Question 1

A high price-earnings ratio for a stock indicates that either the stock is

Accepted Answer

A)   undervalued or people are relatively optimistic about the corporation's prospects.
B)   overvalued or people are relatively optimistic about the corporation's prospects.
C)   overvalued or people are relatively pessimistic about the corporation's prospects.
D)   undervalued or people are relatively pessimistic about the corporation's prospects.E) None of the above
F) A) and D)

Question 2

Joan uses some of her income to buy mutual fund shares. A macroeconomist refers to Joan's purchase as investment.

Accepted Answer

A) True 
 B)False

Question 3

Scenario 26-2. Assume the following information for an imaginary, closed economy.
GDP = $5 trillion; consumption = $3.1 trillion; government purchases = $0.7 trillion; and taxes = $0.9 trillion.
-Refer to Scenario 26-2. Suppose, for this economy, the relationship between the real interest rate, r, and investment, I, is given by the equation I = 10.78 - 3.03r. If, for example, r = 10, this means that the real interest rate is 10 percent.)  The equilibrium real interest rate for this economy is

Accepted Answer

A)   3.19 percent.
B)   3.00 percent.
C)   3.16 percent.
D)   7.14 percent.E) B) and D)
F) C) and D)

Question 4

The country of Bienmundo does not trade with any other country. Its GDP is $30 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Bienmundo amounts to $5 billion. What are consumption and investment in Bienmundo?

Accepted Answer

A)   $17 billion and $8 billion, respectively.
B)   $19 billion and $6 billion, respectively.
C)   $19 billion and $8 billion, respectively.
D)   $17 billion and $6 billion, respectively.E) B) and D)
F) All of the above

Question 5

An increase in the budget deficit shifts the demand for loanable funds to the right.

Accepted Answer

A) True 
 B)False

Question 6

In a closed economy, each unit of output is either consumed by households or invested.

Accepted Answer

A) True 
 B)False

Question 7

The income that households have left after paying their taxes and paying for their consumption is known as .

Accepted Answer

The answer of The income that households have left after...

Question 8

Use the following table to answer the following questions.
Table 26-1
 
-Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share?

Accepted Answer

A)   GenMills
B)   Microsoft
C)   Graco
D)   HersheyE) A) and C)
F) C) and D)

Question 9

Financial intermediaries are

Accepted Answer

A)   the same as financial markets.
B)   individuals who make profits by buying a stock low and selling it high.
C)   a more general name for financial assets such as stocks, bonds, and checking accounts.
D)   financial institutions through which savers can indirectly provide funds to borrowers.E) B) and C)
F) None of the above

Question 10

The sale of stocks

Accepted Answer

A)   and bonds to raise money is called debt finance.
B)   and bonds to raise money is called equity finance.
C)   to raise money is called debt finance, while the sale of bonds to raise funds is called equity finance.
D)   to raise money is called equity finance, while the sale of bonds to raise funds is called debt finance.E) All of the above
F) C) and D)

Question 11

In macroeconomics, refers to the purchase of new capital.

Accepted Answer

The answer of In macroeconomics, refers to the purchase of...

Question 12

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

Accepted Answer

A)   and quantity of loanable funds rises.
B)   and quantity of loanable funds falls.
C)   rises and the quantity of loanable funds falls.
D)   falls and the quantity of loanable funds rises.E) B) and C)
F) All of the above

Question 13

What is a mutual fund?

Accepted Answer

An institution that sells shar...

Question 14

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct?

Accepted Answer

A)   The expected future profitability of a corporation influences the demand for that corporation's stock.
B)   When a corporation sells stock as a means of raising funds it is engaging in debt finance.
C)   The owners of bonds sold by the Microsoft Corporation are part owners of that corporation.
D)   All bonds are, by definition, perpetuities.E) B) and C)
F) A) and D)

Question 16

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

Accepted Answer

A)   tax reforms encouraged greater saving or the budget deficit became smaller.
B)   tax reforms encouraged greater saving or investment tax credits were increased.
C)   the budget deficit became larger or investment tax credits were increased.
D)   the budget deficit became larger or tax reforms discouraged saving.E) B) and D)
F) All of the above

Question 17

A bond buyer is a

Accepted Answer

A)   saver. Bond buyers must hold their bonds until maturity.
B)   saver. Bond buyers may sell their bonds prior to maturity.
C)   borrower. Bond buyers must hold their bonds until maturity.
D)   borrower. Bond buyers may sell their bonds prior to maturity.E) All of the above
F) A) and B)

Question 18

Higher education subsidies in the form of the federal government's student loan program have the potential to

Accepted Answer

A)   reduce the number of people that attend college.
B)   reduce the number of universities and colleges in the future.
C)   create a credit bubble and debt crisis.
D)   reduce the default risk on student loans.E) C) and D)
F) All of the above

Question 19

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 right of D2." 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 8 percent, the inflation rate is 3 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 right of D2.E) None of the above
F) All of the above

Question 20

To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.

Accepted Answer

A) True 
 B)False

Exam 18: Saving, Investment, and the Financial System

A bond buyer is a

Correct Answer
verified

In macroeconomics, refers to the purchase of new capital.

Correct Answer
verified

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Correct Answer
verified

What is a mutual fund?

Correct Answer
verified
An institution that sells shar...
View Answer

The country of Bienmundo does not trade with any other country. Its GDP is $30 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Bienmundo amounts to $5 billion. What are consumption and investment in Bienmundo?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Joan uses some of her income to buy mutual fund shares. A macroeconomist refers to Joan's purchase as investment.

Correct Answer
verified

The sale of stocks

Correct Answer
verified

Higher education subsidies in the form of the federal government's student loan program have the potential to

Correct Answer
verified

The income that households have left after paying their taxes and paying for their consumption is known as .

Correct Answer
verified

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

Correct Answer
verified

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share?

Correct Answer
verified

Correct Answer
verified

An increase in the budget deficit shifts the demand for loanable funds to the right.

Correct Answer
verified

To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.

Correct Answer
verified

Financial intermediaries are

Correct Answer
verified

A high price-earnings ratio for a stock indicates that either the stock is

Correct Answer
verified

In a closed economy, each unit of output is either consumed by households or invested.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Exam 18: Saving, Investment, and the Financial System

A bond buyer is a

Correct AnswerverifiedShow Answer

In macroeconomics, refers to the purchase of new capital.

Correct AnswerverifiedShow Answer

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Correct AnswerverifiedShow Answer

What is a mutual fund?

Correct AnswerverifiedAn institution that sells shar...View AnswerShow Answer

The country of Bienmundo does not trade with any other country. Its GDP is $30 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Bienmundo amounts to $5 billion. What are consumption and investment in Bienmundo?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Joan uses some of her income to buy mutual fund shares. A macroeconomist refers to Joan's purchase as investment.

Correct AnswerverifiedShow Answer

The sale of stocks

Correct AnswerverifiedShow Answer

Higher education subsidies in the form of the federal government's student loan program have the potential to

Correct AnswerverifiedShow Answer

The income that households have left after paying their taxes and paying for their consumption is known as .

Correct AnswerverifiedShow Answer

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An increase in the budget deficit shifts the demand for loanable funds to the right.

Correct AnswerverifiedShow Answer

To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.

Correct AnswerverifiedShow Answer

Financial intermediaries are

Correct AnswerverifiedShow Answer

A high price-earnings ratio for a stock indicates that either the stock is

Correct AnswerverifiedShow Answer

In a closed economy, each unit of output is either consumed by households or invested.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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An institution that sells shar...
View Answer

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