Question 1

If there is a shortage of loanable funds, then

Accepted Answer

A)   the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium.
B)   the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium.
C)   the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.
D)   the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.E) C) and D)
F) All of the above

Question 2

If consumers reduced their spending, what would happen to the interest rate and investment?

Accepted Answer

The interest rate wo...

Question 3

To state that public saving is equal to investment, for a closed economy, is to state an accounting identity.

Accepted Answer

A) True 
 B)False

Question 4

The primary advantage of mutual funds is that they

Accepted Answer

A)   always make a return that "beats the market."
B)   allow people with small amounts of money to diversify.
C)   provide customers with a medium of exchange.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 5

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

Accepted Answer

A)   $5 billion and $45 billion
B)   -$5 billion and $45 billion
C)   $5 billion and $50 billion
D)   -$5 billion and $50 billionE) All of the above
F) A) and B)

Question 6

Crowding out occurs when investment declines because

Accepted Answer

A)   a budget deficit makes interest rates rise.
B)   a budget deficit makes interest rates fall.
C)   a budget surplus makes interest rates rise.
D)   a budget surplus makes interest rates fall.E) B) and D)
F) A) and B)

Question 7

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) A) and D)
F) A) and C)

Question 8

For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

Accepted Answer

A)   $3 trillion and $1 trillion, respectively
B)   $3 trillion and $2 trillion, respectively
C)   $2 trillion and $3 trillion, respectively
D)   $2 trillion and $2 trillion, respectivelyE) C) and D)
F) All of the above

Question 9

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Accepted Answer

A)   the fund's managers
B)   the fund's shareholders
C)   the federal government
D)   the corporations that originally issued the stocks and/or bonds held by the fundE) A) and B)
F) A) and C)

Question 10

In 2013, XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments. If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding, then what is the price-earnings ratio?

Accepted Answer

A)   6.25
B)   11.2
C)   14.0
D)   17.5E) All of the above
F) A) and D)

Question 11

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

Accepted Answer

A)   capital investment.
B)   investment in human capital.
C)   business consumption expenditures.
D)   personal saving.E) A) and D)
F) A) and C)

Question 12

If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs.

Accepted Answer

A)   These purchases are called capital investment. If you raise the funds to purchase them from others you are a saver.
B)   These purchases are called capital investment. If you raise the funds to purchase them from others you are a borrower.
C)   These purchases are called consumption. If you raise the funds to purchase them from others you are a saver.
D)   These purchases are called consumption. If you raise the funds to purchase them from others you are a borrower.E) A) and B)
F) A) and C)

Question 13

Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national saving and investment for this country?

Accepted Answer

A)   $2 trillion, $2 trillion
B)   $2 trillion, $3 trillion
C)   $3 trillion, $3 trillion
D)   $4 trillion, $2 trillionE) A) and D)
F) B) and C)

Question 14

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

Accepted Answer

A)   -2,000, 1,000, and 2,000, respectively.
B)   1,000, 2,000, and 3,000, respectively.
C)   2,000, -1,000, and 1,000, respectively.
D)   2,000, 1,000, and 2,000, respectively.E) C) and D)
F) None of the above

Question 15

Use the following table to answer the following questions.
Table 26-1
 
-Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Accepted Answer

A)   $68,770,900
B)   $6,877,090
C)   $687,709
D)   $6,877.1E) B) and C)
F) All of the above

Question 16

A decrease in taxes on interest income would increase the interest rate.

Accepted Answer

A) True 
 B)False

Question 17

In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then

Accepted Answer

A)   the government has a budget surplus and investment is 1,000
B)   the government has a budget surplus and investment is 2,000
C)   the government has a budget deficit and investment is 1,000
D)   the government has a budget deficit and investment is 2,000E) A) and C)
F) A) and D)

Question 18

The financial system is important because it helps to match one person's with another person's .

Accepted Answer

The answer of The financial system is important because it...

