Question 1

Last quarter in a closed economy GDP was 100,000. Expenditures on capital goods such as business equipment and structures was 10,000, inventory rose 1,000, and new construction of homes was 5,000. Consumption was 65,000, taxes were 15,000. What was public saving?

Accepted Answer

A)  -4,000
B)  -5,000
C)  -14,000
D)  -15,000E) A) and B)
F) A) and C)

Question 2

Scenario 13-2. Assume the following information for an imaginary, closed economy.
GDP = $200,000; consumption = $120,000;
government purchases = $35,000; and taxes = $25,000.
-Refer to Scenario 13-2. For this economy, investment amounts to

Accepted Answer

A)  $25,000.
B)  $30,000.
C)  $35,000.
D)  $45,000.E) B) and C)
F) C) and D)

Question 3

Which of the following statements about mutual funds is correct?

Accepted Answer

A)  A mutual fund is not a financial intermediary.
B)  A disadvantage of buying mutual funds is a lack of diversification
C)  People who buy shares from a mutual fund are guaranteed a minimum return.
D)  On average index funds outperform managed funds.E) A) and B)
F) C) and D) D

Question 4

Suppose the market for loanable funds is in equilibrium. Given the numbers below, determine the quantity of loanable funds demanded.
  GDP $200 billion  Consumption $130 billion  Taxes Net of Transfers $30 billion  Government Spending $40 billion \begin{array} { | l | c | } \hline 	ext { GDP } & \$ 200 	ext { billion } \\hline 	ext { Consumption } & \$ 130 	ext { billion } \\hline 	ext { Taxes Net of Transfers } & \$ 30 	ext { billion } \\hline 	ext { Government Spending } & \$ 40 	ext { billion } \\hline\end{array} GDP  Consumption  Taxes Net of Transfers  Government Spending ​$200 billion $130 billion $30 billion $40 billion ​​

Accepted Answer

A)  $30 billion
B)  $25 billion
C)  $20 billion
D)  $15 billion E) A) and D)
F) C) and D) A

Question 5

Which of the following is an example of financial intermediation?

Accepted Answer

A)  John buys shares of stock issued by a fast food company.
B)  A foreign government buys bonds issued by the U.S. Treasury.
C)  Susan makes a deposit at a bank and the bank uses this money to make an auto loan to Ferguson.
D)  None of the above is correct.E) B) and D)
F) A) and B)

Question 6

In which case would people desire to borrow the most?

Accepted Answer

A)  the nominal interest rate is 8% and the inflation rate is 7%
B)  the nominal interest rate is 7% and the inflation rate is 5%
C)  the nominal interest rate is 6% and the inflation rate is 3%
D)  the nominal interest rate is 5% and the inflation rate is 1%E) None of the above
F) B) and D)

Question 7

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

Accepted Answer

A)  Private saving is equal to zero.
B)  Public saving is equal to zero.
C)  The economy's government is running neither a surplus nor a deficit.
D)  No restriction is necessary; saving and investment are equal for all closed economies.E) B) and D)
F) A) and D)

Question 8

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Accepted Answer

A)  the fund's managers
B)  the fund's shareholders
C)  the federal government
D)  the corporations that originally issued the stocks and/or bonds held by the fundE) B) and C)
F) A) and B)

Question 9

When a country saves a larger portion of its GDP than it did before, it will have

Accepted Answer

A)  more capital and higher productivity.
B)  more capital and lower productivity.
C)  less capital and higher productivity.
D)  less capital and lower productivity.E) B) and D)
F) B) and C)

Question 10

Managed funds

Accepted Answer

A)  typically have a higher rate of return and higher costs than index funds.
B)  typically have a higher rate of return and lower costs than index funds.
C)  typically have a lower rate of return and higher costs than index funds.
D)  typically have a lower rate of return and lower costs than index funds.E) A) and B)
F) A) and C)

Question 11

Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 
-Refer to Figure 13-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Accepted Answer

A)  a movement from Point A to Point B
B)  a movement from Point B to Point F
C)  a movement from Point C to Point F
D)  a movement from Point C to Point BE) B) and D)
F) B) and C)

Question 12

Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?

Accepted Answer

A)  9,500
B)  10,000
C)  10,500
D)  11,000E) A) and B)
F) A) and C) A

Question 13

The first element of a financial crisis is

Accepted Answer

A)  inflation.
B)  a decline in confidence in financial institutions.
C)  a relaxation of rules and regulations that pertain to the financial system.
D)  a large decline in some asset prices.E) All of the above
F) None of the above

Question 14

In 2008, CDZ Corporation had total earnings of $500 million and CDZ retained 30 percent of its earnings for future investments. If the price of a share of CDZ stock is $70 and if 80 million shares of its stock were outstanding, then what is the price-earnings ratio?

Accepted Answer

A)  0.14
B)  11.2
C)  16.0
D)  37.3E) A) and B)
F) A) and C)

Question 15

Which of the following is both a financial institution and a financial intermediary?

Accepted Answer

A)  banks
B)  stock exchanges
C)  the bond market
D)  All of the above are correct.E) A) and C)
F) None of the above

Question 16

Scenario 13-2. Assume the following information for an imaginary, closed economy.
GDP = $200,000; consumption = $120,000;
government purchases = $35,000; and taxes = $25,000.
-Refer to Scenario 13-2. For this economy, private saving is equal to

Accepted Answer

A)  $40,000.
B)  $50,000.
C)  $55,000.
D)  $60,000.E) A) and D)
F) B) and C)

Question 17

Figure 13-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. 
-Refer to Figure 13-2. What is measured along the horizontal axis of the graph?

