Question 1

If the current market interest rate for loanable funds is below the equilibrium level, which of the following is most likely to happen?

Accepted Answer

A) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will rise. 
B) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will rise. 
C) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will fall. 
D) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will fall. 
A) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will rise. 
B) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will rise. 
C) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will fall. 
D) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will fall.

Question 2

Which of the following terms 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 3

What do stockholders receive every year?

Accepted Answer

A) a fixed share of the price of the stock 
B) the face value of the stock at the maturity date 
C) a share of the company's profit 
D) interest 
A) a fixed share of the price of the stock 
B) the face value of the stock at the maturity date 
C) a share of the company's profit 
D) interest

Question 4

Assuming that other things remain the same, if the government increases transfer payments to households, which of the following will most likely happen?

Accepted Answer

A) Investment will rise. 
B) The rate of interest will rise. 
C) Public saving will rise. 
D) The market for loanable funds will be unaffected. 
A) Investment will rise. 
B) The rate of interest will rise. 
C) Public saving will rise. 
D) The market for loanable funds will be unaffected.

Question 5

A company releases the following information:
Number of shares (in thousands) = 7500
Dividend = $0.12
Dividend yield = 0.7%
Profit (in thousands) = $1500
a.Calculate the share price
b.Calculate the market value of the firm (the total value of the firm's stock)
c.Calculate Earnings per share and the P/E ratio
d.Is this company expensive relative to its earnings?

Accepted Answer

a.The dividend yield is the percentage o

Question 6

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following identities shows that GDP is both total income and total expenditure?

Accepted Answer

A) GDP = Y 
B) Y = PI + DI + NX 
C) GDP = GNP - NX 
D) Y = C + I + G + NX 
A) GDP = Y 
B) Y = PI + DI + NX 
C) GDP = GNP - NX 
D) Y = C + I + G + NX

Question 8

Suppose Sarah Lee Corporation stock has a P/E ratio of 8. Which of the following 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 9

What is the face value of a bond?

Accepted Answer

A) the market price of the bond 
B) the difference between the amount owned by the issuer and the market price of the bond 
C) the amount owned by the issuer 
D) the interest earned by the owner of the bond 
A) the market price of the bond 
B) the difference between the amount owned by the issuer and the market price of the bond 
C) the amount owned by the issuer 
D) the interest earned by the owner of the bond

Question 10

In a closed economy, how does national saving compare with investment?

Accepted Answer

A) National saving is usually greater than investment. 
B) National saving is equal to investment. 
C) National saving is usually less than investment because of the leakage of taxes. 
D) National saving is usually less than investment. 
A) National saving is usually greater than investment. 
B) National saving is equal to investment. 
C) National saving is usually less than investment because of the leakage of taxes. 
D) National saving is usually less than investment.

Question 11

Suppose equilibrium exists in the market for loanable funds. Using the following table, what is the quantity of funds supplied in this market?

Accepted Answer

A) $2.2 trillion 
B) $2.5 trillion 
C) $2.8 trillion 
D) $3.1 trillion 
A) $2.2 trillion 
B) $2.5 trillion 
C) $2.8 trillion 
D) $3.1 trillion

Question 12

What is the "volume" as reported in stock tables?

Accepted Answer

A) the number of shares traded 
B) the percentage of shares outstanding traded 
C) the number of shares traded times the price they sold at 
D) the number of shares of a company traded divided by the shares of all companies traded 
A) the number of shares traded 
B) the percentage of shares outstanding traded 
C) the number of shares traded times the price they sold at 
D) the number of shares of a company traded divided by the shares of all companies traded

Question 13

You have two sets of estimates of national account numbers for a closed economy for next year. In the first set, government expenditures will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 billion. Under the second set, GDP will be $200 billion, taxes will be $50 billion, transfer payments will be $20 billion, consumption will be $120 billion, and investment will be $40 billion. Based on these numbers, what are the respective estimated results?