Question 19

Scenario 26-1. Assume the following information for an imaginary, closed economy.
GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000.
-Refer to Scenario 26-1. This economy's government is running a

Accepted Answer

A)   budget surplus of $3,000.
B)   budget surplus of $12,000.
C)   budget deficit of $3,000.
D)   budget deficit of $12,000.E) A) and D)
F) A) and C)

Question 20

You have some estimates of national accounts numbers for a closed economy for the coming year. Under one set of expectations, government purchases will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 billion. Under another set of expectations, GDP will be $200 billion, taxes will be $50 billion, transfer payments will be $20 billion, consumption will be $120 million, and investment will be $40 billion. Based on these numbers in the first case there should be a

Accepted Answer

A)   $15 billion surplus, and in the second case a $10 billion surplus.
B)   $15 billion surplus, and in the second case a $30 billion deficit.
C)   $5 billion surplus, and in the second case a $10 billion deficit.
D)   $5 billion surplus, and in the second case a $30 billion deficit.E) None of the above
F) All of the above

Exam 18: Saving, Investment, and the Financial System

In 2013, XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments. If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding, then what is the price-earnings ratio?

Correct Answer
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Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Correct Answer
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The primary advantage of mutual funds is that they

Correct Answer
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Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national saving and investment for this country?

Correct Answer
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If consumers reduced their spending, what would happen to the interest rate and investment?

Correct Answer
verified
The interest rate wo...
View Answer

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

Correct Answer
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The financial system is important because it helps to match one person's with another person's .

Correct Answer
verified

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. This economy's government is running a

Correct Answer
verified

To state that public saving is equal to investment, for a closed economy, is to state an accounting identity.

Correct Answer
verified

If there is a shortage of loanable funds, then

Correct Answer
verified

If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs.

Correct Answer
verified

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct Answer
verified

A decrease in taxes on interest income would increase the interest rate.

Correct Answer
verified

If there is a surplus of loanable funds, then

Correct Answer
verified

Correct Answer
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Crowding out occurs when investment declines because

Correct Answer
verified

For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

Correct Answer
verified

In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then

Correct Answer
verified

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

Correct Answer
verified

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

Correct Answer
verified

Exam 18: Saving, Investment, and the Financial System

In 2013, XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments. If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding, then what is the price-earnings ratio?

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Assume that the closing price was also the average price at which each stock transaction took place. What was the total dollar volume of Graco stock traded that day?

Correct AnswerverifiedShow Answer

The primary advantage of mutual funds is that they

Correct AnswerverifiedShow Answer

Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national saving and investment for this country?

Correct AnswerverifiedShow Answer

If consumers reduced their spending, what would happen to the interest rate and investment?

Correct AnswerverifiedThe interest rate wo...View AnswerShow Answer

Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?

Correct AnswerverifiedShow Answer

The financial system is important because it helps to match one person's with another person's .

Correct AnswerverifiedShow Answer

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. This economy's government is running a

Correct AnswerverifiedShow Answer

To state that public saving is equal to investment, for a closed economy, is to state an accounting identity.

Correct AnswerverifiedShow Answer

If there is a shortage of loanable funds, then

Correct AnswerverifiedShow Answer

If you were to start a business delivering documents, you might need to purchase cell phones, bicycles, desks, and chairs.

Correct AnswerverifiedShow Answer

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct AnswerverifiedShow Answer

A decrease in taxes on interest income would increase the interest rate.

Correct AnswerverifiedShow Answer

If there is a surplus of loanable funds, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Crowding out occurs when investment declines because

Correct AnswerverifiedShow Answer

For a closed economy, GDP is $18 trillion, consumption is $13 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

Correct AnswerverifiedShow Answer

In a closed economy, if Y is 10,000, T is 1,000, G is 3,000, and C is 5,000, then

Correct AnswerverifiedShow Answer

In a small closed economy investment is $50 billion and private saving is $45 billion. What are public saving and national saving?

Correct AnswerverifiedShow Answer

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

Correct AnswerverifiedShow Answer

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The interest rate wo...
View Answer

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