Accepted Answer

A)  the quantity of loanable funds
B)  the size of the government budget deficit or surplus
C)  the real interest rate
D)  the nominal interest rateE) B) and C)
F) A) and C)

Question 18

In national income accounting, we use which of the following pairs of terms interchangeably?

Accepted Answer

A)  "investment" and "private saving"
B)  "investment" and "purchases of stocks and bonds"
C)  "saving" and "national saving"
D)  "public saving" and "government tax revenue minus government spending"E) C) and D)
F) B) and D)

Question 19

A creditor of a corporation holds

Accepted Answer

A)  bonds sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders.
B)  bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders.
C)  stocks sold by the corporation. If the corporation experiences financial difficulties stock holders are paid before bond holders.
D)  stocks sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders.E) A) and D)
F) A) and B)

Question 20

Historically, the typical price-earnings ratio for stocks is about

Accepted Answer

A)  3
B)  8
C)  15
D)  26E) B) and D)
F) A) and B)

Exam 13: Saving, Investment, and the Financial System

Last quarter in a closed economy GDP was 100,000. Expenditures on capital goods such as business equipment and structures was 10,000, inventory rose 1,000, and new construction of homes was 5,000. Consumption was 65,000, taxes were 15,000. What was public saving?

Correct Answer
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Scenario 13-2. Assume the following information for an imaginary, closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 13-2. For this economy, investment amounts to

Correct Answer
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Which of the following statements about mutual funds is correct?

Correct Answer
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D

Correct Answer
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A

Which of the following is an example of financial intermediation?

Correct Answer
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In which case would people desire to borrow the most?

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

Correct Answer
verified

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct Answer
verified

When a country saves a larger portion of its GDP than it did before, it will have

Correct Answer
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Managed funds

Correct Answer
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Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 13-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Correct Answer
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Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?

Correct Answer
verified
A

The first element of a financial crisis is

Correct Answer
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In 2008, CDZ Corporation had total earnings of $500 million and CDZ retained 30 percent of its earnings for future investments. If the price of a share of CDZ stock is $70 and if 80 million shares of its stock were outstanding, then what is the price-earnings ratio?

Correct Answer
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Which of the following is both a financial institution and a financial intermediary?

Correct Answer
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Scenario 13-2. Assume the following information for an imaginary, closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 13-2. For this economy, private saving is equal to

Correct Answer
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Figure 13-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. -Refer to Figure 13-2. What is measured along the horizontal axis of the graph?

Correct Answer
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In national income accounting, we use which of the following pairs of terms interchangeably?

Correct Answer
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A creditor of a corporation holds

Correct Answer
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Historically, the typical price-earnings ratio for stocks is about

Correct Answer
verified

Exam 13: Saving, Investment, and the Financial System

Last quarter in a closed economy GDP was 100,000. Expenditures on capital goods such as business equipment and structures was 10,000, inventory rose 1,000, and new construction of homes was 5,000. Consumption was 65,000, taxes were 15,000. What was public saving?

Correct AnswerverifiedShow Answer

Scenario 13-2. Assume the following information for an imaginary, closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 13-2. For this economy, investment amounts to

Correct AnswerverifiedShow Answer

Which of the following statements about mutual funds is correct?

Correct AnswerverifiedD

Correct AnswerverifiedA

Which of the following is an example of financial intermediation?

Correct AnswerverifiedShow Answer

In which case would people desire to borrow the most?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct AnswerverifiedShow Answer

When a country saves a larger portion of its GDP than it did before, it will have

Correct AnswerverifiedShow Answer

Managed funds

Correct AnswerverifiedShow Answer

Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 13-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Correct AnswerverifiedShow Answer

Suppose the economy is closed and consumption is 6,500, taxes are 1,500, and government purchases are 2,000. If national saving amounts to 1,000, then what is GDP?

Correct AnswerverifiedA

The first element of a financial crisis is

Correct AnswerverifiedShow Answer

In 2008, CDZ Corporation had total earnings of $500 million and CDZ retained 30 percent of its earnings for future investments. If the price of a share of CDZ stock is $70 and if 80 million shares of its stock were outstanding, then what is the price-earnings ratio?

Correct AnswerverifiedShow Answer

Which of the following is both a financial institution and a financial intermediary?

Correct AnswerverifiedShow Answer

Scenario 13-2. Assume the following information for an imaginary, closed economy. GDP = $200,000; consumption = $120,000; government purchases = $35,000; and taxes = $25,000. -Refer to Scenario 13-2. For this economy, private saving is equal to

Correct AnswerverifiedShow Answer

Figure 13-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves. -Refer to Figure 13-2. What is measured along the horizontal axis of the graph?

Correct AnswerverifiedShow Answer

In national income accounting, we use which of the following pairs of terms interchangeably?

Correct AnswerverifiedShow Answer

A creditor of a corporation holds

Correct AnswerverifiedShow Answer

Historically, the typical price-earnings ratio for stocks is about

Correct AnswerverifiedShow Answer

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D

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A

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A

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