Question 1

All of the following are points of the Restoring American Financial Stability Act of 2010 EXCEPT:

Accepted Answer

A)  imposing tighter restrictions on banks to limit risky investments. 
B)  requiring mortgage lenders to review income and credit histories of applicants to ensure they can afford payments. 
C)  creating a Consumer Financial Protection Bureau. 
D)  requiring firms that create mortgage backed securities to keep at least 50 percent of their value as reserves. 
A)  imposing tighter restrictions on banks to limit risky investments. 
B)  requiring mortgage lenders to review income and credit histories of applicants to ensure they can afford payments. 
C)  creating a Consumer Financial Protection Bureau. 
D)  requiring firms that create mortgage backed securities to keep at least 50 percent of their value as reserves.

Question 2

A small country is a net foreign borrower and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the countryʹs foreign borrowing .

Accepted Answer

A)  increases; does not change 
B)  does not change; increases 
C)  does not change; does not change 
D)  does not change; decreases 
A)  increases; does not change 
B)  does not change; increases 
C)  does not change; does not change 
D)  does not change; decreases

Question 3

In the absence of a Ricardo-Barro effect, a government budget deficit the demand for loanable funds and investment.

Accepted Answer

A)  increases; decreases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; increases 
A)  increases; decreases 
B)  decreases; decreases 
C)  decreases; increases 
D)  increases; increases

Question 4

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

Accepted Answer

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

Question 5

In 2007, Franceʹs exports totalled $490 billion and its imports totalled $529 billion. As a result, France is an international and financial funds from around the world Franceʹs market for loanable funds.

Accepted Answer

A)  borrower; enters 
B)  lender; enters 
C)  borrower; leaves 
D)  lender; leaves 
A)  borrower; enters 
B)  lender; enters 
C)  borrower; leaves 
D)  lender; leaves

Question 6

The University of Central Florida UCF) wanted ʺto create a town center where students can live, eat, study and revel in college traditions like football.ʺ In addition, the university needed funding to build dorms that would house 2000 students. UCF was able to secure financing by promising to pay a lender a specific amount of money on specific dates. This transaction takes place in the
Market for capital.

Accepted Answer

A)  loan; financial. 
B)  bond; financial 
C)  stock; financial 
D)  loan; physical 
A)  loan; financial. 
B)  bond; financial 
C)  stock; financial 
D)  loan; physical

Question 7

Which of the following is FALSE about saving?

Accepted Answer

A)  Income left after paying taxes can either be consumed or saved. 
B)  Saving is the source of funds used to finance investment. 
C)  Saving equals wealth minus consumption expenditures. 
D)  Saving adds to wealth. 
A)  Income left after paying taxes can either be consumed or saved. 
B)  Saving is the source of funds used to finance investment. 
C)  Saving equals wealth minus consumption expenditures. 
D)  Saving adds to wealth.

Question 8

If people expect an inflation rate of 3.3 percent, and the real interest rate is 3 percent, the nominal interest rate equals approximately)

Accepted Answer

A)  6.3 percent. 
B)  9.9 percent. 
C)  0.3 percent. 
D)  8.6 percent. 
A)  6.3 percent. 
B)  9.9 percent. 
C)  0.3 percent. 
D)  8.6 percent.

Question 9

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

Accepted Answer

A)  falls; increases 
B)  rises; increases 
C)  falls; decreases 
D)  rises; decreases 
A)  falls; increases 
B)  rises; increases 
C)  falls; decreases 
D)  rises; decreases

Question 10

If Chinaʹs government runs a budget surplus and there is no Ricardo -Barro effect, there will be
In the supply of loanable funds, private saving and investment .

Accepted Answer

A)  a decrease; decrease; increases 
B)  a decrease; increases; increases 
C)  an increase; increases; increases 
D)  an increase; decreases; increases 
A)  a decrease; decrease; increases 
B)  a decrease; increases; increases 
C)  an increase; increases; increases 
D)  an increase; decreases; increases

Question 11

If Annʹs disposable income increases, her saving decreases.

Accepted Answer

A) True 
 B)False

Question 12

The Ricardo-Barro effects assets that government

Accepted Answer

A)  expenditure affects private expenditure. 
B)  budget deficits crowd out private borrowing. 
C)  saving affects private saving. 
D)  taxation raises interest rates. 
A)  expenditure affects private expenditure. 
B)  budget deficits crowd out private borrowing. 
C)  saving affects private saving. 
D)  taxation raises interest rates.

Question 13

-In the above figure, the initial supply of loanable funds curve is SLF0 and the initial demand for loanable funds curve is DLF0. An increase in the expected profit would

Accepted Answer

A)  only shift the demand for loanable funds curve rightward to a curve such as DLF1. 
B)  only shift the supply of loanable funds curve rightward to a curve such as S LF1. 
C)  have no effect on either the demand for loanable funds curve or the supply of loanable funds curve. 
D)  shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1. 
A)  only shift the demand for loanable funds curve rightward to a curve such as DLF1. 
B)  only shift the supply of loanable funds curve rightward to a curve such as S LF1. 
C)  have no effect on either the demand for loanable funds curve or the supply of loanable funds curve. 
D)  shift the supply of loanable funds curve rightward to a curve such as SLF1, and shift the demand for loanable funds curve rightward to a curve such as DLF1.

