Question 1

Draw and label a graph showing equilibrium in the market for loanable funds.

Accepted Answer

Market for...

Question 2

The country of Meditor, a small country with a closed economy, uses the merit as its currency. Recent national income statistics showed that it had GDP of $600 million merits, no government transfer payments, taxes of $150 million merits, a budget surplus of $40 billion merits, and investment of $100 billion merits. What were its consumption and government expenditures on goods and services?

Accepted Answer

A)   $460 million merits and $150 million merits
B)   $310 million merits and $190 million merits
C)   $350 million merits and $190 million merits
D)   $390 million merits and $110 million meritsE) All of the above
F) C) and D)

Question 3

XDF Corporation had a P/E ratio of 25, earnings per share of $4, and retained earnings per share of $3. What was its dividend yield?

Accepted Answer

A)   4%
B)   3%
C)   1%
D)   None of the above is correct.E) B) and D)
F) None of the above

Question 4

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 
-Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called

Accepted Answer

A)   an increase in the demand for loanable funds, and that increase would originate from people who had some extra income they wanted to lend.
B)   an increase in the demand for loanable funds, and that increase would originate from households and firms who wish to borrow to make investments.
C)   a decrease in the demand for loanable funds, and that decrease would originate from people who had some extra income they wanted to lend.
D)   a decrease in the demand for loanable funds, and that decrease would originate from households and firms who wish to borrow to make investments.E) C) and D)
F) None of the above

Question 5

As a money management fee, mutual funds usually charge their customers

Accepted Answer

A)   between 0.5 and 2.0 percent of assets each year.
B)   between 1.5 and 3.0 percent of assets each year.
C)   nothing, because they receive commissions from the firms whose stock they buy.
D)   a flat fee of about $50.E) A) and B)
F) A) and C)

Question 6

Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

Accepted Answer

Robert is ...

Question 7

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Accepted Answer

A)   greater investment.
B)   a higher interest rate.
C)   higher public saving.
D)   All of the above are correct.E) All of the above
F) B) and D)

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

Question 9

Owners of municipal bonds

Accepted Answer

A)   are not required to pay federal income tax on the interest income.
B)   usually receive a higher interest rate compared to bonds issued by corporations.
C)   usually receive a higher interest rate compared to stock issued by corporations.
D)   pay taxes on the dividends earned from these bonds.E) A) and C)
F) All of the above

Question 10

Scenario 26-3. Assume the following information for an imaginary, open economy.
Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150.
-Refer to Scenario 26-3. This economy's government is running a

Accepted Answer

A)   budget deficit of $75.
B)   budget deficit of $80.
C)   budget deficit of $50.
D)   budget deficit of $100.E) A) and D)
F) A) and C)

Question 11

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Accepted Answer

A)   the demand for existing shares of stock in this company to decrease, so the price would fall.
B)   the demand for existing shares of stock in this company to increase, so the price would rise.
C)   the supply of existing shares of stock in this company to decrease, so the price would fall.
D)   the supply of existing shares of stock in this company to increase, so the price would rise.E) C) and D)
F) A) and D)

Question 12

Which of the following is correct?

Accepted Answer

A)   In a closed economy, equilibrium in the market for loanable funds occurs where saving = investment.
B)   Investment is the source for the supply of loanable funds.
C)   If there is a surplus in the market for loanable funds, the interest rate rises.
D)   All of the above are correctE) B) and C)
F) B) and D)

Question 13

In a closed economy, investment must be equal to private saving.

Accepted Answer

A) True 
 B)False

Question 14

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Accepted Answer

The answer of A does not engage in international trade...

Question 15

A is a certificate of indebtedness and a is a claim to partial ownership in a firm.

Accepted Answer

The answer of A is a certificate of indebtedness and...

Question 16

In a closed economy, private saving is

Accepted Answer

A)   the amount of income that households have left after paying for their taxes and consumption.
B)   the amount of income that businesses have left after paying for the factors of production.
C)   the amount of tax revenue that the government has left after paying for its spending.
D)   always equal to investment.E) None of the above
F) C) and D)

Question 17

Which of the following is included in the demand for loanable funds?

