Question 1

Which of the following equations represents GDP for a closed economy?

Accepted Answer

A)   Y = C + I + G + T
B)   S = I - G
C)   I = Y - C + G
D)   Y = C + I + GE) C) and D)
F) None of the above

Question 2

Which of the following statements is correct?

Accepted Answer

A)   A large,well-known corporation such as Intel generally would use financial intermediation to finance expansion of its facilities.
B)   On average,managed funds outperform indexed funds.
C)   Unlike corporate bonds and stocks,checking accounts are a medium of exchange.
D)   A mutual fund is a financial market.E) A) and B)
F) A) and D)

Question 3

Suppose a country repealed its investment tax credit.The effects of this are represented by shifting the

Accepted Answer

A)   demand for and the supply of loanable funds to the right.
B)   demand for and the supply of loanable funds to the left.
C)   supply of loanable funds to the right and the demand for loanable funds to the left.
D)   None of the above is correct.E) B) and D)
F) All of the above

Question 4

The slope of the demand for loanable funds curve represents the

Accepted Answer

A)   positive relation between the real interest rate and investment.
B)   negative relation between the real interest rate and investment.
C)   positive relation between the real interest rate and saving.
D)   negative relation between the real interest rate and saving.E) All of the above
F) B) and D)

Question 5

If a share of stock in Dell sells for $70,the retained earnings per share are $5,and the dividend per share is $2,then the price-earnings ratio is 10.

Accepted Answer

A) True 
 B)False

Question 6

Suppose the Move It! exercise chain has revenues of $45 million,accounting costs of $15 million,and currently has issued 10 million shares of stocks selling at $90 each.Compute the price-earning ratio.Show your work.Is this ratio relatively high or low? What might an increase in the price-earnings ratio indicate?

Accepted Answer

The earnings per share is ($45 million -...

Question 7

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

Accepted Answer

A)   retained earnings.
B)   dividends.
C)   interest payments.
D)   capital accounts.E) None of the above
F) B) and D)

Question 8

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free.This would shift the

Accepted Answer

A)   supply of loanable funds to the right,causing interest rates to fall.
B)   supply of loanable funds to the left,causing interest rates to rise.
C)   demand for loanable funds to the right,causing interest rates to rise.
D)   demand for loanable funds to the left,causing interest rates to fall.E) A) and D)
F) C) and D)

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 D)

Question 10

The slope of the supply of loanable funds is based on the logic that an increase in interest rates

Accepted Answer

A)   makes saving more attractive.
B)   makes saving less attractive.
C)   makes investment more attractive.
D)   makes investment less attractive.E) None of the above
F) All of the above

Question 11

Financial intermediaries are

Accepted Answer

A)   the same as financial markets.
B)   individuals who make profits by buying a stock low and selling it high.
C)   a more general name for financial assets such as stocks,bonds,and checking accounts.
D)   financial institutions through which savers can indirectly provide funds to borrowers.E) All of the above
F) A) and D)

Question 12

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) None of the above

Question 13

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

Question 14

Suppose that Congress were to institute an investment tax credit.What would happen in the market for loanable funds?

Accepted Answer

A)   The demand for loanable funds would shift left.
B)   The supply of loanable funds would shift left.
C)   The demand for loanable funds would shift right.
D)   The supply of loanable funds would shift right.E) B) and D)
F) None of the above

Question 15

The demand for loanable funds comes from saving and the supply of loanable funds comes from investment.

Accepted Answer

A) True 
 B)False

Question 16

We interpret the term loanable funds to mean the flow of resources available to fund private investment.

Accepted Answer

A) True 
 B)False

Question 17

Other things the same,which bond would you expect to pay the lowest interest rate?

Accepted Answer

A)   a bond issued by a state with a very good credit rating
B)   a bond issued by the U.S.government
C)   a bond issued by a fairly new company doing genetic research
D)   a bond issued by NabiscoE) A) and B)
F) A) and D)

Question 18

A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 4 percent.The price of a share of this stock is

Accepted Answer

A)   $2.08.
B)   $5.00.
C)   $8.00
D)   $50.00.E) None of the above
F) All of the above

Question 19

Public saving is T - G,while private saving is Y - T - C.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is correct?

Accepted Answer

A)   The total income in the economy that remains after paying for consumption and government purchases is called private saving.
B)   The sum of private saving and national saving is called public saving.
C)   For a closed economy,the sum of private saving and public saving must equal investment.
D)   For a closed economy,the sum of consumption,national saving,and taxes must equal GDP.E) A) and D)
F) A) and C)

Exam 18: Saving,investment,and the Financial System

Which of the following equations represents GDP for a closed economy?

Correct Answer
verified

The slope of the supply of loanable funds is based on the logic that an increase in interest rates

Correct Answer
verified

The demand for loanable funds comes from saving and the supply of loanable funds comes from investment.

Correct Answer
verified

Other things the same,which bond would you expect to pay the lowest interest rate?

Correct Answer
verified

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

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

If a share of stock in Dell sells for $70,the retained earnings per share are $5,and the dividend per share is $2,then the price-earnings ratio is 10.

Correct Answer
verified

The slope of the demand for loanable funds curve represents the

Correct Answer
verified

Suppose that Congress were to institute an investment tax credit.What would happen in the market for loanable funds?

Correct Answer
verified

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free.This would shift the

Correct Answer
verified

Public saving is T - G,while private saving is Y - T - C.

Correct Answer
verified

We interpret the term loanable funds to mean the flow of resources available to fund private investment.

Correct Answer
verified

Financial intermediaries are

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Suppose a country repealed its investment tax credit.The effects of this are represented by shifting the

Correct Answer
verified

Correct Answer
verified
The earnings per share is ($45 million -...
View Answer

A stock's dividend yield is the

Correct Answer
verified

A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 4 percent.The price of a share of this stock is

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

Which of the following statements is correct?

Correct Answer
verified

Exam 18: Saving,investment,and the Financial System

Which of the following equations represents GDP for a closed economy?

Correct AnswerverifiedShow Answer

The slope of the supply of loanable funds is based on the logic that an increase in interest rates

Correct AnswerverifiedShow Answer

The demand for loanable funds comes from saving and the supply of loanable funds comes from investment.

Correct AnswerverifiedShow Answer

Other things the same,which bond would you expect to pay the lowest interest rate?

Correct AnswerverifiedShow Answer

All or part of a firm's profits may be paid out to the firm's stockholders in the form of

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

If a share of stock in Dell sells for $70,the retained earnings per share are $5,and the dividend per share is $2,then the price-earnings ratio is 10.

Correct AnswerverifiedShow Answer

The slope of the demand for loanable funds curve represents the

Correct AnswerverifiedShow Answer

Suppose that Congress were to institute an investment tax credit.What would happen in the market for loanable funds?

Correct AnswerverifiedShow Answer

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free.This would shift the

Correct AnswerverifiedShow Answer

Public saving is T - G,while private saving is Y - T - C.

Correct AnswerverifiedShow Answer

We interpret the term loanable funds to mean the flow of resources available to fund private investment.

Correct AnswerverifiedShow Answer

Financial intermediaries are

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose a country repealed its investment tax credit.The effects of this are represented by shifting the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe earnings per share is ($45 million -...View AnswerShow Answer

A stock's dividend yield is the

Correct AnswerverifiedShow Answer

A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 4 percent.The price of a share of this stock is

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

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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The earnings per share is ($45 million -...
View Answer

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