Question 1

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?

Accepted Answer

A)   -2,000, 1,000, and 2,000, respectively.
B)   1,000, 2,000, and 3,000, respectively.
C)   2,000, -1,000, and 1,000, respectively.
D)   2,000, 1,000, and 2,000, respectively.E) None of the above
F) C) and D)

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 low­risk bonds."
B)   "Use a medium of exchange."
C)   "Diversify."
D)   "Intermediate."E) A) and B)
F) B) and D)

Question 3

What is the main function of the financial system?

Accepted Answer

Matching s...

Question 4

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

Accepted Answer

A)   national saving = 0.
B)   national saving = private saving.
C)   public saving = investment.
D)   gross domestic product = consumption.E) B) and D)
F) A) and B)

Question 5

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?

Accepted Answer

A)   -4,000
B)   -5,000
C)   -14,000
D)   -6,000E) All of the above
F) C) and D)

Question 6

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

Accepted Answer

A)   lower than 6 percent.
B)   6 percent.
C)   between 6 percent and 8 percent.
D)   higher than 8 percent.E) C) and D)
F) B) and C)

Question 7

Which of the following statements is correct?

Accepted Answer

A)   A general, persistent decline in stock prices may signal that the economy is about to enter a boom period because people will be able to buy stock for less money.
B)   A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices may mean that people are expecting low corporate profits.
C)   A general, persistent decline in stock prices may signal that the economy is about to enter a recession because low stock prices mean that corporations have had low profits in the past.
D)   Expectations about the business cycle have no impact on stock prices.E) C) and D)
F) A) and D)

Question 8

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

Accepted Answer

A)   national disposable income.
B)   national saving.
C)   public saving.
D)   private saving.E) None of the above
F) B) and C)

Question 9

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?

Accepted Answer

The earnings per share is $45 million - ...

Question 10

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

Accepted Answer

A)   The demand for loanable funds shifted right.
B)   The demand for loanable funds shifted left.
C)   The supply of loanable funds shifted right.
D)   The supply of loanable funds shifted left.E) None of the above
F) A) and D)

Question 11

Mutual funds

Accepted Answer

A)   provide diversification. Shareholders assume all of the risk associated with the mutual fund.
B)   provide diversification. Government insurance eliminates the risk of mutual fund shareholders.
C)   do not provide diversification. Shareholders assume all of the risk associated with the mutual fund
D)   do not provide diversification. Government insurance eliminates the risk of mutual fund shareholders.E) A) and C)
F) B) and C)

Question 12

A municipal bond is

Accepted Answer

A)   issued by the federal government.
B)   issued by state and local governments.
C)   issued by corporations.
D)   issued by households.E) B) and C)
F) B) and D)

Question 13

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

Accepted Answer

A)   Michelle wanted to be a part owner of Mamma Rosa's Pizza, so she purchased a bond issued by Mamma Rosa's Pizza.
B)   Tim wanted a high return, even if it meant taking some risk, so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric.
C)   Jennifer wanted to buy equity in Honda, so she purchased bonds sold by Honda.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. 1. B)  D2. C)  between D1 and D2. D)  to the left of D1." class="answers-bank-image d-inline" rel="preload" >
-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

Accepted Answer

A)   D1.
B)   D2.
C)   between D1 and D2.
D)   to the left of D1.E) A) and C)
F) B) and C)

Question 16

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

Accepted Answer

A)   $3 trillion
B)   $9 trillion
C)   $11 trillion
D)   $17 trillionE) None of the above
F) B) and C)

Question 17

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

Accepted Answer

A)   the equilibrium interest rate falls
B)   the equilibrium interest rate rises
C)   the equilibrium quantity of loanable funds rises
D)   the equilibrium quantity of loanable funds fallsE) A) and B)
F) B) and D)

Question 18

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

Accepted Answer

A)   between 0.5 and 2.0 percent of assets each year.
B)   between 1.5 and 3.0 percent of assets each year.
C)   nothing, because they receive commissions from the firms whose stock they buy.
D)   a flat fee of about $50.E) All of the above
F) A) and C)

Question 19

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

Accepted Answer

A)   Firms become pessimistic about the future and, as a result, they cut back on their plans to buy new equipment and build new factories.
B)   The government goes from running a budget deficit to running a budget surplus.
C)   Congress passes a reform of the tax laws that encourages greater saving.
D)   Congress passes a reform of the tax laws that encourages greater investment.E) B) and D)
F) A) and B)

Question 20

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

Accepted Answer

A)   New York Stock Exchange
B)   American Stock Exchange
C)   Chicago Mercantile Exchange
D)   NASDAQE) B) and C)
F) B) and D)

Exam 13: Saving, Investment, and the Financial System

Correct Answer
verified
The earnings per share is $45 million - ...
View Answer

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

Correct Answer
verified

A municipal bond is

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Mutual funds

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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 Answer
verified

What is the main function of the financial system?

Correct Answer
verified
Matching s...
View Answer

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?

Correct Answer
verified

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

Correct Answer
verified

Exam 13: Saving, Investment, and the Financial System

Correct AnswerverifiedThe earnings per share is $45 million - ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A municipal bond is

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Mutual funds

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

What is the main function of the financial system?

Correct AnswerverifiedMatching s...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
The earnings per share is $45 million - ...
View 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
Matching s...
View Answer

Correct Answer
verified

Correct Answer
verified