Accepted Answer

A)   investment and government borrowing
B)   investment but not government borrowing
C)   government borrowing but not investment
D)   neither government borrowing nor investmentE) A) and C)
F) A) and D)

Question 18

National saving is the sum of and . In a closed economy it is equal to in equilibrium.

Accepted Answer

private saving, publ...

Question 19

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Accepted Answer

A)   1.25%.
B)   5.0%.
C)   3.4%.
D)   10.6%.E) C) and D)
F) B) and C)

Question 20

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future.

Accepted Answer

A) True 
 B)False

Exam 18: Saving, Investment, and the Financial System

Scenario 26-3. Assume the following information for an imaginary, open economy. Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150. -Refer to Scenario 26-3. This economy's government is running a

Correct Answer
verified

In a closed economy, private saving is

Correct Answer
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In a closed economy, investment must be equal to private saving.

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

A is a certificate of indebtedness and a is a claim to partial ownership in a firm.

Correct Answer
verified

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Correct Answer
verified

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Correct Answer
verified

As a money management fee, mutual funds usually charge their customers

Correct Answer
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XDF Corporation had a P/E ratio of 25, earnings per share of $4, and retained earnings per share of $3. What was its dividend yield?

Correct Answer
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Which of the following is correct?

Correct Answer
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Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called

Correct Answer
verified

Which of the following is included in the demand for loanable funds?

Correct Answer
verified

Draw and label a graph showing equilibrium in the market for loanable funds.

Correct Answer
verified
Market for...
View Answer

Owners of municipal bonds

Correct Answer
verified

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future.

Correct Answer
verified

Correct Answer
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Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

Correct Answer
verified
Robert is ...
View Answer

National saving is the sum of and . In a closed economy it is equal to in equilibrium.

Correct Answer
verified
private saving, publ...
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Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Correct Answer
verified

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Correct Answer
verified

Exam 18: Saving, Investment, and the Financial System

Scenario 26-3. Assume the following information for an imaginary, open economy. Consumption = $1,000; investment = $200; net exports = -$50; taxes = $230; private saving = $225; and national saving = $150. -Refer to Scenario 26-3. This economy's government is running a

Correct AnswerverifiedShow Answer

In a closed economy, private saving is

Correct AnswerverifiedShow Answer

In a closed economy, investment must be equal to private saving.

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

A is a certificate of indebtedness and a is a claim to partial ownership in a firm.

Correct AnswerverifiedShow Answer

Other things the same, the effects of an increase in transfer payments on the government's budget deficit will lead to

Correct AnswerverifiedShow Answer

Over-the-Rhine Cheese Corporation had a P/E ratio of 20, retained earnings of $0.80 per share and a dividend of $1.70. What was its dividend yield?

Correct AnswerverifiedShow Answer

As a money management fee, mutual funds usually charge their customers

Correct AnswerverifiedShow Answer

XDF Corporation had a P/E ratio of 25, earnings per share of $4, and retained earnings per share of $3. What was its dividend yield?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3. A shift of the demand curve from D1 to D2 is called

Correct AnswerverifiedShow Answer

Which of the following is included in the demand for loanable funds?

Correct AnswerverifiedShow Answer

Draw and label a graph showing equilibrium in the market for loanable funds.

Correct AnswerverifiedMarket for...View AnswerShow Answer

Owners of municipal bonds

Correct AnswerverifiedShow Answer

Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living in the future.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Robert buys bonds. Rachel buys a new truck for her landscaping business. Identify both as savers, investors, both, or neither.

Correct AnswerverifiedRobert is ...View AnswerShow Answer

National saving is the sum of and . In a closed economy it is equal to in equilibrium.

Correct Answerverifiedprivate saving, publ...View AnswerShow Answer

Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect

Correct AnswerverifiedShow Answer

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Correct AnswerverifiedShow Answer

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Market for...
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Robert is ...
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private saving, publ...
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