Question 1

The slope of the supply of loanable funds curve represents the

Accepted Answer

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

Question 2

If the government's expenditures exceeded its receipts, it would likely

Accepted Answer

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

Question 3

National saving is equal to Y - T - C.

Accepted Answer

A) True 
 B)False

Question 4

In the market for loanable funds, the interaction of the demand for, and supply of, loanable funds determines the equilibrium level of

Accepted Answer

A) the inflation rate. 
B) gross domestic product. 
C) the real interest rate. 
D) the nominal interest rate. 
A) the inflation rate. 
B) gross domestic product. 
C) the real interest rate. 
D) the nominal interest rate.

Question 5

Other things being constant, when a firm sells new shares of stock, the

Accepted Answer

A) supply of the stock increases and the price decreases. 
B) supply of the stock decreases and the price increases. 
C) demand for the stock increases and the price increases. 
D) demand for the stock decreases and the price decreases. 
A) supply of the stock increases and the price decreases. 
B) supply of the stock decreases and the price increases. 
C) demand for the stock increases and the price increases. 
D) demand for the stock decreases and the price decreases.

Question 6

Which of the following statements is correct?

Accepted Answer

A) NASDAQ is an important stock exchange in the United States. 
B) The Standard & Poor's 500 Index and the New York Stock Exchange are two examples of stock indexes. 
C) The most significant influence on the demand for a corporation's stock is the number of shares of the stock that the corporation has issued. 
D) All of the above are correct. 
A) NASDAQ is an important stock exchange in the United States. 
B) The Standard & Poor's 500 Index and the New York Stock Exchange are two examples of stock indexes. 
C) The most significant influence on the demand for a corporation's stock is the number of shares of the stock that the corporation has issued. 
D) All of the above are correct.

Question 7

Other things the same, bonds are likely to have higher interest rates if they have

Accepted Answer

A) tax exemptions and short terms. 
B) tax exemptions and long terms. 
C) no tax exemptions and short terms. 
D) no tax exemptions and long terms. 
A) tax exemptions and short terms. 
B) tax exemptions and long terms. 
C) no tax exemptions and short terms. 
D) no tax exemptions and long terms.

Question 8

Which of the following would likely make the interest rate on a bond higher than otherwise?

Accepted Answer

A) both high credit risk and a long term 
B) high credit risk but not a long term 
C) a long term but not a high credit risk 
D) neither high credit risk nor a long term 
A) both high credit risk and a long term 
B) high credit risk but not a long term 
C) a long term but not a high credit risk 
D) neither high credit risk nor a long term

Question 9

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

Accepted Answer

A) between 0.5 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 0.5 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.

Question 10

Public saving is equal to national saving minus private saving.

Accepted Answer

A) True 
 B)False

Question 11

When an economy's government goes from running a budget deficit to running a budget surplus, the economy's long-run growth prospects are improved.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 1,500, consumption equals 7,500, and government purchases equal 2,000. What is national saving?

Accepted Answer

A) -500 
B) 0 
C) 2,000 
D) None of the above is correct. 
A) -500 
B) 0 
C) 2,000 
D) None of the above is correct.

Question 13

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $4 billion worth of goods and services each year, collects $6 billion in taxes, and provides $1 billion in transfer payments to households. Private saving in Cedarland is $4 billion. For Cedarland,

Accepted Answer

A) investment is $6 billion and consumption is $9 billion. 
B) investment is $6 billion and consumption is $8 billion. 
C) investment is $5 billion and consumption is $8 billion. 
D) investment is $5 billion and consumption is $7 billion. 
A) investment is $6 billion and consumption is $9 billion. 
B) investment is $6 billion and consumption is $8 billion. 
C) investment is $5 billion and consumption is $8 billion. 
D) investment is $5 billion and consumption is $7 billion.

Question 14

Which of the following is not correct?

Accepted Answer

A) If you buy a bond from a corporation, you can sell the bond to someone else before it matures. 
B) Term refers to the scheduling of periodic interest rate payments on a bond. 
C) A bond is an IOU. 
D) There are millions of different bonds in the U.S. economy. 
A) If you buy a bond from a corporation, you can sell the bond to someone else before it matures. 
B) Term refers to the scheduling of periodic interest rate payments on a bond. 
C) A bond is an IOU. 
D) There are millions of different bonds in the U.S. economy.

Question 15

In a closed economy, what does (T - G) represent?

Accepted Answer

A) national saving 
B) investment 
C) private saving 
D) public saving 
A) national saving 
B) investment 
C) private saving 
D) public saving

Question 16

If the tax revenue of the federal government exceeds spending, then the 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 17

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,

Accepted Answer

A) invest in physical capital. 
B) use equity finance. 
C) sell bonds. 
D) purchase bonds. 
A) invest in physical capital. 
B) use equity finance. 
C) sell bonds. 
D) purchase bonds.

Question 18

A corporation's earnings are

Accepted Answer

A) the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants minus the dividends paid out. 
B) the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists minus the dividends paid out. 
C) the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants. 
D) the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists. 
A) the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants minus the dividends paid out. 
B) the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists minus the dividends paid out. 
C) the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants. 
D) the amount of revenue it receives for the sale of its products minus its direct and indirect costs of production as measured by its economists.

Question 19

Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?

Accepted Answer

A) It would decrease. 
B) It would increase. 
C) It would stay the same. 
D) It might do any of the above. 
A) It would decrease. 
B) It would increase. 
C) It would stay the same. 
D) It might do any of the above.

Question 20

The indirect provision of funds by savers to borrowers is accomplished by

Accepted Answer

A) banks and other financial markets. 
B) banks and other financial intermediaries. 
C) stock markets and other financial markets. 
D) All of the above are correct. 
A) banks and other financial markets. 
B) banks and other financial intermediaries. 
C) stock markets and other financial markets. 
D) All of the above are correct.

Exam 13: Saving, Investment, and the Financial System

The slope of the supply of loanable funds curve represents the

If the government's expenditures exceeded its receipts, it would likely

National saving is equal to Y - T - C.

In the market for loanable funds, the interaction of the demand for, and supply of, loanable funds determines the equilibrium level of

Other things being constant, when a firm sells new shares of stock, the

Which of the following statements is correct?

Other things the same, bonds are likely to have higher interest rates if they have

Which of the following would likely make the interest rate on a bond higher than otherwise?

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

Public saving is equal to national saving minus private saving.

When an economy's government goes from running a budget deficit to running a budget surplus, the economy's long-run growth prospects are improved.

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 1,500, consumption equals 7,500, and government purchases equal 2,000. What is national saving?

Which of the following is not correct?

In a closed economy, what does (T - G) represent?

If the tax revenue of the federal government exceeds spending, then the government necessarily

As an alternative to selling shares of stock as a means of raising funds, a large company could, instead,

A corporation's earnings are

Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?

The indirect provision of funds by savers to borrowers is accomplished by

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

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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