Question 1

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.

Question 2

What is the single most important piece of information about a stock?

Accepted Answer

A)  price / earnings ratio 
B)  dividend 
C)  volume 
D)  price 
A)  price / earnings ratio 
B)  dividend 
C)  volume 
D)  price

Question 3

What would NOT result from replacing the income tax with a consumption tax?

Accepted Answer

A)  The interest rate would decrease. 
B)  Investment would decrease. 
C)  The standard of living would eventually rise. 
D)  The supply of loanable funds would shift right. 
A)  The interest rate would decrease. 
B)  Investment would decrease. 
C)  The standard of living would eventually rise. 
D)  The supply of loanable funds would shift right.

Question 4

Australia has recently implemented a national sales tax.If that country uses the proceeds from this tax to reduce income tax rates,what happens in the loanable funds market?

Accepted Answer

The supply of loanable funds s

Question 5

Which expression represents national saving in a closed economy?

Accepted Answer

A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y 
A)  Y - I - G - NX 
B)  Y - C - G 
C)  Y - I - C 
D)  G + C - Y

Question 6

What is a secondary advantage of mutual funds?

Accepted Answer

A)  They allow an investor to avoid investment charges and fees. 
B)  They give ordinary people access to loanable funds for investing. 
C)  They usually outperform stock market indexes. 
D)  They give ordinary people access to the skills of professional money managers. 
A)  They allow an investor to avoid investment charges and fees. 
B)  They give ordinary people access to loanable funds for investing. 
C)  They usually outperform stock market indexes. 
D)  They give ordinary people access to the skills of professional money managers.

Question 7

What would an increase in the budget deficit most likely cause?

Accepted Answer

A)  a shortage of loanable funds at the original interest rate,which would lead to falling interest rates 
B)  a surplus of loanable funds at the original interest rate,which would lead to rising interest rates 
C)  a shortage of loanable funds at the original interest rate,which would lead to rising interest rates 
D)  a surplus of loanable funds at the original interest rate,which would lead to falling interest rates 
A)  a shortage of loanable funds at the original interest rate,which would lead to falling interest rates 
B)  a surplus of loanable funds at the original interest rate,which would lead to rising interest rates 
C)  a shortage of loanable funds at the original interest rate,which would lead to rising interest rates 
D)  a surplus of loanable funds at the original interest rate,which would lead to falling interest rates

Question 8

National saving is equal to Y - T - C.

Accepted Answer

A) True 
 B)False

Question 9

During the financial crisis of 2008-2009,the risk of lending and borrowing increased significantly.
a)Use the supply and demand for loanable funds model to analyze the effects of increased risk on savings,investment,and the interest rate.
b)Assume the following demand and supply of loanable funds equations: QD = 160 - 10r,and QS = -20 + 20r.How would you modify these equations to include risk?

Accepted Answer

a)Increased risk means that potential in

Question 10

Who would a macroeconomist consider as investment?

Accepted Answer

A)  Brianna purchases a bond issued by CP Rail 
B)  Jerry purchases stock issued by BCE. 
C)  Anita builds a new house 
D)  Brenda buys an amount of gold. 
A)  Brianna purchases a bond issued by CP Rail 
B)  Jerry purchases stock issued by BCE. 
C)  Anita builds a new house 
D)  Brenda buys an amount of gold.

Question 11

When a country saves a larger portion of its GDP,will it have more or less investment?

Accepted Answer

A)  It will have less investment,and so it will have more capital and higher productivity. 
B)  It will have less investment,and so it will have less capital and higher productivity. 
C)  It will have more investment,and so it will have more capital and higher productivity. 
D)  It will have more investment,and so it will have less capital and higher productivity. 
A)  It will have less investment,and so it will have more capital and higher productivity. 
B)  It will have less investment,and so it will have less capital and higher productivity. 
C)  It will have more investment,and so it will have more capital and higher productivity. 
D)  It will have more investment,and so it will have less capital and higher productivity.

Question 12

Many economists believe that if the current income tax were replaced with a consumption tax,then saving,investment,economic growth,and the standard of living of Canadians would increase.

Accepted Answer

A) True 
 B)False

Question 13

Corporations receive no proceeds from the resale of their stock.

Accepted Answer

A) True 
 B)False

Question 14

Table 8-1
The following table shows stock prices and volumes for a few hypothetical companies.  
-Refer to Table 8-1.What were company D's earnings per share?

Accepted Answer

A)  $0.61 
B)  $1.38 
C)  $1.64 
D)  $38 
A)  $0.61 
B)  $1.38 
C)  $1.64 
D)  $38

Question 15

What is the effect of an increase in budget deficit?

Accepted Answer

A)  It changes the supply of loanable funds. 
B)  It changes the demand for loanable funds. 
C)  It changes both the supply of and demand for loanable funds. 
D)  It does not influence the supply of or the demand for loanable funds. 
A)  It changes the supply of loanable funds. 
B)  It changes the demand for loanable funds. 
C)  It changes both the supply of and demand for loanable funds. 
D)  It does not influence the supply of or the demand for loanable funds.

Question 16

Which term refers to the amount of revenue a firm receives for the sale of its products,minus its costs of production,as measured by its accountants?