Question 14

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF0. What happens if real wealth decreases?

Accepted Answer

A)  There would be a movement to a point such as b on supply of loanable funds curve SLF0. 
B)  The supply of loanable funds curve would shift leftward to a curve such as SLF1. 
C)  The supply of loanable funds curve would shift rightward to a curve such as SLF2. 
D)  Nothing; the economy would remain at point a. 
A)  There would be a movement to a point such as b on supply of loanable funds curve SLF0. 
B)  The supply of loanable funds curve would shift leftward to a curve such as SLF1. 
C)  The supply of loanable funds curve would shift rightward to a curve such as SLF2. 
D)  Nothing; the economy would remain at point a.

Question 15

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

Accepted Answer

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

Question 16

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

Accepted Answer

A)  A lower real interest rate makes more investment projects profitable. 
B)  Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment. 
C)  Consumers are willing to spend less and hence save more at higher real interest rates. 
D)  All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate. 
A)  A lower real interest rate makes more investment projects profitable. 
B)  Interest rate flexibility in financial markets assures an equilibrium in which saving equals investment. 
C)  Consumers are willing to spend less and hence save more at higher real interest rates. 
D)  All of the above are reasons why the demand for loanable funds is negatively related to the real interest rate.

Question 17

Which of the following is correct?

Accepted Answer

A)  As saving decreases, disposable income increases. 
B)  As disposable income increases, the real interest rate increases. 
C)  As disposable income decreases, saving decreases. 
D)  As saving increases, investment by households decreases. 
A)  As saving decreases, disposable income increases. 
B)  As disposable income increases, the real interest rate increases. 
C)  As disposable income decreases, saving decreases. 
D)  As saving increases, investment by households decreases.

Question 18

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

Question 19

ʺWhen there is a shortage of loanable funds, the real interest rate will increase.ʺ Explain whether the previous statement is correct or not.

Accepted Answer

The statement is correct. The shortage o

Question 20

The real interest rate is in the United States compared to Zimbabwe because .

Accepted Answer

A)  higher; Zimbabwe is a net borrower. 
B)  lower; the United States is a net borrower. 
C)  higher; more firms want to borrow financial capital in the United States. 
D)  lower; there is a lower risk premium in the United States. 
A)  higher; Zimbabwe is a net borrower. 
B)  lower; the United States is a net borrower. 
C)  higher; more firms want to borrow financial capital in the United States. 
D)  lower; there is a lower risk premium in the United States.

All of the following are points of the Restoring American Financial Stability Act of 2010 EXCEPT:

A small country is a net foreign borrower and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the countryʹs foreign borrowing .

In the absence of a Ricardo-Barro effect, a government budget deficit the demand for loanable funds and investment.

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

In 2007, Franceʹs exports totalled $490 billion and its imports totalled $529 billion. As a result, France is an international and financial funds from around the world Franceʹs market for loanable funds.

Which of the following is FALSE about saving?

If people expect an inflation rate of 3.3 percent, and the real interest rate is 3 percent, the nominal interest rate equals approximately)

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

If Chinaʹs government runs a budget surplus and there is no Ricardo -Barro effect, there will be In the supply of loanable funds, private saving and investment .

If Annʹs disposable income increases, her saving decreases.

The Ricardo-Barro effects assets that government

-In the above figure, the initial supply of loanable funds curve is SLF₀and the initial demand for loanable funds curve is DLF₀. An increase in the expected profit would

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if real wealth decreases?

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

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

Which of the following is correct?

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

ʺWhen there is a shortage of loanable funds, the real interest rate will increase.ʺ Explain whether the previous statement is correct or not.

The real interest rate is in the United States compared to Zimbabwe because .

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 7: Finance, Saving, and Investment

All of the following are points of the Restoring American Financial Stability Act of 2010 EXCEPT:

A small country is a net foreign borrower and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country and the countryʹs foreign borrowing .

In the absence of a Ricardo-Barro effect, a government budget deficit the demand for loanable funds and investment.

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

In 2007, Franceʹs exports totalled $490 billion and its imports totalled $529 billion. As a result, France is an international and financial funds from around the world Franceʹs market for loanable funds.

Which of the following is FALSE about saving?

If people expect an inflation rate of 3.3 percent, and the real interest rate is 3 percent, the nominal interest rate equals approximately)

Suppose the market for loanable funds is in equilibrium. If the expected profit falls, the equilibrium real interest rate and the quantity of loanable funds .

If Chinaʹs government runs a budget surplus and there is no Ricardo -Barro effect, there will be In the supply of loanable funds, private saving and investment .

If Annʹs disposable income increases, her saving decreases.

The Ricardo-Barro effects assets that government

-In the above figure, the initial supply of loanable funds curve is SLF0 and the initial demand for loanable funds curve is DLF0. An increase in the expected profit would

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF0. What happens if real wealth decreases?

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

Which of the following explains why the demand for loanable funds is negatively related to the real interest rate?

Which of the following is correct?

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

ʺWhen there is a shortage of loanable funds, the real interest rate will increase.ʺ Explain whether the previous statement is correct or not.

The real interest rate is in the United States compared to Zimbabwe because .

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

-In the above figure, the initial supply of loanable funds curve is SLF₀and the initial demand for loanable funds curve is DLF₀. An increase in the expected profit would

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if real wealth decreases?