Econ Chapter 13

Given that Monika's income exceeds her expenditures, Monika is best described as a a. saver or as a supplier of funds. b. saver or as a demander of funds. c. borrower or as a supplier of funds. d. borrower or as a demander of funds.

A

If a firm wants to borrow it can a. supply bonds by selling them. b. supply bonds by buying them. c. demand bonds by selling them. d. demand bonds by buying them

A

Refer to Figure 2. A shift of the supply curve from S1 to S2 is called a. an increase in the supply of loanable funds. b. an increase in the quantity of loanable funds supplied. c. a decrease in the supply of loanable funds. d. a decrease in the quantity of loanable funds supplied.

A

When the government has a budget surplus a. it buys more of its bonds from the public than it sells to the public. b. it spends more than it receives in tax revenue. c. private saving is greater than zero. d. exports are greater than imports.

A

Which of the following is both a financial institution and a financial intermediary? a. banks b. stock exchanges c. the bond market d. All of the above are correct.

A

Which of the following lists correctly identifies the four expenditure categories of GDP? a. consumption, government purchases, investment, net-exports b. consumption, investment, depreciation, net-exports c. consumption, saving, investment, depreciation, d. consumption, government purchases, investment, savings

A

Which of the following statements is correct? a. The expected future profitability of a corporation influences the demand for that corporation's stock. b. When a corporation sells stock as a means of raising funds it is engaging in debt finance. c. The owners of bonds sold by the Microsoft Corporation are part owners of that corporation. d. All bonds are, by definition, perpetuities.

A

A closed economy does not engage in international trade because a. national saving is less than investment (S < I). b. net exports (NX) are zero. c. Y - C - G > I. d. national saving is zero.

B

Municipal bonds pay a relatively a. low rate of interest because of their high default risk and because the interest they pay is subject to federal income tax. b. low rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax. c. high rate of interest because of their high default risk and because federal taxes must be paid on the interest they pay. d. high rate of interest because of their low default risk and because the interest they pay is not subject to federal income tax.

B

Northwest Wholesale Foods sells stocks. The company is using a. equity financing and the return shareholders earn is fixed. b. equity financing and the return shareholders earn depends on how profitable the company is. c. debt financing and the return shareholders earn is fixed. d. debt financing and the return shareholders earn depends on how profitable the company is.

B

Refer to Figure 2. A shift of the demand curve from D1 to D2 is called 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

B

Refer to Figure 2. What, specifically, does the label on the vertical axis, 𝑖, represent? a. the nominal interest rate b. the real interest rate c. the inflation rate d. the dividend yield

B

You observe a closed economy that has a government deficit and positive investment. Which of the following is correct? a. Private and public saving are both positive. b. Private saving is positive; public saving is negative. c. Private saving is negative; public saving is positive. d. Both private saving and public saving are negative.

B

For an imaginary economy, when the real interest rate is 5 percent, the quantity of loanable funds demanded is $1,000 and the quantity of loanable funds supplied is $1,000. Currently, the nominal interest rate is 9 percent and the inflation rate is 2 percent. Currently, 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.

C

Refer to Figure 2. Which of the following movements shows the effects of households' decision to save more? a. a movement from Point A to Point B b. a movement from Point F to Point A c. a movement from Point C to Point F d. a movement from Point B to Point C

C

Refer to Figure 2. Which of the following movements would be consistent with the government budget going from deficit to surplus and the simultaneous enactment of an investment tax credit? a. a movement from Point A to Point C b. a movement from Point B to Point A c. a movement from Point B to Point F d. a movement from Point C to Point B

C

Institutions that help to match one person's saving with another person's investment are collectively called the a. Federal Reserve system. b. banking system. c. monetary system. d. financial system.

D

The financial system does NOT influence a. long-run economic growth. b. saving and investment. c. the amount of capital in the economy. d. the amount of natural resources in the economy.

D

When the government goes from running a balanced budget to running a budget surplus, a. national saving decreases, the interest rate rises, and the economy's long-run growth rate is likely to decrease. b. national saving increases, the interest rate falls, and the economy's long-run growth rate is likely to decrease. c. national saving decreases, the interest rate rises, and the economy's long-run growth rate is likely to increase. d. national saving increases, the interest rate falls, and the economy's long-run growth rate is likely to increase.

D

𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑆𝑎𝑣𝑖𝑛𝑔𝑠 =

𝑃𝑟𝑖𝑣𝑎𝑡𝑒 𝑆𝑎𝑣𝑖𝑛𝑔𝑠 + 𝑃𝑢𝑏𝑙𝑖𝑐 𝑆𝑎𝑣𝑖𝑛𝑔𝑠

𝑃𝑢𝑏𝑙𝑖𝑐 𝑆𝑎𝑣𝑖𝑛𝑔𝑠 =

𝑇 − 𝐺

𝑃𝑟𝑖𝑣𝑎𝑡𝑒 𝑆𝑎𝑣𝑖𝑛𝑔𝑠 =

𝑌 − 𝐶 − 𝑇