Exam 13: Saving, Investment, and the Financial System

Longview Corporation has a stock price of $50, has issued 2,000,000 shares of stock, has retained earnings of $4 million dollars, and a dividend yield of 4 percent. The price-earnings ratio for Longview stock is

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

A budget surplus is created if

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

For an open economy, the equation Y = C + I + G + NX is an identity. If we define national saving, S, as the total income in the economy that is left after paying for consumption and government purchases, then for an open economy, it is true that

Which of the following statements is correct?

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

Which of the following is correct?

Banks and mutual funds are examples of financial markets.

The demand for loanable funds comes from saving and the supply of loanable funds comes from investment.

When economists refer to investment, they mean the purchasing of stocks and bonds and other types of saving.

Other things the same, a higher interest rate induces people to

When the government budget deficit rises, national saving is reduced, interest rates rise, and investment falls.

If a firm sells a total of 100 shares of stock, then

A bond is a

The Dow Jones Industrial Average is now based on the prices of the stocks of

As chief financial officer you sell newly issued bonds on behalf of your firm. Your firm is

Which of the following events could explain an increase in interest rates together with a decrease in investment?

Two of the economy's most important financial intermediaries are

Kathleen is considering expanding her dress shop. If interest rates rise she is