Question 1

_____ and _____ are the two most important financial intermediaries.

Accepted Answer

Banks, Mut...

Question 2

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

Question 3

The bond market

Accepted Answer

A)  is a financial market, whereas the stock market is a financial intermediary.
B)  is a financial intermediary, whereas the stock market is a financial market.
C)  is a financial market, as is the stock market.
D)  is a financial intermediary, as is the stock market.E) A) and C)
F) A) and B)

Question 4

What variable adjusts to balance demand and supply in the market for loanable funds?

Accepted Answer

The real i...

Question 5

The primary economic function of the financial system is to

Accepted Answer

A)  keep interest rates low.
B)  provide expert advice to savers and investors.
C)  match one person's consumption expenditures with another person's capital expenditures.
D)  match one person's saving with another person's investment.E) A) and B)
F) A) and C)

Question 6

Use the following table to answer the following questions.
Table 26-2 
-Refer to Table 26-2. Which company had the highest dollar dividend per share?

Accepted Answer

A)  Boeing Co.
B)  Eli Lilly and Co.
C)  Kraft Foods Group
D)  Kellogg Co.E) B) and D)
F) B) and C) C

Question 7

Which of the following statements is not correct?

Accepted Answer

A)  If GDP is rising faster than debt, the government is, in some sense, living within its means.
B)  The ratio of debt to GDP in the United States has always been less than one.
C)  Debts during wars may distribute the burden of fighting the war more evenly across generations.
D)  During times of peace in the United States, the ratio of debt to GDP sometimes rose.E) None of the above
F) A) and D)

Question 8

What does the maturity of a bond indicate?

Accepted Answer

The date a...

Question 9

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

Question 10

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

Accepted Answer

A)  raise both national saving and private saving.
B)  raise national saving and reduce private saving.
C)  leave national saving and private saving unchanged.
D)  leave national saving unchanged and reduce private saving.E) A) and C)
F) A) and D)

Question 11

The real interest rate is the

Accepted Answer

A)  interest rate corrected for inflation.
B)  interest rate as usually reported by banks.
C)  difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors.
D)  difference between the average dividend yield on stocks and the average interest rate on bonds.E) B) and C)
F) None of the above A

Question 12

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

Question 13

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

Accepted Answer

A)  there is a surplus so interest rates will rise.
B)  there is a surplus so interest rates will fall.
C)  there is a shortage so interest rates will rise.
D)  there is a shortage so interest rates will fall.E) A) and B)
F) B) and C)

Question 14

Financial crises seldom involve economic downturns.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  between 0.25 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) None of the above A

Question 16

Which advantage(s)  do mutual funds claim to provide?

Accepted Answer

A)  diversification and access to the skills of professional money managers
B)  diversification but not access to the skills of professional money managers
C)  access to the skills of professional money managers but not diversification
D)  neither diversification nor access to the skills of professional money managers.E) B) and C)
F) C) and D)

Question 17

The financial system coordinates investment and saving, which are important determinants of long-run real GDP.

Accepted Answer

A) True 
 B)False

Question 18

In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, and national saving?

Accepted Answer

Investment = $100, T...

Question 19

What is the source of the supply of loanable funds?

Accepted Answer

The answer of What is the source of the supply...

Question 20

Use the following table to answer the following questions.
Table 26-1 
-Refer to Table 26-1. What was Hershey's earnings per share?

Accepted Answer

A)  $29.90
B)  $2.79
C)  $1.50
D)  $0.36E) B) and C)
F) All of the above

Exam 26: Saving, Investment, and the Financial System

_____ and _____ are the two most important financial intermediaries.

Correct AnswerverifiedBanks, Mut...View AnswerShow Answer

Which of the following would a macroeconomist consider as investment?

Correct AnswerverifiedShow Answer

The bond market

Correct AnswerverifiedShow Answer

What variable adjusts to balance demand and supply in the market for loanable funds?

Correct AnswerverifiedThe real i...View AnswerShow Answer

The primary economic function of the financial system is to

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-2 -Refer to Table 26-2. Which company had the highest dollar dividend per share?

Correct AnswerverifiedC

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

What does the maturity of a bond indicate?

Correct AnswerverifiedThe date a...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

According to the definitions of national saving and private saving, if Y, C, and G remained the same, an increase in taxes would

Correct AnswerverifiedShow Answer

The real interest rate is the

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Financial crises seldom involve economic downturns.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

Which advantage(s) do mutual funds claim to provide?

Correct AnswerverifiedShow Answer

The financial system coordinates investment and saving, which are important determinants of long-run real GDP.

Correct AnswerverifiedShow Answer

In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, and national saving?

Correct AnswerverifiedInvestment = $100, T...View AnswerShow Answer

What is the source of the supply of loanable funds?

Correct AnswerverifiedShow Answer

Use the following table to answer the following questions. Table 26-1 -Refer to Table 26-1. What was Hershey's earnings per share?

Correct AnswerverifiedShow Answer

_ and _ are the two most important financial intermediaries.

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Banks, Mut...
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The real i...
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C

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The date a...
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A

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A

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Investment = $100, T...
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