Exam 13: Saving, Investment, and the Financial System

Scenario 13-1. Assume the following information for an imaginary, closed economy. GDP =\ 120,000; consumption =\ 70,000; private savng =\ 9,000 ; national saving =\ 12,000 -Refer to Scenario 13-1. For this economy, government purchases amount to

In a closed economy, if Y and T remained the same, but G rose, and C fell but by less than the rise in G, what would happen to public and national saving?

You are thinking of buying a bond from Bluestone Corporation. You know that this bond is long term and you know that Bluestone's business ventures are risky and uncertain. You then consider another bond with a shorter term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?

Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will

A national chain of grocery stores wants to finance the construction of several new stores. The firm has limited internal funds, so it likely will

In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then

Scenario 13-2. Assume the following information for an imaginary, closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 13-2. For this economy, public saving is equal to

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Other things the same, corporate bonds generally feature higher interest rates than U.S. government bonds.

In which of the following cases would it necessarily be true that national saving and private saving are equal for a closed economy?

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that

Morgan, a financial advisor, has told her clients the following things. Which of her statements is not correct?

Which of the following is not always correct for a closed economy?

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries.

The supply of loanable funds would shift to the right if either

Table 13-2 Stack Sym Yld \% P/E Val 100s Hi Lo Clase Nat Che. Baeing Ca. BA 1.55 30.48 4,531,600 64.78 63.70 64.62 +.93 Eli Lily and Cu. LLY 2.60 29.71 3,765,700 58.98 58.21 58.52 +.16 H. J. Heinz and Ca. HNZ 3.30 15.33 1,350,200 36.55 36.26 36.33 +.21 Kellog Cu. K 2.22 20.50 1,990,600 45.72 45.20 45.50 +.24 -Refer to Table 13-2. For which company's stock is the P/E ratio closest to what is historically typical?

Which of the following equations represents GDP for a closed economy?

Potential buyers of ABC Corporation bonds are not concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct?

For an imaginary economy, when the real interest rate is 7 percent, the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500. Currently, the nominal interest rate is 9 percent and the inflation rate is 4 percent. Currently,

A decrease in taxes on interest income would increase the interest rate.