Question 1

Figure 18-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 
-Refer to Figure 18-3.Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Accepted Answer

A)   a movement from Point A to Point B
B)   a movement from Point B to Point F
C)   a movement from Point C to Point F
D)   a movement from Point C to Point BE) None of the above
F) All of the above

Question 2

The supply of loanable funds would shift to the right if either

Accepted Answer

A)   tax reforms encouraged greater saving or the budget deficit became smaller.
B)   tax reforms encouraged greater saving or investment tax credits were increased.
C)   the budget deficit became larger or investment tax credits were increased.
D)   the budget deficit became larger or tax reforms discouraged saving.E) A) and B)
F) A) and C)

Question 3

Queen City Sausage stock is selling at $40 per share,it has retained earnings of $2.00 per share and dividends of $.50 per share.What is the price-earnings ratio and what is the dividend yield?

Accepted Answer

A)   20,1.25 percent
B)   20,6.25 percent
C)   16,1.25 percent
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 4

Scenario 18-2.Assume the following information for an imaginary,closed economy.
GDP = $200,000; consumption = $120,000;
government purchases = $35,000; and taxes = $25,000.
-Refer to Scenario 18-2.For this economy,national saving is equal to

Accepted Answer

A)   $30,000.
B)   $35,000.
C)   $45,000.
D)   $60,000.E) B) and D)
F) All of the above

Question 5

In a closed economy,if Y and T remained the same,but G rose,and C fell but by less than the rise in G,what would happen to public and national saving?

Accepted Answer

A)   public and national saving would rise
B)   public and national saving would fall
C)   public saving would rise and national saving would fall
D)   public saving would fall and national saving would riseE) C) and D)
F) None of the above

Question 6

People who buy newly issued stock in a corporation such as Crate and Barrel provide

Accepted Answer

A)   debt finance and so become part owners of Crate and Barrel.
B)   debt finance and so become creditors of Crate and Barrel.
C)   equity finance and so become part owners of Crate and Barrel.
D)   equity finance and so become creditors of Crate and Barrel.E) A) and D)
F) B) and C)

Question 7

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) B) and C)

Question 8

As real interest rates fall,firms desire to

Accepted Answer

A)   buy more new equipment and buildings.This response helps explain why the supply of loanable funds is upward sloping.
B)   buy more new equipment and buildings.This response helps explain why the demand for loanable funds is downward sloping.
C)   buy less new equipment and buildings.This response helps explain why the supply of loanable funds is upward sloping.
D)   buy less new equipment and buildings.This response helps explain why the demand for loanable funds is downward sloping.E) A) and B)
F) A) and C)

Question 9

In a closed economy,if Y remained the same,but G rose,T rose by the same amount as G,and C fell but by less than the increase in T,what would happen to private and national saving?

Accepted Answer

A)   national saving would fall and private saving would rise
B)   national saving would rise and private saving would fall
C)   both national saving and private saving would fall
D)   None of the above is correct.E) B) and C)
F) B) and D)

Question 10

In 2008,XYZ Corporation had total earnings of $200 million and 50 million shares of the corporation's stock were outstanding.If the price-earnings ratio for XYZ is 20,then what is the price of a share of its stock?

Accepted Answer

A)   $5
B)   $10
C)   $80
D)   $500E) B) and D)
F) A) and B)

Question 11

A stock index is

Accepted Answer

A)   an average of a group of stock prices.
B)   an average of a group of stock yields.
C)   a measure of the risk relative to the profitability of corporations.
D)   a report in a newspaper or other media outlet on the price of the stock and earnings of the corporation that issued the stock.E) C) and D)
F) B) and D)

Question 12

Scenario 18-1.Assume the following information for an imaginary,closed economy.
 
-Refer to Scenario 18-1.For this economy,taxes amount to

Accepted Answer

A)   $28,000.
B)   $38,000.
C)   $41,000.
D)   $44,000.E) A) and B)
F) A) and D)

Question 13

Scenario 18-1.Assume the following information for an imaginary,closed economy.
 
-Refer to Scenario 18-1.For this economy,investment amounts to

Accepted Answer

A)   $4,000.
B)   $9,000.
C)   $12,000.
D)   $16,000.E) A) and D)
F) C) and D)

Question 14

Late in the 2000-2009 decade,real estate prices in the U.S.fell by a greater percentage than they had fallen since the

Accepted Answer

A)   1890s.
B)   1930s.
C)   1950s.
D)   1970s.E) C) and D)
F) None of the above

Question 15

Which of the following involves financial intermediation?

Accepted Answer

A)   a bank makes a loan
B)   a household buys stock issued by a corporation
C)   a foreign government purchases U.S.government bonds
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 16

National saving is equal to Y - T - C.

Accepted Answer

A) True 
 B)False

Question 17

For a closed economy,GDP is $11 trillion,consumption is $7 trillion,taxes are $3 trillion and the government runs a surplus of $1 trillion.What are private saving and national saving?

