Question 1

Figure 26-5.Figure 26-5 shows the loanable funds market for a closed economy. 
-Refer to Figure 26-5.Starting at point A,the enactment of an investment tax credit would likely cause

Accepted Answer

A)  the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% (point 
C)  .
B)  the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% (point 
B)  .
C)  the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% (point 
E)  .
D)  the quantity of loanable funds traded to increase to $125 and the interest rate to fall to 5% (point 
D)  .E) B) and C)
F) A) and B)

Question 2

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?

Accepted Answer

A)  The interest rate will increase;investment may increase or decrease.
B)  The interest rate will decrease;investment may increase or decrease.
C)  The interest rate may increase or decrease;investment will decrease.
D)  The interest rate may increase or decrease;investment will increase.E) B) and C)
F) All of the above

Question 3

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

Accepted Answer

A)  The government budget went from surplus to deficit.
B)  The government instituted an investment tax credit.
C)  The government reduced the tax rate on savings.
D)  None of the above is correct.E) A) and B)
F) C) and D)

Question 4

Bonds issued by state and local governments are called _____ bonds. Bonds issued by financially shaky corporations are called _____ bonds. Of these two, which type of bond usually pays a relatively higher interest rate?

Accepted Answer

The answer of Bonds issued by state and local governments...

Question 5

Which of the following is included in the demand for loanable funds?

Accepted Answer

A)  investment and government borrowing
B)  investment but not government borrowing
C)  government borrowing but not investment
D)  neither government borrowing nor investmentE) None of the above
F) A) and D)

Question 6

In which case would people desire to borrow the most?

Accepted Answer

A)  the nominal interest rate is 8% and the inflation rate is 7%
B)  the nominal interest rate is 7% and the inflation rate is 5%
C)  the nominal interest rate is 6% and the inflation rate is 3%
D)  the nominal interest rate is 5% and the inflation rate is 1%E) C) and D)
F) B) and D)

Question 7

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold.What type of risk for bondholders falls? What happens to the interest rate on this company's bonds?

Accepted Answer

default ri...

Question 8

How do banks make profits?

Accepted Answer

They charge borrower...

Question 9

In macroeconomics, _____ refers to the purchase of new capital.

Accepted Answer

The answer of In macroeconomics, _____ refers to the purchase...

Question 10

A decrease in the budget deficit

Accepted Answer

A)  makes investment spending fall.
B)  makes investment spending rise.
C)  does not affect investment spending.
D)  may increase,decrease,or not affect investment spending if private saving doesn't change.E) C) and D)
F) All of the above

Question 11

If in the past Congress had taken additional actions to make saving more rewarding,then today it is likely that the equilibrium interest rate

Accepted Answer

A)  and the equilibrium quantity of loanable funds both would be lower.
B)  and the equilibrium quantity of loanable funds both would be higher.
C)  would be higher and the equilibrium quantity of loanable funds would be lower.
D)  would be lower and the equilibrium quantity of loanable funds would be higher.E) B) and C)
F) A) and C)

Question 12

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

Accepted Answer

The answer of A higher interest rate makes_________ less attractive.Therefore...

Question 13

What is the source of the supply of loanable funds?

Accepted Answer

The answer of What is the source of the supply...

Question 14

A higher interest rate makes _____ more attractive. Therefore the quantity of loanable funds supplied increases.

Accepted Answer

The answer of A higher interest rate makes _____ more...

Question 15

National saving is the sum of _____ and _____. In a closed economy it is equal to _____ in equilibrium.

Accepted Answer

private saving, publ...