Accepted Answer

A) $15 billion surplus and a $10 billion surplus 
B) $15 billion surplus and a $10 billion deficit 
C) $5 billion surplus and a $10 billion surplus 
D) $5 billion surplus and a $10 billion deficit 
A) $15 billion surplus and a $10 billion surplus 
B) $15 billion surplus and a $10 billion deficit 
C) $5 billion surplus and a $10 billion surplus 
D) $5 billion surplus and a $10 billion deficit

Question 14

When opening a restaurant, you may need to buy ovens, freezers, tables, and cash registers. What do economists call these expenditures?

Accepted Answer

A) capital investment 
B) investment in human capital 
C) business consumption expenditures 
D) inventories 
A) capital investment 
B) investment in human capital 
C) business consumption expenditures 
D) inventories

Question 15

Table 8-2.
  
-Refer to Table 8-2. Which company had the lowest dollar dividend?

Accepted Answer

A) Boeing Co. 
B) Eli Lily and Co. 
C) H.J. Heinz and Co. 
D) Kellogg Co. 
A) Boeing Co. 
B) Eli Lily and Co. 
C) H.J. Heinz and Co. 
D) Kellogg Co.

Question 16

The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

Accepted Answer

The claim that an increase in the intere

Question 17

Which of the following best describes the evolution of Canadian national debt between 1996 and 2008?

Accepted Answer

A) It fell by 10 percent of GDP. 
B) It fell, and then it rose. 
C) It fell by $60 billion. 
D) It fell to 32 percent of GDP. 
A) It fell by 10 percent of GDP. 
B) It fell, and then it rose. 
C) It fell by $60 billion. 
D) It fell to 32 percent of GDP.

Question 18

What has the typical price-earnings ratio been historically?

Accepted Answer

A) about 3 
B) about 8 
C) about 15 
D) about 20 
A) about 3 
B) about 8 
C) about 15 
D) about 20

Question 19

In a closed economy, what remains after paying for consumption and government purchases?

Accepted Answer

A) national disposable income 
B) national saving 
C) public saving 
D) private saving 
A) national disposable income 
B) national saving 
C) public saving 
D) private saving

Question 20

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

If the current market interest rate for loanable funds is below the equilibrium level, which of the following is most likely to happen?

Which of the following terms refers to institutions that help to match one person's saving with another person's investment?

What do stockholders receive every year?

Assuming that other things remain the same, if the government increases transfer payments to households, which of the following will most likely happen?

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living.

Which of the following identities shows that GDP is both total income and total expenditure?

Suppose Sarah Lee Corporation stock has a P/E ratio of 8. Which of the following best describes this P/E ratio?

What is the face value of a bond?

In a closed economy, how does national saving compare with investment?

Suppose equilibrium exists in the market for loanable funds. Using the following table, what is the quantity of funds supplied in this market?

What is the "volume" as reported in stock tables?

When opening a restaurant, you may need to buy ovens, freezers, tables, and cash registers. What do economists call these expenditures?

Table 8-2. -Refer to Table 8-2. Which company had the lowest dollar dividend?

The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

Which of the following best describes the evolution of Canadian national debt between 1996 and 2008?

What has the typical price-earnings ratio been historically?

In a closed economy, what remains after paying for consumption and government purchases?

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

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 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

If the current market interest rate for loanable funds is below the equilibrium level, which of the following is most likely to happen?

Which of the following terms refers to institutions that help to match one person's saving with another person's investment?

What do stockholders receive every year?

Assuming that other things remain the same, if the government increases transfer payments to households, which of the following will most likely happen?

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living.

Which of the following identities shows that GDP is both total income and total expenditure?

Suppose Sarah Lee Corporation stock has a P/E ratio of 8. Which of the following best describes this P/E ratio?

What is the face value of a bond?

In a closed economy, how does national saving compare with investment?

Suppose equilibrium exists in the market for loanable funds. Using the following table, what is the quantity of funds supplied in this market?

What is the "volume" as reported in stock tables?

When opening a restaurant, you may need to buy ovens, freezers, tables, and cash registers. What do economists call these expenditures?

Table 8-2. -Refer to Table 8-2. Which company had the lowest dollar dividend?

The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

Which of the following best describes the evolution of Canadian national debt between 1996 and 2008?

What has the typical price-earnings ratio been historically?

In a closed economy, what remains after paying for consumption and government purchases?

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

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 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