Question 1

Larry buys stock in A to Z Express Company. Curly Corporation builds a new factory. Whose transaction would be an act of investment in the language of macroeconomics?

Accepted Answer

A)   only Larry's
B)   only Curly Corporation's
C)   Larry's and Curly Corporation's
D)   neither Larry's nor Curly Corporation'sE) A) and B)
F) A) and C)

Question 2

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland,

Accepted Answer

A)   investment is $6 billion and consumption is $7 billion.
B)   investment is $6 billion and consumption is $6 billion.
C)   investment is $7 billion and consumption is $7 billion.
D)   investment is $7 billion and consumption is $6 billion.E) A) and B)
F) A) and C)

Question 3

Municipal bonds pay a relatively

Accepted Answer

A)   low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax.
B)   low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.
C)   high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay.
D)   high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.E) B) and C)
F) B) and D)

Question 4

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 B)
F) All of the above

Question 5

Which of the following statements is correct?

Accepted Answer

A)   Stocks, bonds, and deposits are all similar in that each provides a common medium of exchange.
B)   Most buyers of stocks and bonds prefer those issued by large and familiar companies.
C)   Banks charge borrowers a slightly lower interest rate than they pay to depositors.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 6

When someone borrows to purchase capital goods, he is using someone else's to fund his .

Accepted Answer

The answer of When someone borrows to purchase capital goods,...

Question 7

If Congress instituted an investment tax credit, the interest rate would

Accepted Answer

A)   rise and saving would rise.
B)   fall and saving would fall.
C)   rise and saving would fall.
D)   fall and saving would rise.E) A) and B)
F) All of the above

Question 8

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Accepted Answer

A)   earnings.
B)   retained earnings.
C)   economic, or real, profit.
D)   dividend.E) None of the above
F) A) and B)

Question 9

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Accepted Answer

A) True 
 B)False

Question 10

Volume, as reported in stock tables, refers to the

Accepted Answer

A)   number of shares traded.
B)   percentage of shares outstanding traded.
C)   number of shares traded times the price they sold at.
D)   number of shares of a company traded divided by the shares of all companies traded.E) A) and D)
F) A) and C)

Question 11

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

Accepted Answer

A)   and quantity of loanable funds rises.
B)   and quantity of loanable funds falls.
C)   rises and the quantity of loanable funds falls.
D)   falls and the quantity of loanable funds rises.E) B) and D)
F) C) and D)

Question 12

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) B) and C)

Question 13

An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.

Accepted Answer

A) True 
 B)False

Question 14

After a corporation issues stock, the stock

Accepted Answer

A)   cannot be resold.
B)   can be resold only if the corporation wants to buy it back.
C)   can be resold on exchanges; the resale will raise additional funds for the corporation.
D)   None of the above are correct.E) C) and D)
F) B) and D)

Question 15

When a large, well-known corporation wishes to borrow directly from the public, it can

Accepted Answer

A)   sell bonds.
B)   sell shares of stock.
C)   go to a bank for a loan.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 16

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Accepted Answer

A)   their consumption expenditures are being financed by someone else's saving.
B)   their consumption expenditures are being financed by someone else's investment.
C)   their investments are being financed by someone else's saving.
D)   their saving is being financed by someone else's investment.E) A) and B)
F) C) and D)

Question 17

Alberta buys a paint sprayer and a lift for her car customizing shop. A macroeconomist would refer to these purchases as investment.

Accepted Answer

A) True 
 B)False

Question 18

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) A) and B)
F) B) and D)

Question 19

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. 1. B)  D2. C)  between D1 and D2. D)  to the right of D2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 26-4. Regard the position of the Supply curve as fixed, as on the graph. If the real interest rate is 8 percent, the inflation rate is 3 percent, and the market for loanable funds is in equilibrium, then the position of the demand-for-loanable-funds curve must be

Accepted Answer

A)   D1.
B)   D2.
C)   between D1 and D2.
D)   to the right of D2.E) A) and D)
F) B) and C)

Question 20

For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components?

Accepted Answer

A)   consumption.
B)   national saving.
C)   government purchases.
D)   net exports.E) None of the above
F) A) and B)

Exam 13: Saving, Investment, and the Financial System

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

Larry buys stock in A to Z Express Company. Curly Corporation builds a new factory. Whose transaction would be an act of investment in the language of macroeconomics?

Correct Answer
verified

An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.

Correct Answer
verified

Alberta buys a paint sprayer and a lift for her car customizing shop. A macroeconomist would refer to these purchases as investment.

Correct Answer
verified

After a corporation issues stock, the stock

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

Which of the following statements is correct?

Correct Answer
verified

When a large, well-known corporation wishes to borrow directly from the public, it can

Correct Answer
verified

If Congress instituted an investment tax credit, the interest rate would

Correct Answer
verified

Volume, as reported in stock tables, refers to the

Correct Answer
verified

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Correct Answer
verified

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Correct Answer
verified

Correct Answer
verified

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Correct Answer
verified

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland,

Correct Answer
verified

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

Correct Answer
verified

Municipal bonds pay a relatively

Correct Answer
verified

For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components?

Correct Answer
verified

When someone borrows to purchase capital goods, he is using someone else's to fund his .

Correct Answer
verified

Exam 13: Saving, Investment, and the Financial System

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

Larry buys stock in A to Z Express Company. Curly Corporation builds a new factory. Whose transaction would be an act of investment in the language of macroeconomics?

Correct AnswerverifiedShow Answer

An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.

Correct AnswerverifiedShow Answer

Alberta buys a paint sprayer and a lift for her car customizing shop. A macroeconomist would refer to these purchases as investment.

Correct AnswerverifiedShow Answer

After a corporation issues stock, the stock

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

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When a large, well-known corporation wishes to borrow directly from the public, it can

Correct AnswerverifiedShow Answer

If Congress instituted an investment tax credit, the interest rate would

Correct AnswerverifiedShow Answer

Volume, as reported in stock tables, refers to the

Correct AnswerverifiedShow Answer

Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,

Correct AnswerverifiedShow Answer

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Correct AnswerverifiedShow Answer

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland,

Correct AnswerverifiedShow Answer

If the supply of loanable funds shifts to the right, then the equilibrium interest rate

Correct AnswerverifiedShow Answer

Municipal bonds pay a relatively

Correct AnswerverifiedShow Answer

For an economy that engages in international trade, GDP is divided into four components. Which of the following items is not one of those components?

Correct AnswerverifiedShow Answer

When someone borrows to purchase capital goods, he is using someone else's to fund his .

Correct AnswerverifiedShow Answer

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