Question 1

What is the primary advantage of mutual funds?

Accepted Answer

A)  They usually make a return that "beats the market." 
B)  They allow people with small amounts of money to diversify. 
C)  They provide customers with a medium of exchange. 
D)  They allow investing in the venture capital industry. 
A)  They usually make a return that "beats the market." 
B)  They allow people with small amounts of money to diversify. 
C)  They provide customers with a medium of exchange. 
D)  They allow investing in the venture capital industry.

Question 2

What does the slope of the supply of loanable funds curve represent?

Accepted Answer

A)  the positive relation between the real interest rate and investment 
B)  the positive relation between the real interest rate and saving 
C)  the negative relation between the real interest rate and investment 
D)  the negative relation between the real interest rate and saving 
A)  the positive relation between the real interest rate and investment 
B)  the positive relation between the real interest rate and saving 
C)  the negative relation between the real interest rate and investment 
D)  the negative relation between the real interest rate and saving

Question 3

Public saving is T - G, while private saving is Y - T - C.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Sarah Lee Corporation stock has a P/E ratio of 10. Which statement best describes this P/E ratio?

Accepted Answer

A)  The P/E ratio is low, indicating that buyers may expect earnings to rise. 
B)  The P/E ratio is low, indicating that buyers may expect earnings to fall. 
C)  The P/E ratio is high, indicating that buyers may expect earnings to rise. 
D)  The P/E ratio is high, indicating that buyers may expect earnings to fall. 
A)  The P/E ratio is low, indicating that buyers may expect earnings to rise. 
B)  The P/E ratio is low, indicating that buyers may expect earnings to fall. 
C)  The P/E ratio is high, indicating that buyers may expect earnings to rise. 
D)  The P/E ratio is high, indicating that buyers may expect earnings to fall.

Question 5

Which statement best describes a characteristic of a bond?

Accepted Answer

A)  The maturity of a bond refers to the amount to be paid back. 
B)  The principal of the bond refers to the person buying the bond. 
C)  A bond buyer cannot sell a bond before it matures. 
D)  The interest paid by a bond depends on its price. 
A)  The maturity of a bond refers to the amount to be paid back. 
B)  The principal of the bond refers to the person buying the bond. 
C)  A bond buyer cannot sell a bond before it matures. 
D)  The interest paid by a bond depends on its price.

Question 6

Most entrepreneurs finance their purchases of real capital using their past saving.

Accepted Answer

A) True 
 B)False

Question 7

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 8

In terms of riskiness, how do long-term bonds and short-term bonds compare?

Accepted Answer

A)  Short-term bonds are more risky and so pay higher interest. 
B)  Short-term bonds are less risky and so pay lower interest. 
C)  Short-term bonds are less risky and so pay higher interest. 
D)  Short-term bonds have about the same degree of risk and so pay about the same interest. 
A)  Short-term bonds are more risky and so pay higher interest. 
B)  Short-term bonds are less risky and so pay lower interest. 
C)  Short-term bonds are less risky and so pay higher interest. 
D)  Short-term bonds have about the same degree of risk and so pay about the same interest.

Question 9

Suppose that investment rises and interest rates fall. Which statement best explains these changes?

Accepted Answer

A)  The government has replaced the consumption tax with an income tax. 
B)  The government instituted an investment tax credit. 
C)  The government reduced the tax rate on savings. 
D)  The government repealed an investment tax credit. 
A)  The government has replaced the consumption tax with an income tax. 
B)  The government instituted an investment tax credit. 
C)  The government reduced the tax rate on savings. 
D)  The government repealed an investment tax credit.

Question 10

Which term refers to a certificate of indebtedness that specifies the obligations of the borrower to the holder?

Accepted Answer

A)  bond 
B)  stock 
C)  mutual fund 
D)  savings plan 
A)  bond 
B)  stock 
C)  mutual fund 
D)  savings plan

Question 11

As a money management fee, how much do mutual funds usually charge their customers?

Accepted Answer

A)  between 0.5 and 3.0 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 0.5 and 3.0 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

Question 12

How does the supply and demand for loanable funds model reflect an increase in the goods and services tax rate?

Accepted Answer

A)  The supply curve shifts to the left, while the demand curve remains unchanged. 
B)  The supply curve shifts to the right, while the demand curve remains unchanged. 
C)  The supply curve remains unchanged, while the demand curve shifts to the left. 
D)  The supply curve remains unchanged, while the demand curve shifts to the right. 
A)  The supply curve shifts to the left, while the demand curve remains unchanged. 
B)  The supply curve shifts to the right, while the demand curve remains unchanged. 
C)  The supply curve remains unchanged, while the demand curve shifts to the left. 
D)  The supply curve remains unchanged, while the demand curve shifts to the right.

Question 13

Which term refers to institutions that help to match one person's saving with another person's investment?

Accepted Answer

A)  the Bank of Canada 
B)  the banking system 
C)  the monetary system 
D)  the financial system 
A)  the Bank of Canada 
B)  the banking system 
C)  the monetary system 
D)  the financial system

Question 14

If the government's expenditures exceeded its receipts, what would it most likely do?

Accepted Answer

A)  It would lend money to a bank or other financial intermediary. 
B)  It would borrow money from a bank or other financial intermediary. 
C)  It would directly buy bonds from the public. 
D)  It would directly sell bonds to the public. 
A)  It would lend money to a bank or other financial intermediary. 
B)  It would borrow money from a bank or other financial intermediary. 
C)  It would directly buy bonds from the public. 
D)  It would directly sell bonds to the public.

What is the primary advantage of mutual funds?

What does the slope of the supply of loanable funds curve represent?

Public saving is T - G, while private saving is Y - T - C.

Suppose Sarah Lee Corporation stock has a P/E ratio of 10. Which statement best describes this P/E ratio?

Which statement best describes a characteristic of a bond?

Most entrepreneurs finance their purchases of real capital using their past saving.

Which of the following is a Canadian stock market index?

In terms of riskiness, how do long-term bonds and short-term bonds compare?

Suppose that investment rises and interest rates fall. Which statement best explains these changes?

Which term refers to a certificate of indebtedness that specifies the obligations of the borrower to the holder?

As a money management fee, how much do mutual funds usually charge their customers?

How does the supply and demand for loanable funds model reflect an increase in the goods and services tax rate?

Which term refers to institutions that help to match one person's saving with another person's investment?

If the government's expenditures exceeded its receipts, what would it most likely do?

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 and 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

What is the primary advantage of mutual funds?

What does the slope of the supply of loanable funds curve represent?

Public saving is T - G, while private saving is Y - T - C.

Suppose Sarah Lee Corporation stock has a P/E ratio of 10. Which statement best describes this P/E ratio?

Which statement best describes a characteristic of a bond?

Most entrepreneurs finance their purchases of real capital using their past saving.

Which of the following is a Canadian stock market index?

In terms of riskiness, how do long-term bonds and short-term bonds compare?

Suppose that investment rises and interest rates fall. Which statement best explains these changes?

Which term refers to a certificate of indebtedness that specifies the obligations of the borrower to the holder?

As a money management fee, how much do mutual funds usually charge their customers?

How does the supply and demand for loanable funds model reflect an increase in the goods and services tax rate?

Which term refers to institutions that help to match one person's saving with another person's investment?

If the government's expenditures exceeded its receipts, what would it most likely do?

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 and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters