Question 1

Use the following table to answer the following questions.
Table 26-1
 
-Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share?

Accepted Answer

A)   GenMills
B)   Microsoft
C)   Graco
D)   HersheyE) C) and D)
F) None of the above

Question 2

If the demand for loanable funds shifts to the left, 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) None of the above
F) A) and C)

Question 3

Which of the following is not a nonsensical headline?

Accepted Answer

A)   British perpetuities about to mature.
B)   Disney issues new bonds with term of 7 percent.
C)   Corporate bonds currently pay higher interest rates than government bonds.
D)   Standard and Poor's judges new junk bond to have very low credit risk.E) A) and C)
F) B) and D)

Question 4

Suppose a small closed economy has GDP of $5 billion, consumption of $3 billion, and government expenditures of $1 billion. Then investment and national saving are both $1 billion.

Accepted Answer

A) True 
 B)False

Question 5

The supply of loanable funds slopes

Accepted Answer

A)   upward because an increase in the interest rate induces people to save more.
B)   downward because an increase in the interest rate induces people to save less.
C)   downward because an increase in the interest rate induces people to invest less.
D)   upward because an increase in the interest rate induces people to invest more.E) A) and B)
F) B) and C)

Question 6

In the terminology of macroeconomics, what's the difference between a saver and an investor?

Accepted Answer

A saver earns more than he spe...

Question 7

According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?

Accepted Answer

A)   Firms become pessimistic about the future and, as a result, they cut back on their plans to buy new equipment and build new factories.
B)   The government goes from running a budget deficit to running a budget surplus.
C)   Congress passes a reform of the tax laws that encourages greater saving.
D)   Congress passes a reform of the tax laws that encourages greater investment.E) None of the above
F) All of the above

Question 8

Which of the following restrictions implies that private saving and investment are equal for a closed economy?

Accepted Answer

A)   Consumption and private saving are equal.
B)   The economy's government is running neither a surplus nor a deficit.
C)   Private saving and public saving are both zero.
D)   No restriction is necessary; private saving and investment are equal for all closed economies.E) B) and C)
F) None of the above

Question 9

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) All of the above

Question 10

An increase in the budget deficit shifts the demand for loanable funds to the right.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would a macroeconomist consider as investment?

Accepted Answer

A)   Marisa purchases a bond issued by Proctor and Gamble Corp.
B)   Karlee purchases stock issued by Texas Instruments, Inc.
C)   Charlie builds a new coffee shop.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 12

Which of the following is both a store of value and a common medium of exchange?

Accepted Answer

A)   corporate bonds
B)   mutual funds
C)   checking account balances
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 13

If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,

Accepted Answer

A)   there is a surplus and the interest rate is above the equilibrium level.
B)   there is a surplus and the interest rate is below the equilibrium level.
C)   there is a shortage and the interest rate is above the equilibrium level.
D)   there is a shortage and the interest rate is below the equilibrium level.E) B) and C)
F) B) and D)

Question 14

The interest rate will and the quantity of loanable funds invested will when the government decreases the budget deficit.

Accepted Answer

The answer of The interest rate will and the quantity...

Question 15

If the tax revenue of the federal government is less than its spending, then the federal government necessarily

Accepted Answer

A)   runs a budget deficit.
B)   runs a budget surplus.
C)   runs a national debt.
D)   will increase taxes.E) None of the above
F) A) and C)

Question 16

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) A) and B)
F) A) and C)

Question 17

You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds

Accepted Answer

A)   is not subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S. government.
B)   is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S. government.
C)   is subject to federal income tax and so these bonds pay a higher interest rate than otherwise comparable bonds issued by the U.S. government.
D)   is subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the U.S. government.E) A) and B)
F) None of the above

Question 18

A stock's dividend yield is the

Accepted Answer

A)   dividend as a percentage of the price per share.
B)   stock price as a percentage of the dividend.
C)   dividend as a percentage of the retained earnings per share.
D)   retained earnings per share as the percentage of the dividend.E) B) and C)
F) A) and B)

Question 19

Use the following table to answer the following questions.
Table 26-1
 
-Refer to Table 26-1. Which firm had the P/E ratio that was closest to the historically typical P/E ratio?

Accepted Answer

A)   GenMills
B)   Microsoft
C)   Graco
D)   HersheyE) B) and C)
F) A) and D)

Question 20

Which of the following expressions must be equal to national saving for a closed economy?

Accepted Answer

A)   Y - I - G - NX
B)   Y - C - G
C)   Y - I - C
D)   G + C - YE) A) and D)
F) A) and B)

Exam 8: Saving, Investment, and the Financial System

Which of the following is both a store of value and a common medium of exchange?

Correct AnswerverifiedShow Answer

In the terminology of macroeconomics, what's the difference between a saver and an investor?

Correct AnswerverifiedA saver earns more than he spe...View AnswerShow Answer

Which of the following restrictions implies that private saving and investment are equal for a closed economy?

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?

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Which of the following expressions must be equal to national saving for a closed economy?

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Suppose a small closed economy has GDP of $5 billion, consumption of $3 billion, and government expenditures of $1 billion. Then investment and national saving are both $1 billion.

Correct AnswerverifiedShow Answer

According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?

Correct AnswerverifiedShow Answer

An increase in the budget deficit shifts the demand for loanable funds to the right.

Correct AnswerverifiedShow Answer

The supply of loanable funds slopes

Correct AnswerverifiedShow Answer

If the tax revenue of the federal government is less than its spending, then the federal government necessarily

Correct AnswerverifiedShow Answer

If the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded,

Correct AnswerverifiedShow Answer

You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds

Correct AnswerverifiedShow Answer

If the demand for loanable funds shifts to the left, then the equilibrium interest rate

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share?

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

A stock's dividend yield is the

Correct AnswerverifiedShow Answer

Which of the following would a macroeconomist consider as investment?

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Which of the following is not a nonsensical headline?

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The interest rate will and the quantity of loanable funds invested will when the government decreases the budget deficit.

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. Which firm had the P/E ratio that was closest to the historically typical P/E ratio?

Correct AnswerverifiedShow Answer

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