Question 1

-In the above figure, a decrease in the expected profit will result in a movement from point E to

Accepted Answer

A)  point I. 
B)  point H. 
C)  point F. 
D)  point G. 
A)  point I. 
B)  point H. 
C)  point F. 
D)  point G.

Question 2

Assume you save $1,000 in a bank account that pays 8 percent interest per year and the inflation rate is 3 percent. At the end of the year you have earned

Accepted Answer

A)  a real return of $80. 
B)  a nominal return of $50. 
C)  a real return of $50. 
D)  a negative real return. 
A)  a real return of $80. 
B)  a nominal return of $50. 
C)  a real return of $50. 
D)  a negative real return.

Question 3

People know that the inflation rate will increase from 3 percent to 5 percent. As a result

Accepted Answer

A)  the nominal interest rate is constant. 
B)  the real interest rate rises by 2 percentage points. 
C)  the nominal interest rate falls by 2 percentage points. 
D)  the nominal interest rate rises by 2 percentage points. 
A)  the nominal interest rate is constant. 
B)  the real interest rate rises by 2 percentage points. 
C)  the nominal interest rate falls by 2 percentage points. 
D)  the nominal interest rate rises by 2 percentage points.

Question 4

The supply of loanable funds curve shifts leftward if the real interest rate rises.

Accepted Answer

A) True 
 B)False

Question 5

The total amount spent on new capital

Accepted Answer

A)  the net stock of investment. 
B)  depreciation. 
C)  wealth. 
D)  gross investment. 
A)  the net stock of investment. 
B)  depreciation. 
C)  wealth. 
D)  gross investment.

Question 6

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's capital stock at the end of year equals

Accepted Answer

A)  6 machines. 
B)  1 machine. 
C)  3 machines. 
D)  2 machines. 
A)  6 machines. 
B)  1 machine. 
C)  3 machines. 
D)  2 machines.

Question 7

A firm's decision to invest in a project is based on the

Accepted Answer

A)  real interest rate and expected total revenue. 
B)  real interest rate and the expected profit. 
C)  nominal interest rate and expected total revenue. 
D)  nominal interest rate and the expected profit. 
A)  real interest rate and expected total revenue. 
B)  real interest rate and the expected profit. 
C)  nominal interest rate and expected total revenue. 
D)  nominal interest rate and the expected profit.

Question 8

If Ann's disposable income increases, we expect her saving to decrease.

Accepted Answer

A) True 
 B)False

Question 9

A nation's investment must be financed by

Accepted Answer

A)  the government's budget deficit. 
B)  national saving plus borrowing from the rest of the world. 
C)  borrowing from the rest of the world only. 
D)  national saving only. 
A)  the government's budget deficit. 
B)  national saving plus borrowing from the rest of the world. 
C)  borrowing from the rest of the world only. 
D)  national saving only.

Question 10

-In the above figure, new expectations of booming business conditions and a higher expected profit will

Accepted Answer

A)  make the demand for loanable funds curve become horizontal. 
B)  shift the demand for loanable funds curve leftward. 
C)  shift the demand for loanable funds curve rightward. 
D)  have no effect on the demand for loanable funds curve. 
A)  make the demand for loanable funds curve become horizontal. 
B)  shift the demand for loanable funds curve leftward. 
C)  shift the demand for loanable funds curve rightward. 
D)  have no effect on the demand for loanable funds curve.

Question 11

Which of the following influences household saving?
I. The real interest rate.
II. Disposable income.
III. Expected future income.

Accepted Answer

A)  I and III 
B)  I and II 
C)  I only 
D)  I, II, and III 
A)  I and III 
B)  I and II 
C)  I only 
D)  I, II, and III

Question 12

The Ricardo- Barro effect holds that

Accepted Answer

A)  a government budget deficit crowds out private investment. 
B)  equal increases in taxes and government expenditures have no effect on equilibrium real GDP. 
C)  a government budget deficit induces a decrease in saving that magnifies the crowding out effect. 
D)  government budget deficits have no effect on the real interest rate. 
A)  a government budget deficit crowds out private investment. 
B)  equal increases in taxes and government expenditures have no effect on equilibrium real GDP. 
C)  a government budget deficit induces a decrease in saving that magnifies the crowding out effect. 
D)  government budget deficits have no effect on the real interest rate.

Question 13

The United States regularly runs a trade and therefore _ _.

Accepted Answer

A)  surplus; loanable funds flow out of the United States 
B)  deficit; loanable funds are sent to the United States 
C)  deficit; loanable funds flow out of the United States 
D)  surplus; loanable funds are sent to the United States 
A)  surplus; loanable funds flow out of the United States 
B)  deficit; loanable funds are sent to the United States 
C)  deficit; loanable funds flow out of the United States 
D)  surplus; loanable funds are sent to the United States

Question 14

In 2008, a share of Apple stock costs $82.58 and gives $5.36 of Apple's profit to its owner. In 2007, a share cost $174.36 and still gave its owner $5.36 of Apple's profit. Which of the following statements is correct?

Accepted Answer

A)  The interest rate paid on a share of Apple stock decreased as the price decreased from $174.36 to $82.58. 
B)  An increase in the profit per share causes the stock price to fall. 
C)  Between 2007 and 2008, the interest rate paid on a share of Apple stock increased from 3.1 percent to 6.4 percent. 
D)  When the price of a share of Apple's stock increase, Apple's profits increase. 
A)  The interest rate paid on a share of Apple stock decreased as the price decreased from $174.36 to $82.58. 
B)  An increase in the profit per share causes the stock price to fall. 
C)  Between 2007 and 2008, the interest rate paid on a share of Apple stock increased from 3.1 percent to 6.4 percent. 
D)  When the price of a share of Apple's stock increase, Apple's profits increase.