Question 16

If there is a surplus of loanable funds,then

Accepted Answer

A)  the quantity demanded is greater than the quantity supplied and the interest rate will rise.
B)  the quantity demanded is greater than the quantity supplied and the interest rate will fall.
C)  the quantity supplied is greater than the quantity demanded and the interest rate will rise.
D)  the quantity supplied is greater than the quantity demanded and the interest rate will fall.E) None of the above
F) A) and B)

Question 17

Figure 26-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 1 to S2 is called A) an increase in the supply of loanable funds. B) an increase in the quantity of loanable funds supplied. C) a decrease in the supply of loanable funds. D) a decrease in the quantity of loanable funds supplied." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 26-3.A shift of the supply curve from S1 to S2 is called

Accepted Answer

A)  an increase in the supply of loanable funds.
B)  an increase in the quantity of loanable funds supplied.
C)  a decrease in the supply of loanable funds.
D)  a decrease in the quantity of loanable funds supplied.E) C) and D)
F) B) and C)

Question 18

In a closed economy private saving is $500 billion and the government budget deficit is $100 billion.What is investment?

Accepted Answer

The answer of In a closed economy private saving is...

Question 19

A _____ is a certificate of indebtedness and a _____ is a claim to partial ownership in a firm.

Accepted Answer

The answer of A _____ is a certificate of indebtedness...

Question 20

If the supply of and demand for loanable funds both shift left,which of the following necessarily happens?

Accepted Answer

A)  the equilibrium interest rate falls
B)  the equilibrium interest rate rises
C)  the equilibrium quantity of loanable funds rises
D)  the equilibrium quantity of loanable funds fallsE) C) and D)
F) All of the above

Exam 13: Saving Investment and the Financial System: The Market for Loanable Funds

National saving is the sum of _____ and _____. In a closed economy it is equal to _____ in equilibrium.

Correct Answerverifiedprivate saving, publ...View AnswerShow Answer

Figure 26-5.Figure 26-5 shows the loanable funds market for a closed economy. -Refer to Figure 26-5.Starting at point A,the enactment of an investment tax credit would likely cause

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a closed economy private saving is $500 billion and the government budget deficit is $100 billion.What is investment?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is included in the demand for loanable funds?

Correct AnswerverifiedShow Answer

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold.What type of risk for bondholders falls? What happens to the interest rate on this company's bonds?

Correct Answerverifieddefault ri...View AnswerShow Answer

Bonds issued by state and local governments are called _____ bonds. Bonds issued by financially shaky corporations are called _____ bonds. Of these two, which type of bond usually pays a relatively higher interest rate?

Correct AnswerverifiedShow Answer

If there is a surplus of loanable funds,then

Correct AnswerverifiedShow Answer

In macroeconomics, _____ refers to the purchase of new capital.

Correct AnswerverifiedShow Answer

A higher interest rate makes _____ more attractive. Therefore the quantity of loanable funds supplied increases.

Correct AnswerverifiedShow Answer

If the supply of and demand for loanable funds both shift left,which of the following necessarily happens?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A _____ is a certificate of indebtedness and a _____ is a claim to partial ownership in a firm.

Correct AnswerverifiedShow Answer

Figure 26-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3.A shift of the supply curve from S1 to S2 is called

Correct AnswerverifiedShow Answer

What is the source of the supply of loanable funds?

Correct AnswerverifiedShow Answer

A decrease in the budget deficit

Correct AnswerverifiedShow Answer

How do banks make profits?

Correct AnswerverifiedThey charge borrower...View AnswerShow Answer

In which case would people desire to borrow the most?

Correct AnswerverifiedShow Answer

If in the past Congress had taken additional actions to make saving more rewarding,then today it is likely that the equilibrium interest rate

Correct AnswerverifiedShow Answer

National saving is the sum of ___ and _. In a closed economy it is equal to ___ in equilibrium.

Correct Answer
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private saving, publ...
View Answer

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default ri...
View Answer

Bonds issued by state and local governments are called _ bonds. Bonds issued by financially shaky corporations are called _ bonds. Of these two, which type of bond usually pays a relatively higher interest rate?

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A _ is a certificate of indebtedness and a _ is a claim to partial ownership in a firm.

Correct Answer
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Figure 26-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3.A shift of the supply curve from S₁ to S₂ is called

Correct Answer
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Correct Answer
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They charge borrower...
View Answer

Correct Answer
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Correct Answer
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