Question 1

Table 13-2
 
-Refer to Table 13-2.Which company had the highest earnings per share?

Accepted Answer

A)   Boeing Co.
B)   Eli Lilly and Co.
C)   H.J.Heinz and Co.
D)   Kellog Co.E) A) and B)
F) A) and C)

Question 2

The single most important piece of information about a stock is its

Accepted Answer

A)   term.
B)   dividend.
C)   daily volume.
D)   price.E) C) and D)
F) None of the above

Question 3

If the nominal interest rate is 10 percent and the inflation rate is 4 percent,then the real interest rate is

Accepted Answer

A)   14 percent.
B)   6 percent.
C)   2.5 percent.
D)   .4 percent.E) None of the above
F) C) and D)

Question 4

For an imaginary economy,when the real interest rate is 5 percent,the quantity of loanable funds demanded is $100,000 and the quantity of loanable funds supplied is $100,000.Currently,the nominal interest rate is 6 percent and the inflation rate is 2 percent.Currently,

Accepted Answer

A)   the market for loanable funds is in equilibrium.
B)   the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will rise.
C)   the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will fall.
D)   the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,and as a result the real interest rate will rise.E) C) and D)
F) A) and C)

Question 5

For an imaginary economy,when the real interest rate is 7 percent,the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500.Currently,the nominal interest rate is 9 percent and the inflation rate is 4 percent.Currently,

Accepted Answer

A)   the market for loanable funds is in equilibrium.
B)   the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will rise.
C)   the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,and as a result the real interest rate will fall.
D)   the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied,and as a result the real interest rate will rise.E) None of the above
F) All of the above

Question 6

Assuming the market for loanable funds is in equilibrium,use the following numbers to determine the quantity of loanable funds supplied. GDP
$8) 7 trillion
Consumption Spending
$3) 2 trillion
Taxes Net of Transfers
$2) 7 trillion
Government Purchases
$3) 0 trillion

Accepted Answer

A)   $2.2 trillion
B)   $2.5 trillion
C)   $3.9 trillion
D)   $5.2 trillionE) A) and B)
F) B) and C)

Question 7

The first element of a financial crisis is

Accepted Answer

A)   inflation.
B)   a decline in confidence in financial institutions.
C)   a relaxation of rules and regulations that pertain to the financial system.
D)   a large decline in some asset prices.E) None of the above
F) A) and C)

Question 8

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?

Accepted Answer

Private saving is Y ...

Question 9

In 2002 mortgage rates fell and mortgage lending increased.Which of the following could explain both of these changes?

Accepted Answer

A)   The demand for loanable funds shifted rightward.
B)   The demand for loanable funds shifted leftward.
C)   The supply of loanable funds shifted rightward.
D)   The supply of loanable funds shifted leftward.E) B) and C)
F) A) and C)

Question 10

If Congress increased the tax rate on interest income,investment

Accepted Answer

A)   would increase and saving would decrease.
B)   would decrease and saving would increase.
C)   and saving would increase.
D)   and saving would decrease.E) B) and D)
F) All of the above

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Suppose the government were to replace the income tax with a consumption tax so that interest on savings was not taxed.The result would be that the interest rate

Accepted Answer

A)   and investment both would increase.
B)   and investment both would decrease.
C)   would increase and investment would decrease.
D)   would decrease and investment would increase.E) C) and D)
F) None of the above

Question 13

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) All of the above
F) A) and D)

Question 14

Buskin's Corporation has issued 2 million shares of stock.Its earnings were $10 million,of which it retained $6 million.What was the dividend per share?

Accepted Answer

A)   $2.
B)   $3.
C)   $5
D)   None of the above is correct.E) B) and C)
F) None of the above

Question 15

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 16

The country of Growpaw does not trade with any other country.Its GDP is $20 billion.Its government purchases $3 billion worth of goods and services each year,collects $6 billion in taxes,and provides $2 billion in transfer payments to households.Private saving in Growpaw is $4 billion.What is investment in Growpaw?

Accepted Answer

A)   $5 billion
B)   $4 billion
C)   $3 billion
D)   $2 billionE) A) and B)
F) None of the above

Question 17

The sale of either stocks or bonds to raise money is known as equity finance.

Accepted Answer

A) True 
 B)False

Question 18

At some point during the financial crisis of 2008-2009,people with uninsured deposits at financial institutions withdrew money from their accounts at those institutions.This phenomenon characterized which element of the financial crisis?

Accepted Answer

A)   the decline in confidence in financial institutions
B)   the credit crunch
C)   the economic downturn
D)   the decline in asset pricesE) All of the above
F) None of the above

Question 19

Suppose Congress institutes an investment tax credit.What would happen in the market for loanable funds?