Question 15

Changes in all of the following shift the supply curve of loanable funds EXCEPT

Accepted Answer

A)  expected future income. 
B)  disposable income. 
C)  wealth. 
D)  the real interest rate. 
A)  expected future income. 
B)  disposable income. 
C)  wealth. 
D)  the real interest rate.

Question 16

In 2007, France's exports totaled $490 billion and its imports totaled $529 billion. As a result, the
i. rest of the world supplies funds to France.
ii. quantity of loanable funds in France is less than the supply.
iii. Ricardo- Barro effect occurs in France.

Accepted Answer

A)  ii and iii only. 
B)  i, ii and iii. 
C)  i and ii. 
D)  i only. 
A)  ii and iii only. 
B)  i, ii and iii. 
C)  i and ii. 
D)  i only.

Question 17

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's net investment for the year totaled

Accepted Answer

A)  1 machine. 
B)  2 machines. 
C)  6 machines. 
D)  3 machines. 
A)  1 machine. 
B)  2 machines. 
C)  6 machines. 
D)  3 machines.

Question 18

If the nominal interest rate is 8 percent and the inflation rate is 2 percent, the real interest rate is approximately

Accepted Answer

A)  6 percent. 
B)  4 percent. 
C)  0.25 percent. 
D)  10 percent. 
A)  6 percent. 
B)  4 percent. 
C)  0.25 percent. 
D)  10 percent.

Question 19

The supply of loanable funds is the relationship between loanable funds and other things remaining the same.

Accepted Answer

A)  the inflation rate 
B)  real GDP 
C)  the price level 
D)  the real interest rate 
A)  the inflation rate 
B)  real GDP 
C)  the price level 
D)  the real interest rate

Question 20

All of the following are sources of loanable funds EXCEPT

Accepted Answer

A)  business investment. 
B)  international borrowing. 
C)  private saving. 
D)  government budget surplus. 
A)  business investment. 
B)  international borrowing. 
C)  private saving. 
D)  government budget surplus.

-In the above figure, a decrease in the expected profit will result in a movement from point E to

Assume you save $1,000 in a bank account that pays 8 percent interest per year and the inflation rate is 3 percent. At the end of the year you have earned

People know that the inflation rate will increase from 3 percent to 5 percent. As a result

The supply of loanable funds curve shifts leftward if the real interest rate rises.

The total amount spent on new capital

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's capital stock at the end of year equals

A firm's decision to invest in a project is based on the

If Ann's disposable income increases, we expect her saving to decrease.

A nation's investment must be financed by

-In the above figure, new expectations of booming business conditions and a higher expected profit will

Which of the following influences household saving? I. The real interest rate. II. Disposable income. III. Expected future income.

The Ricardo- Barro effect holds that

The United States regularly runs a trade and therefore _ _.

In 2008, a share of Apple stock costs $82.58 and gives $5.36 of Apple's profit to its owner. In 2007, a share cost $174.36 and still gave its owner $5.36 of Apple's profit. Which of the following statements is correct?

Changes in all of the following shift the supply curve of loanable funds EXCEPT

In 2007, France's exports totaled $490 billion and its imports totaled $529 billion. As a result, the i. rest of the world supplies funds to France. ii. quantity of loanable funds in France is less than the supply. iii. Ricardo- Barro effect occurs in France.

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's net investment for the year totaled

If the nominal interest rate is 8 percent and the inflation rate is 2 percent, the real interest rate is approximately

The supply of loanable funds is the relationship between loanable funds and other things remaining the same.

All of the following are sources of loanable funds EXCEPT

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 7: Finance, Saving, and Investment

-In the above figure, a decrease in the expected profit will result in a movement from point E to

Assume you save $1,000 in a bank account that pays 8 percent interest per year and the inflation rate is 3 percent. At the end of the year you have earned

People know that the inflation rate will increase from 3 percent to 5 percent. As a result

The supply of loanable funds curve shifts leftward if the real interest rate rises.

The total amount spent on new capital

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's capital stock at the end of year equals

A firm's decision to invest in a project is based on the

If Ann's disposable income increases, we expect her saving to decrease.

A nation's investment must be financed by

-In the above figure, new expectations of booming business conditions and a higher expected profit will

Which of the following influences household saving? I. The real interest rate. II. Disposable income. III. Expected future income.

The Ricardo- Barro effect holds that

The United States regularly runs a trade and therefore _ _.

In 2008, a share of Apple stock costs $82.58 and gives $5.36 of Apple's profit to its owner. In 2007, a share cost $174.36 and still gave its owner $5.36 of Apple's profit. Which of the following statements is correct?

Changes in all of the following shift the supply curve of loanable funds EXCEPT

In 2007, France's exports totaled $490 billion and its imports totaled $529 billion. As a result, the i. rest of the world supplies funds to France. ii. quantity of loanable funds in France is less than the supply. iii. Ricardo- Barro effect occurs in France.

At the beginning of the year, Tom's Tubes had a capital stock of 5 tube inflating machines. During the year, Tom scrapped 2 old machines and purchased 3 new machines. Tom's net investment for the year totaled

If the nominal interest rate is 8 percent and the inflation rate is 2 percent, the real interest rate is approximately

The supply of loanable funds is the relationship between loanable funds and other things remaining the same.

All of the following are sources of loanable funds EXCEPT

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters