Question 1

A determinant of the supply of loanable funds is:

Accepted Answer

A)  current economic conditions.
B)  wealth.
C)  culture.
D)  All of these are determinants of the supply of loanable funds.E) A) and B)
F) None of the above

Question 2

Since the future holds more uncertainty over longer periods of time,lenders generally want:

Accepted Answer

A)  a higher interest rate for loans over a longer period.
B)  a lower interest rate for loans over a longer period.
C)  a higher interest rate for loans over a shorter period.
D)  None of these is true.E) A) and D)
F) None of the above

Question 3

Studies show that __________ households tend to save more of their income than others,and also show that ____________ households save more out of tax cuts than others do.

Accepted Answer

A)  richer;poorer
B)  richer;richer
C)  poorer;richer
D)  poorer;poorerE) A) and B)
F) A) and C)

Question 4

If the rate of return is higher than the cost of borrowing:

Accepted Answer

A)  the investor will lose money on net after paying back the loan.
B)  the investor will make money on net after paying back the loan.
C)  the saver will make less money on net than the borrower.
D)  the borrower will make more money on net than the borrower.E) A) and D)
F) C) and D)

Question 5

A closed economy is an economy that does not:

Accepted Answer

A)  interact with other economies.
B)  publish its financial information to the public.
C)  collect tax revenue.
D)  charge tariffs on imports.E) All of the above
F) B) and C)

Question 6

The price of borrowing is known as the:

Accepted Answer

A)  equilibrium price.
B)  interest rate.
C)  transaction cost.
D)  None of these is true.E) A) and B)
F) A) and C)

Question 7

An economy that interacts with other economies is called:

Accepted Answer

A)  an open economy.
B)  a closed economy.
C)  an international economy.
D)  a global economy.E) B) and C)
F) None of the above

Question 8

Financial intermediaries are:

Accepted Answer

A)  institutions that channel funds from people who have them to people who want them.
B)  government officials who bring together buyers and sellers in a market.
C)  those who negotiate terms of settlement between borrower and lender when one is in default.
D)  those who negotiate terms of settlement between buyer and seller when one is in default.E) A) and B)
F) B) and C)

Question 9

Which of the following people are liquidity providers?

Accepted Answer

A)  Used car salesman
B)  Antiques dealer
C)  Bank teller
D)  All of these are considered liquidity providers.E) A) and D)
F) C) and D)

Question 10

If Jen takes out a $2,000 loan for one year at 10 percent interest annually,the price she will pay for borrowing is:

Accepted Answer

A)  $2,000.
B)  $2,200.
C)  $200.
D)  $2,400.E) B) and C)
F) A) and B)

Question 11

Credit risk is:

Accepted Answer

A)  the risk of a borrower defaulting on a loan.
B)  lower,the longer the length of the loan.
C)  lower,the larger the amount of the loan.
D)  All of these are true.E) A) and D)
F) C) and D)

Question 12

Banks act as:

Accepted Answer

A)  an organizer among firms in a specific market.
B)  intermediaries between buyers and sellers.
C)  informants to various buyers about prices and contracts.
D)  None of these is true.E) B) and C)
F) A) and B)

Question 13

The more liquid markets are:

Accepted Answer

A)  the more people are willing to save,and the higher the amount of investment occurs.
B)  the less people are willing to save,and the higher the amount of investment occurs.
C)  the more people are willing to save,and the lower the amount of investment occurs.
D)  the less people are willing to save,and the lower the amount of investment occurs.E) A) and C)
F) A) and B)

Question 14

Economists use the word investment to refer to the portion of income that:

Accepted Answer

A)  is spent on productive inputs,such as factories,machinery,and inventories.
B)  is not immediately spent on consumption of goods and services.
C)  is placed in an individual's savings account.
D)  is in any interest-bearing account.E) A) and D)
F) All of the above

Question 15

The measure of how easily a particular asset can be converted quickly to cash without much loss of value is called:

Accepted Answer

A)  liquidity.
B)  risk.
C)  intermediation.
D)  default line.E) All of the above
F) None of the above

Question 16

The market for loanable funds is a market in which:

Accepted Answer

A)  savers supply funds to those who want to borrow for their investment spending needs.
B)  borrowers buy and sell loans.
C)  savers interact to set the interest rate for loans.
D)  borrowers supply funds to savers,who want loans for their investment spending needs.E) B) and C)
F) A) and D)

Question 17

Savers in the financial system make decisions about how to save their money by following the basic principles of:

Accepted Answer

A)  asset valuation.
B)  cost benefit analysis.
C)  rate of return on investments.
D)  risk valuation.E) B) and C)
F) C) and D)

Question 18

An asset whose value is based on the value of another asset is called:

Accepted Answer

A)  a derivative.
B)  a dividend.
C)  a stock.
D)  a bond.E) A) and B)
F) A) and C)

Question 19

If an asset is considered liquid,then it:

Accepted Answer

A)  can be sold quickly for cash without much loss of value.
B)  cannot be sold quickly for cash without much loss of value.
C)  can be sold quickly for cash,but tends to lose value.
D)  None of these is true.E) B) and D)
F) None of the above

Question 20

In a closed economy,national savings is:

Accepted Answer

A)  the sum of the savings of individuals and corporations plus the savings of the government.
B)  the sum of public savings plus private savings.
C)  equal to national investment.
D)  All of these are true.E) None of the above
F) C) and D)

Exam 30: The Basics of Finance

Savers in the financial system make decisions about how to save their money by following the basic principles of:

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Studies show that __________ households tend to save more of their income than others,and also show that ____________ households save more out of tax cuts than others do.

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The market for loanable funds is a market in which:

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A closed economy is an economy that does not:

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Credit risk is:

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If the rate of return is higher than the cost of borrowing:

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Which of the following people are liquidity providers?

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An economy that interacts with other economies is called:

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If an asset is considered liquid,then it:

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An asset whose value is based on the value of another asset is called:

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In a closed economy,national savings is:

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If Jen takes out a $2,000 loan for one year at 10 percent interest annually,the price she will pay for borrowing is:

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The price of borrowing is known as the:

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Financial intermediaries are:

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A determinant of the supply of loanable funds is:

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Since the future holds more uncertainty over longer periods of time,lenders generally want:

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Banks act as:

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The measure of how easily a particular asset can be converted quickly to cash without much loss of value is called:

Correct AnswerverifiedShow Answer

The more liquid markets are:

Correct AnswerverifiedShow Answer

Economists use the word investment to refer to the portion of income that:

Correct AnswerverifiedShow Answer

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Studies show that households tend to save more of their income than others,and also show that __ households save more out of tax cuts than others do.

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