Accepted Answer

A)   The interest rate and investment would fall.
B)   The interest rate and investment would rise.
C)   The interest rate would rise and investment would fall.
D)   None of the above is necessarily correct.E) A) and B)
F) C) and D)

Question 20

Suppose the government finds a major defect in one of a company's products and demands that the product be taken off the market.We would expect that the

Accepted Answer

A)   supply of existing shares of the stock and the price will both rise.
B)   supply of existing shares of the stock and the price will both fall.
C)   demand for existing shares of the stock and the price will both rise.
D)   demand for existing shares of the stock and the price will both fall.E) B) and C)
F) A) and B)

Exam 26: Saving,investment,and the Financial System

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

Suppose the government finds a major defect in one of a company's products and demands that the product be taken off the market.We would expect that the

Correct Answer
verified

For an imaginary economy,when the real interest rate is 5 percent,the quantity of loanable funds demanded is $100,000 and the quantity of loanable funds supplied is $100,000.Currently,the nominal interest rate is 6 percent and the inflation rate is 2 percent.Currently,

Correct Answer
verified

Buskin's Corporation has issued 2 million shares of stock.Its earnings were $10 million,of which it retained $6 million.What was the dividend per share?

Correct Answer
verified

The single most important piece of information about a stock is its

Correct Answer
verified

As real interest rates fall,firms desire to

Correct Answer
verified

Table 13-2 -Refer to Table 13-2.Which company had the highest earnings per share?

Correct Answer
verified

If Congress increased the tax rate on interest income,investment

Correct Answer
verified

For an imaginary economy,when the real interest rate is 7 percent,the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500.Currently,the nominal interest rate is 9 percent and the inflation rate is 4 percent.Currently,

Correct Answer
verified

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?

Correct Answer
verified
Private saving is Y ...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Assuming the market for loanable funds is in equilibrium,use the following numbers to determine the quantity of loanable funds supplied. GDP $8) 7 trillion Consumption Spending $3) 2 trillion Taxes Net of Transfers $2) 7 trillion Government Purchases $3) 0 trillion

Correct Answer
verified

In 2002 mortgage rates fell and mortgage lending increased.Which of the following could explain both of these changes?

Correct Answer
verified

Suppose the government were to replace the income tax with a consumption tax so that interest on savings was not taxed.The result would be that the interest rate

Correct Answer
verified

The first element of a financial crisis is

Correct Answer
verified

Suppose Congress institutes an investment tax credit.What would happen in the market for loanable funds?

Correct Answer
verified

At some point during the financial crisis of 2008-2009,people with uninsured deposits at financial institutions withdrew money from their accounts at those institutions.This phenomenon characterized which element of the financial crisis?

Correct Answer
verified

The sale of either stocks or bonds to raise money is known as equity finance.

Correct Answer
verified

If the nominal interest rate is 10 percent and the inflation rate is 4 percent,then the real interest rate is

Correct Answer
verified

Exam 26: Saving,investment,and the Financial System

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

Suppose the government finds a major defect in one of a company's products and demands that the product be taken off the market.We would expect that the

Correct AnswerverifiedShow Answer

For an imaginary economy,when the real interest rate is 5 percent,the quantity of loanable funds demanded is $100,000 and the quantity of loanable funds supplied is $100,000.Currently,the nominal interest rate is 6 percent and the inflation rate is 2 percent.Currently,

Correct AnswerverifiedShow Answer

Buskin's Corporation has issued 2 million shares of stock.Its earnings were $10 million,of which it retained $6 million.What was the dividend per share?

Correct AnswerverifiedShow Answer

The single most important piece of information about a stock is its

Correct AnswerverifiedShow Answer

As real interest rates fall,firms desire to

Correct AnswerverifiedShow Answer

Table 13-2 -Refer to Table 13-2.Which company had the highest earnings per share?

Correct AnswerverifiedShow Answer

If Congress increased the tax rate on interest income,investment

Correct AnswerverifiedShow Answer

For an imaginary economy,when the real interest rate is 7 percent,the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500.Currently,the nominal interest rate is 9 percent and the inflation rate is 4 percent.Currently,

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedPrivate saving is Y ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming the market for loanable funds is in equilibrium,use the following numbers to determine the quantity of loanable funds supplied. GDP $8) 7 trillion Consumption Spending $3) 2 trillion Taxes Net of Transfers $2) 7 trillion Government Purchases $3) 0 trillion

Correct AnswerverifiedShow Answer

In 2002 mortgage rates fell and mortgage lending increased.Which of the following could explain both of these changes?

Correct AnswerverifiedShow Answer

Suppose the government were to replace the income tax with a consumption tax so that interest on savings was not taxed.The result would be that the interest rate

Correct AnswerverifiedShow Answer

The first element of a financial crisis is

Correct AnswerverifiedShow Answer

Suppose Congress institutes an investment tax credit.What would happen in the market for loanable funds?

Correct AnswerverifiedShow Answer

At some point during the financial crisis of 2008-2009,people with uninsured deposits at financial institutions withdrew money from their accounts at those institutions.This phenomenon characterized which element of the financial crisis?

Correct AnswerverifiedShow Answer

The sale of either stocks or bonds to raise money is known as equity finance.

Correct AnswerverifiedShow Answer

If the nominal interest rate is 10 percent and the inflation rate is 4 percent,then the real interest rate is

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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Correct Answer
verified
Private saving is Y ...
View Answer

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Correct Answer
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