Exam 8: Saving, Investment, and the Financial System

In the national income accounting identity showing the equality between national saving and investment, what are the algebraic expressions for private saving and public saving?

The country of Bienmundo does not trade with any other country. Its GDP is $30 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Bienmundo amounts to $5 billion. What are consumption and investment in Bienmundo?

If there is a shortage of loanable funds, then

A higher interest rate makes less attractive. Therefore the quantity of loanable funds demanded decreases.

Which of the following would necessarily create a surplus at the original equilibrium interest rate in the loanable funds market?

If people expect future earnings of Galt Corporation to be high relative to current earnings, then

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

Camp Company had total earnings of $600 million in 2013, out of which it retained 20 percent for future investments. In 2013, its stock featured a dividend yield of 4 percent and 100 million shares were outstanding. The price-earnings ratio for Camp Company stock was

Figure 26-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. -Refer to Figure 26-2. What is measured along the horizontal axis of the graph?

In 2009 and 2010, the federal government's budget deficit was about

The source of the supply of loanable funds

A high demand for a company's stock is an indication that

By definition, equity finance

If national saving in a closed economy is greater than zero, which of the following must be true?

When a country saves a larger portion of its GDP than it did before, it will have

Which of the following are effects of an increased budget deficit?

Anything other than a change in the interest rate that decreases national saving shifts the supply of loanable funds to the left.

Which of the following is not correct?

The U.S. government increases its budget deficit, but at the same time Congress eliminates an investment tax credit. Which of the following is correct?

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