Accepted Answer

A)  earnings 
B)  retained earnings 
C)  economic,or real,profit 
D)  dividends 
A)  earnings 
B)  retained earnings 
C)  economic,or real,profit 
D)  dividends

Question 17

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 18

Which of the following bond buyers did NOT buy the bond that best met his or her objective?

Accepted Answer

A)  Mia wanted a bond with a high interest rate,regardless of the risk.She purchased a junk bond. 
B)  Anna wanted the least risky bond available.She purchased a federal bond. 
C)  Bill wanted to purchase a bond that was unlikely to default.He purchased a bond that Standard & Poor's rated a low credit risk. 
D)  To reduce risk,Toby purchased a bond with a date of maturity far in the future. 
A)  Mia wanted a bond with a high interest rate,regardless of the risk.She purchased a junk bond. 
B)  Anna wanted the least risky bond available.She purchased a federal bond. 
C)  Bill wanted to purchase a bond that was unlikely to default.He purchased a bond that Standard & Poor's rated a low credit risk. 
D)  To reduce risk,Toby purchased a bond with a date of maturity far in the future.

Question 19

Which equation will always represent GDP in an open economy?

Accepted Answer

A)  S = I - G 
B)  I = Y - C + G 
C)  Y = C + I + G 
D)  Y = C + I + G + NX 
A)  S = I - G 
B)  I = Y - C + G 
C)  Y = C + I + G 
D)  Y = C + I + G + NX

Question 20

The Eye of Horus Incense Company has $10 million in cash,which it has accumulated from retained earnings.It was planning to use the money to build a new factory.Recently,the rate of interest has increased.How does this fact influence the company's decision?

Accepted Answer

A)  The increase in the rate of interest should not influence the decision to build the factory because the Eye of Horus doesn't have to borrow any money. 
B)  The increase in the rate of interest should not influence the decision to build the factory because its shareholders are expecting a new factory. 
C)  The increase in the rate of interest should make it more likely that the Eye of Horus will build the factory because a higher interest rate will make the factory more valuable. 
D)  The increase in the rate of interest should make it less likely that the Eye of Horus will build the factory because the opportunity cost of the $10 million is now higher. 
A)  The increase in the rate of interest should not influence the decision to build the factory because the Eye of Horus doesn't have to borrow any money. 
B)  The increase in the rate of interest should not influence the decision to build the factory because its shareholders are expecting a new factory. 
C)  The increase in the rate of interest should make it more likely that the Eye of Horus will build the factory because a higher interest rate will make the factory more valuable. 
D)  The increase in the rate of interest should make it less likely that the Eye of Horus will build the factory because the opportunity cost of the $10 million is now higher.

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

What is the single most important piece of information about a stock?

What would NOT result from replacing the income tax with a consumption tax?

Australia has recently implemented a national sales tax.If that country uses the proceeds from this tax to reduce income tax rates,what happens in the loanable funds market?

Which expression represents national saving in a closed economy?

What is a secondary advantage of mutual funds?

What would an increase in the budget deficit most likely cause?

National saving is equal to Y - T - C.

Who would a macroeconomist consider as investment?

When a country saves a larger portion of its GDP,will it have more or less investment?

Many economists believe that if the current income tax were replaced with a consumption tax,then saving,investment,economic growth,and the standard of living of Canadians would increase.

Corporations receive no proceeds from the resale of their stock.

Table 8-1 The following table shows stock prices and volumes for a few hypothetical companies. -Refer to Table 8-1.What were company D's earnings per share?

What is the effect of an increase in budget deficit?

Which term refers to the amount of revenue a firm receives for the sale of its products,minus its costs of production,as measured by its accountants?

What is the primary advantage of mutual funds?

Which of the following bond buyers did NOT buy the bond that best met his or her objective?

Which equation will always represent GDP in an open economy?

The Eye of Horus Incense Company has $10 million in cash,which it has accumulated from retained earnings.It was planning to use the money to build a new factory.Recently,the rate of interest has increased.How does this fact influence the company's decision?

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

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

What is the single most important piece of information about a stock?

What would NOT result from replacing the income tax with a consumption tax?

Australia has recently implemented a national sales tax.If that country uses the proceeds from this tax to reduce income tax rates,what happens in the loanable funds market?

Which expression represents national saving in a closed economy?

What is a secondary advantage of mutual funds?

What would an increase in the budget deficit most likely cause?

National saving is equal to Y - T - C.

Who would a macroeconomist consider as investment?

When a country saves a larger portion of its GDP,will it have more or less investment?

Many economists believe that if the current income tax were replaced with a consumption tax,then saving,investment,economic growth,and the standard of living of Canadians would increase.

Corporations receive no proceeds from the resale of their stock.

Table 8-1 The following table shows stock prices and volumes for a few hypothetical companies. -Refer to Table 8-1.What were company D's earnings per share?

What is the effect of an increase in budget deficit?

Which term refers to the amount of revenue a firm receives for the sale of its products,minus its costs of production,as measured by its accountants?

What is the primary advantage of mutual funds?

Which of the following bond buyers did NOT buy the bond that best met his or her objective?

Which equation will always represent GDP in an open economy?

The Eye of Horus Incense Company has $10 million in cash,which it has accumulated from retained earnings.It was planning to use the money to build a new factory.Recently,the rate of interest has increased.How does this fact influence the company's decision?

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