Accepted Answer

A)   $4 trillion and $1 trillion,respectively
B)   $4 trillion and $5 trillion,respectively
C)   $1 trillion and $2 trillion,respectively
D)   $1 trillion and $1 trillion,respectivelyE) None of the above
F) All of the above

Question 18

Skyline Chili wants to finance the purchase of new equipment for its restaurants.The firm has limited internal funds,so Skyline likely will

Accepted Answer

A)   demand funds from the financial system by buying bonds.
B)   demand funds from the financial system by selling bonds.
C)   supply funds to the financial system by buying bonds.
D)   supply funds to the financial system by selling bonds.E) A) and B)
F) None of the above

Question 19

In examining the national income accounts of the closed economy of Nepotocracy you see that this year it had taxes of $100 billion,transfers of $40 billion,and government purchases of goods and services of $80 billion.You also notice that last year it had private saving of $50 billion and investment of $70 billion.In which year did Nepotocracy have a budget deficit of $20 billion?

Accepted Answer

A)   this year and last year
B)   this year but not last year
C)   last year but not this year
D)   neither this year nor last yearE) A) and B)
F) A) and C)

Question 20

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

Accepted Answer

A)   banks and other financial markets.
B)   banks and other financial intermediaries.
C)   stock markets and other financial markets.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Exam 18: Saving,investment,and the Financial System

In 2008,XYZ Corporation had total earnings of $200 million and 50 million shares of the corporation's stock were outstanding.If the price-earnings ratio for XYZ is 20,then what is the price of a share of its stock?

Correct Answer
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Queen City Sausage stock is selling at $40 per share,it has retained earnings of $2.00 per share and dividends of $.50 per share.What is the price-earnings ratio and what is the dividend yield?

Correct Answer
verified

Scenario 18-2.Assume the following information for an imaginary,closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 18-2.For this economy,national saving is equal to

Correct Answer
verified

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

Correct Answer
verified

In a closed economy,if Y remained the same,but G rose,T rose by the same amount as G,and C fell but by less than the increase in T,what would happen to private and national saving?

Correct Answer
verified

Figure 18-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 18-3.Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Correct Answer
verified

Scenario 18-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 18-1.For this economy,investment amounts to

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

Late in the 2000-2009 decade,real estate prices in the U.S.fell by a greater percentage than they had fallen since the

Correct Answer
verified

Which of the following involves financial intermediation?

Correct Answer
verified

Skyline Chili wants to finance the purchase of new equipment for its restaurants.The firm has limited internal funds,so Skyline likely will

Correct Answer
verified

In a closed economy,if Y and T remained the same,but G rose,and C fell but by less than the rise in G,what would happen to public and national saving?

Correct Answer
verified

People who buy newly issued stock in a corporation such as Crate and Barrel provide

Correct Answer
verified

As real interest rates fall,firms desire to

Correct Answer
verified

For a closed economy,GDP is $11 trillion,consumption is $7 trillion,taxes are $3 trillion and the government runs a surplus of $1 trillion.What are private saving and national saving?

Correct Answer
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Correct Answer
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A stock index is

Correct Answer
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The supply of loanable funds would shift to the right if either

Correct Answer
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National saving is equal to Y - T - C.

Correct Answer
verified

Scenario 18-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 18-1.For this economy,taxes amount to

Correct Answer
verified

Exam 18: Saving,investment,and the Financial System

In 2008,XYZ Corporation had total earnings of $200 million and 50 million shares of the corporation's stock were outstanding.If the price-earnings ratio for XYZ is 20,then what is the price of a share of its stock?

Correct AnswerverifiedShow Answer

Queen City Sausage stock is selling at $40 per share,it has retained earnings of $2.00 per share and dividends of $.50 per share.What is the price-earnings ratio and what is the dividend yield?

Correct AnswerverifiedShow Answer

Scenario 18-2.Assume the following information for an imaginary,closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 18-2.For this economy,national saving is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a closed economy,if Y remained the same,but G rose,T rose by the same amount as G,and C fell but by less than the increase in T,what would happen to private and national saving?

Correct AnswerverifiedShow Answer

Figure 18-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 18-3.Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Correct AnswerverifiedShow Answer

Scenario 18-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 18-1.For this economy,investment amounts to

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

Late in the 2000-2009 decade,real estate prices in the U.S.fell by a greater percentage than they had fallen since the

Correct AnswerverifiedShow Answer

Which of the following involves financial intermediation?

Correct AnswerverifiedShow Answer

Skyline Chili wants to finance the purchase of new equipment for its restaurants.The firm has limited internal funds,so Skyline likely will

Correct AnswerverifiedShow Answer

In a closed economy,if Y and T remained the same,but G rose,and C fell but by less than the rise in G,what would happen to public and national saving?

Correct AnswerverifiedShow Answer

People who buy newly issued stock in a corporation such as Crate and Barrel provide

Correct AnswerverifiedShow Answer

As real interest rates fall,firms desire to

Correct AnswerverifiedShow Answer

For a closed economy,GDP is $11 trillion,consumption is $7 trillion,taxes are $3 trillion and the government runs a surplus of $1 trillion.What are private saving and national saving?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A stock index is

Correct AnswerverifiedShow Answer

The supply of loanable funds would shift to the right if either

Correct AnswerverifiedShow Answer

National saving is equal to Y - T - C.

Correct AnswerverifiedShow Answer

Scenario 18-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 18-1.For this economy,taxes amount to

Correct AnswerverifiedShow Answer

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