = $200; and national saving = $150. -Refer to Scenario 18-3.For this economy,GDP equals

Correct AnswerverifiedShow Answer

Figure 18-2.The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. -Refer to Figure 18-2.What is measured along the horizontal axis of the graph?

Correct AnswerverifiedShow Answer

Table 18-2 -Refer to Table 18-2.Which company had the highest dollar dividend?

Correct AnswerverifiedShow Answer

Figure 18-1.The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves. -Refer to Figure 18-1.Which of the following events would shift the supply curve from S1 to S2?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A national chain of grocery stores wants to finance the construction of several new stores.The firm has limited internal funds,so it likely will

Correct AnswerverifiedShow Answer

At the broadest level,the financial system moves the economy's scarce resources from

Correct AnswerverifiedShow Answer

Other things the same,when the interest rate rises,

Correct AnswerverifiedShow Answer

All else equal,when people become more optimistic about a company's future,the

Correct AnswerverifiedShow Answer

Other things the same,an increase in the budget deficit

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following equations represents GDP for an open economy?

Correct AnswerverifiedShow Answer

In a closed economy,what does (T - G) represent?

Correct AnswerverifiedShow Answer

Which of the following would a macroeconomist consider as investment?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Suppose a closed economy had public saving of $2 trillion and private saving of $4 trillion.What are national saving and investment for this country?

Correct AnswerverifiedShow Answer

If the inflation rate is 2 percent and the real interest rate is 3 percent,then the nominal interest rate is

Correct AnswerverifiedShow Answer

Alpha Corporation has a price of $5 a share,outstanding shares of 2.5 million,retained earnings of $1 million dollars,and a dividend yield of 2 percent.It has a price-earnings ratio which is

Correct AnswerverifiedShow Answer

A change in the tax laws that increases the supply of loanable funds will have a smaller effect on investment when

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified