Question 1

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

Accepted Answer

A) between 0.25 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. 
A) between 0.25 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. A

Question 2

The real interest rate is the

Accepted Answer

A) interest rate corrected for inflation. 
B) interest rate as usually reported by banks. 
C) difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors. 
D) difference between the average dividend yield on stocks and the average interest rate on bonds. 
A) interest rate corrected for inflation. 
B) interest rate as usually reported by banks. 
C) difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors. 
D) difference between the average dividend yield on stocks and the average interest rate on bonds. A

Question 3

Use the following table to answer the following questions.
Table 26-2  
-Refer to Table 26-2. Which company had the highest dollar dividend per share?

Accepted Answer

A) Boeing Co. 
B) Eli Lilly and Co. 
C) Kraft Foods Group 
D) Kellogg Co. 
A) Boeing Co. 
B) Eli Lilly and Co. 
C) Kraft Foods Group 
D) Kellogg Co. C

Question 4

Which of the following statements is not correct?

Accepted Answer

A) If GDP is rising faster than debt, the government is, in some sense, living within its means. 
B) The ratio of debt to GDP in the United States has always been less than one. 
C) Debts during wars may distribute the burden of fighting the war more evenly across generations. 
D) During times of peace in the United States, the ratio of debt to GDP sometimes rose. 
A) If GDP is rising faster than debt, the government is, in some sense, living within its means. 
B) The ratio of debt to GDP in the United States has always been less than one. 
C) Debts during wars may distribute the burden of fighting the war more evenly across generations. 
D) During times of peace in the United States, the ratio of debt to GDP sometimes rose.

Question 5

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,

Accepted Answer

A) there is a surplus so interest rates will rise. 
B) there is a surplus so interest rates will fall. 
C) there is a shortage so interest rates will rise. 
D) there is a shortage so interest rates will fall. 
A) there is a surplus so interest rates will rise. 
B) there is a surplus so interest rates will fall. 
C) there is a shortage so interest rates will rise. 
D) there is a shortage so interest rates will fall.

Question 6

The bond market

Accepted Answer

A) is a financial market, whereas the stock market is a financial intermediary. 
B) is a financial intermediary, whereas the stock market is a financial market. 
C) is a financial market, as is the stock market. 
D) is a financial intermediary, as is the stock market. 
A) is a financial market, whereas the stock market is a financial intermediary. 
B) is a financial intermediary, whereas the stock market is a financial market. 
C) is a financial market, as is the stock market. 
D) is a financial intermediary, as is the stock market.

Question 7

Which of the following would a macroeconomist consider as investment?

Accepted Answer

A) Marisa purchases a bond issued by Proctor and Gamble Corp. 
B) Karlee purchases stock issued by Texas Instruments, Inc. 
C) Charlie builds a new coffee shop. 
D) All of the above are correct. 
A) Marisa purchases a bond issued by Proctor and Gamble Corp. 
B) Karlee purchases stock issued by Texas Instruments, Inc. 
C) Charlie builds a new coffee shop. 
D) All of the above are correct.

Question 8

Which advantage(s) do mutual funds claim to provide?

Accepted Answer

A) diversification and access to the skills of professional money managers 
B) diversification but not access to the skills of professional money managers 
C) access to the skills of professional money managers but not diversification 
D) neither diversification nor access to the skills of professional money managers. 
A) diversification and access to the skills of professional money managers 
B) diversification but not access to the skills of professional money managers 
C) access to the skills of professional money managers but not diversification 
D) neither diversification nor access to the skills of professional money managers.

Question 9

The primary economic function of the financial system is to

Accepted Answer

A) keep interest rates low. 
B) provide expert advice to savers and investors. 
C) match one person's consumption expenditures with another person's capital expenditures. 
D) match one person's saving with another person's investment. 
A) keep interest rates low. 
B) provide expert advice to savers and investors. 
C) match one person's consumption expenditures with another person's capital expenditures. 
D) match one person's saving with another person's investment.

Question 10

What is the source of the supply of loanable funds?

Accepted Answer

The answer of What is the source of the supply...

Question 11

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

Accepted Answer

A) raise both national saving and private saving. 
B) raise national saving and reduce private saving. 
C) leave national saving and private saving unchanged. 
D) leave national saving unchanged and reduce private saving. 
A) raise both national saving and private saving. 
B) raise national saving and reduce private saving. 
C) leave national saving and private saving unchanged. 
D) leave national saving unchanged and reduce private saving.

Question 12

If the tax revenue of the federal government is less than its spending, then the federal government necessarily

Accepted Answer

A) runs a budget deficit. 
B) runs a budget surplus. 
C) runs a national debt. 
D) will increase taxes. 
A) runs a budget deficit. 
B) runs a budget surplus. 
C) runs a national debt. 
D) will increase taxes.

Question 13

In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, and national saving?

Accepted Answer

Investment = $100, T

Question 14

The financial system coordinates investment and saving, which are important determinants of long-run real GDP.

Accepted Answer

A) True 
 B)False

Question 15

What variable adjusts to balance demand and supply in the market for loanable funds?

Accepted Answer

The real i

Question 16

Use the following table to answer the following questions.
Table 26-1  
-Refer to Table 26-1. What was Hershey's earnings per share?

Accepted Answer

A) $29.90 
B) $2.79 
C) $1.50 
D) $0.36 
A) $29.90 
B) $2.79 
C) $1.50 
D) $0.36

Question 17

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Accepted Answer

A) greater investment. 
B) a higher interest rate. 
C) higher public saving. 
D) All of the above are correct. 
A) greater investment. 
B) a higher interest rate. 
C) higher public saving. 
D) All of the above are correct.

Question 18

_____ and _____ are the two most important financial intermediaries.

Accepted Answer

Banks, Mut

Question 19

What does the maturity of a bond indicate?

Accepted Answer

The date a

Question 20

Financial crises seldom involve economic downturns.

Accepted Answer

A) True 
 B)False

Exam 26: Saving, Investment, and the Financial System

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

The real interest rate is the

Use the following table to answer the following questions. Table 26-2 -Refer to Table 26-2. Which company had the highest dollar dividend per share?

Which of the following statements is not correct?

If the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,

The bond market

Which of the following would a macroeconomist consider as investment?

Which advantage(s) do mutual funds claim to provide?

The primary economic function of the financial system is to

What is the source of the supply of loanable funds?

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

If the tax revenue of the federal government is less than its spending, then the federal government necessarily

In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, and national saving?

The financial system coordinates investment and saving, which are important determinants of long-run real GDP.

What variable adjusts to balance demand and supply in the market for loanable funds?

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

_____ and _____ are the two most important financial intermediaries.

What does the maturity of a bond indicate?

Financial crises seldom involve economic downturns.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

_ and _ are the two most important financial intermediaries.