Question 1

Which of the following is a Canadian stock market index?

Accepted Answer

A)  S&P 100 
B)  S&P 500 
C)  S&P/TSX 
D)  S&P/CAD 
A)  S&P 100 
B)  S&P 500 
C)  S&P/TSX 
D)  S&P/CAD

Question 2

Consider a closed economy. Use the supply and demand for loanable funds model to predict the effects of the following events on interest rates and investment.
a. The government introduces a tax credit for savings accounts of up to $5000 per year.
b. The government introduces a tax credit for savings accounts of up to $5000 per year, and at the same time it repeals an investment tax exemption provision.
c. The government raises the tax rates.
d. The government issues bonds worth $10 billion.

Accepted Answer

a. Since saving is now less taxed, one w

Question 3

In a closed economy, what is public saving?

Accepted Answer

A)  the amount of income that households have left after paying for taxes and consumption 
B)  the amount of income that businesses have left after paying for the factors of production 
C)  the amount of tax revenue that the government has left after paying for its spending 
D)  the amount of total income minus total expenditure 
A)  the amount of income that households have left after paying for taxes and consumption 
B)  the amount of income that businesses have left after paying for the factors of production 
C)  the amount of tax revenue that the government has left after paying for its spending 
D)  the amount of total income minus total expenditure

Question 4

-Refer to Table 8-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of company B's stock traded that day?

Accepted Answer

A)  $121,712 
B)  $12,171,200 
C)  $121,712,000 
D)  $1,217,120,000 
A)  $121,712 
B)  $12,171,200 
C)  $121,712,000 
D)  $1,217,120,000

Question 5

Country A has taxes of $60 billion, transfers of $45 billion, and government expenditures on goods and services of $45 billion. How much is Country A's deficit?

Accepted Answer

A)  $0 billion 
B)  $15 billion 
C)  $30 billion 
D)  $45 billion 
A)  $0 billion 
B)  $15 billion 
C)  $30 billion 
D)  $45 billion

Question 6

Which term refers to the fall in investment due to government borrowing?

Accepted Answer

A)  the neutrality of money 
B)  the vicious circle 
C)  comparative advantage 
D)  crowding out 
A)  the neutrality of money 
B)  the vicious circle 
C)  comparative advantage 
D)  crowding out

Question 7

When is a budget surplus created?

Accepted Answer

A)  when the government sells more bonds than it buys back 
B)  when the government spends more than it receives in tax revenue 
C)  when private savings are greater than zero 
D)  when the government spends less than the tax revenue 
A)  when the government sells more bonds than it buys back 
B)  when the government spends more than it receives in tax revenue 
C)  when private savings are greater than zero 
D)  when the government spends less than the tax revenue

Question 8

What does a high price/earnings ratio indicate?

Accepted Answer

A)  Either the stock is undervalued or people have become more optimistic about the corporation's prospects. 
B)  Either the stock is overvalued or people have become more optimistic about the corporation's prospects. 
C)  Either the stock is overvalued or people have become less optimistic about the corporation's prospects. 
D)  Either the stock is undervalued or people have become less optimistic about the corporation's prospects. 
A)  Either the stock is undervalued or people have become more optimistic about the corporation's prospects. 
B)  Either the stock is overvalued or people have become more optimistic about the corporation's prospects. 
C)  Either the stock is overvalued or people have become less optimistic about the corporation's prospects. 
D)  Either the stock is undervalued or people have become less optimistic about the corporation's prospects.

Question 9

If Huedepool Beer runs into financial difficulty, how are bondholders and shareholders paid?

Accepted Answer

A)  Shareholders are paid before bondholders. 
B)  Shareholders are paid after bondholders. 
C)  Shareholders and bondholders are paid proportional shares of the company's assets. 
D)  Shareholders receive all the company's assets. 
A)  Shareholders are paid before bondholders. 
B)  Shareholders are paid after bondholders. 
C)  Shareholders and bondholders are paid proportional shares of the company's assets. 
D)  Shareholders receive all the company's assets.

Question 10

Suppose the following equations give the demand and supply for loanable funds in billions of dollars; r is the real interest rate in percentage points :
QD = 160 - 10r
QS = -20 + 20r
Now, assume the government wishes to stimulate consumption, and imposes a tax on interest earnings of 40 percent.
a) How do the demand and supply equations change to reflect the interest earnings tax?
b) Calculate the new equilibrium interest rate and quantity of loanable funds. (Compare this to the zero-tax equilibrium.)
c) Calculate the changes in consumer and producer surplus due to the tax. Who gains and who loses from the tax?

Accepted Answer

a) The new demand and supply for loanabl

Question 11

If the nominal interest rate is 8 percent and the inflation rate is 4 percent, what is the real interest rate?

Accepted Answer

A)  0.44 percent 
B)  4 percent 
C)  6 percent 
D)  12 percent 
A)  0.44 percent 
B)  4 percent 
C)  6 percent 
D)  12 percent

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

If you know that Alberta Dreams Corporation, a travel equipment and clothing company, has revenues of $30 million and accounting costs of $10 million, you also know that its earnings are $20 million.

Accepted Answer

A) True 
 B)False

Question 14

The Lazy River Corporation has issued 4 million shares. Its earnings were $16 million of which it retained $8 million. What was the dividend per share?

Accepted Answer

A)  $2 
B)  $3 
C)  $5 
D)  $6 
A)  $2 
B)  $3 
C)  $5 
D)  $6

Which of the following is a Canadian stock market index?

In a closed economy, what is public saving?

-Refer to Table 8-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of company B's stock traded that day?

Country A has taxes of $60 billion, transfers of $45 billion, and government expenditures on goods and services of $45 billion. How much is Country A's deficit?

Which term refers to the fall in investment due to government borrowing?

When is a budget surplus created?

What does a high price/earnings ratio indicate?

If Huedepool Beer runs into financial difficulty, how are bondholders and shareholders paid?

If the nominal interest rate is 8 percent and the inflation rate is 4 percent, what is the real interest rate?

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

If you know that Alberta Dreams Corporation, a travel equipment and clothing company, has revenues of $30 million and accounting costs of $10 million, you also know that its earnings are $20 million.

The Lazy River Corporation has issued 4 million shares. Its earnings were $16 million of which it retained $8 million. What was the dividend per share?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 8: Saving, Investment, and the Financial System

Which of the following is a Canadian stock market index?

In a closed economy, what is public saving?

-Refer to Table 8-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of company B's stock traded that day?

Country A has taxes of $60 billion, transfers of $45 billion, and government expenditures on goods and services of $45 billion. How much is Country A's deficit?

Which term refers to the fall in investment due to government borrowing?

When is a budget surplus created?

What does a high price/earnings ratio indicate?

If Huedepool Beer runs into financial difficulty, how are bondholders and shareholders paid?

If the nominal interest rate is 8 percent and the inflation rate is 4 percent, what is the real interest rate?

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

If you know that Alberta Dreams Corporation, a travel equipment and clothing company, has revenues of $30 million and accounting costs of $10 million, you also know that its earnings are $20 million.

The Lazy River Corporation has issued 4 million shares. Its earnings were $16 million of which it retained $8 million. What was the dividend per share?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters