Question 1

In macroeconomics, refers to the purchase of new capital.

Accepted Answer

The answer of In macroeconomics, refers to the purchase of...

Question 2

Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget

Accepted Answer

A)   will make investment rise.
B)   will make the rate of interest rise.
C)   will make public saving rise.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 3

A government reduces its budget deficit, but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default. Which of the following is correct?

Accepted Answer

A)   The reduced budget deficit will raise interest rates in general. The increased risk of default will raise interest rates on government bonds.
B)   The reduced budget deficit will raise interest rates in general. The increased risk of default will reduce interest rates on government bonds.
C)   The reduced budget deficit will reduce interest rates in general. The increased risk of default will raise interest rates on government bonds.
D)   The reduced budget deficit will reduce interest rates in general. The increased risk of default will reduce interest rates on government bonds.E) B) and D)
F) B) and C)

Question 4

When the government increases spending (holding taxes constant), the budget balance _____. This causes the interest rate in the market for loanable funds to _____ and investment to _____.

Accepted Answer

falls, inc...

Question 5

Which of the following is not correct?

Accepted Answer

A)   If you buy a bond from a corporation, you can sell the bond to someone else before it matures.
B)   Term refers to the scheduling of periodic interest rate payments on a bond.
C)   A bond is an IOU.
D)   There are millions of different bonds in the U.S. economy.E) A) and B)
F) None of the above

Question 6

Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars. 
-Refer to Figure 26-4. Regard the position of the Supply curve as fixed, as on the graph. If the real interest rate is 8 percent, the inflation rate is 3 percent, and the market for loanable funds is in equilibrium, then the position of the demand-for-loanable-funds curve must be

Accepted Answer

A)   D1.
B)   D2.
C)   between D1 and D2.
D)   to the right of D2.E) A) and D)
F) C) and D)

Question 7

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) All of the above
F) A) and D)

Question 8

The sale of either stocks or bonds to raise money is known as equity finance.

Accepted Answer

A) True 
 B)False

Question 9

In a closed economy, each unit of output is either consumed by households or invested.

Accepted Answer

A) True 
 B)False

Question 10

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) A) and D)
F) All of the above

Question 11

Two of the economy's most important financial intermediaries are

Accepted Answer

A)   suppliers of funds and demanders of funds.
B)   banks and the bond market.
C)   the stock market and the bond market.
D)   banks and mutual funds.E) C) and D)
F) None of the above

Question 12

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

Question 13

Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a corporation and the probability of default is believed to be high. Which of the following is correct?

Accepted Answer

A)   Because they have the same term to maturity the interest rates should be the same.
B)   Because of the differences in tax treatment and credit risk, the state bond should have the higher interest rate.
C)   Because of the differences in tax treatment and credit risk, the corporate bond should have the higher interest rate.
D)   It is not possible to say if one bond has a higher interest rate than the other.E) A) and B)
F) B) and C)

Question 14

When economists refer to investment, they mean the purchasing of stocks and bonds and other types of saving.

Accepted Answer

A) True 
 B)False

Question 15

When a firm wants to borrow directly from the public to finance the purchase of new equipment, it does so by selling shares of stock.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?

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) All of the above

Question 17

A bond that never matures is known as a

Accepted Answer

A)   perpetuity.
B)   an intermediary bond.
C)   an indexed bond.
D)   a junk bond.E) B) and C)
F) A) and C)

Question 18

The identity that shows that total income and total expenditure are equal is

Accepted Answer

A)   GDP = Y.
B)   Y = DI + T + NX.
C)   GDP = GNP - NX.
D)   Y = C + I + G + NX.E) A) and C)
F) C) and D)

Question 19

In a closed economy, what does (T - G)  represent?

Accepted Answer

A)   national saving
B)   investment
C)   private saving
D)   public savingE) A) and B)
F) B) and C)

Question 20

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Accepted Answer

A)   Each one of these is equal to national saving.
B)   Each one of these is equal to public saving.
C)   The first of these is private saving; the second one is public saving.
D)   The first of these is public saving; the second one is private saving.E) All of the above
F) A) and B)

Exam 26: Saving, Investment, and the Financial System

Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a corporation and the probability of default is believed to be high. Which of the following is correct?

Correct Answer
verified

Two of the economy's most important financial intermediaries are

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

In macroeconomics, refers to the purchase of new capital.

Correct Answer
verified

Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget

Correct Answer
verified

In a closed economy, what does (T - G) represent?

Correct Answer
verified

The sale of either stocks or bonds to raise money is known as equity finance.

Correct Answer
verified

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?

Correct Answer
verified

The bond market

Correct Answer
verified

In a closed economy, each unit of output is either consumed by households or invested.

Correct Answer
verified

A bond that never matures is known as a

Correct Answer
verified

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

A government reduces its budget deficit, but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default. Which of the following is correct?

Correct Answer
verified

The identity that shows that total income and total expenditure are equal is

Correct Answer
verified

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Correct Answer
verified

When economists refer to investment, they mean the purchasing of stocks and bonds and other types of saving.

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

When the government increases spending (holding taxes constant), the budget balance ___. This causes the interest rate in the market for loanable funds to _ and investment to ___.

Correct Answer
verified
falls, inc...
View Answer

When a firm wants to borrow directly from the public to finance the purchase of new equipment, it does so by selling shares of stock.

Correct Answer
verified

Exam 26: Saving, Investment, and the Financial System

Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a corporation and the probability of default is believed to be high. Which of the following is correct?

Correct AnswerverifiedShow Answer

Two of the economy's most important financial intermediaries are

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

In macroeconomics, refers to the purchase of new capital.

Correct AnswerverifiedShow Answer

Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget

Correct AnswerverifiedShow Answer

In a closed economy, what does (T - G) represent?

Correct AnswerverifiedShow Answer

The sale of either stocks or bonds to raise money is known as equity finance.

Correct AnswerverifiedShow Answer

Which of the following could explain a decrease in the equilibrium interest rate and an increase in the equilibrium quantity of loanable funds?

Correct AnswerverifiedShow Answer

The bond market

Correct AnswerverifiedShow Answer

In a closed economy, each unit of output is either consumed by households or invested.

Correct AnswerverifiedShow Answer

A bond that never matures is known as a

Correct AnswerverifiedShow Answer

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

A government reduces its budget deficit, but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default. Which of the following is correct?

Correct AnswerverifiedShow Answer

The identity that shows that total income and total expenditure are equal is

Correct AnswerverifiedShow Answer

Consider the expressions T - G and Y - T - C. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When economists refer to investment, they mean the purchasing of stocks and bonds and other types of saving.

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When the government increases spending (holding taxes constant), the budget balance _____. This causes the interest rate in the market for loanable funds to _____ and investment to _____.

Correct Answerverifiedfalls, inc...View AnswerShow Answer

When a firm wants to borrow directly from the public to finance the purchase of new equipment, it does so by selling shares of stock.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

When the government increases spending (holding taxes constant), the budget balance ___. This causes the interest rate in the market for loanable funds to _ and investment to ___.

Correct Answer
verified
falls, inc...
View Answer

Correct Answer
verified