Question 1

When the government goes from running a balanced budget to running a budget surplus,

Accepted Answer

A)   national saving decreases, the interest rate rises, and the economy's long­run growth rate is likely to decrease.
B)   national saving increases, the interest rate falls, and the economy's long­run growth rate is likely to decrease.
C)   national saving decreases, the interest rate rises, and the economy's long­run growth rate is likely to increase.
D)   national saving increases, the interest rate falls, and the economy's long­run growth rate is likely to increase.E) A) and B)
F) A) and C)

Question 2

What does the maturity of a bond indicate?

Accepted Answer

The date a...

Question 3

A stock index is

Accepted Answer

A)   an average of a group of stock prices.
B)   an average of a group of stock yields.
C)   a measure of the risk relative to the profitability of corporations.
D)   a report in a newspaper or other media outlet on the price of the stock and earnings of the corporation that issued the stock.E) All of the above
F) A) and C)

Question 4

In the terminology of macroeconomics, what's the difference between a saver and an investor?

Accepted Answer

A saver earns more than he spe...

Question 5

Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. 
-Refer to Figure 26-5. Starting at point A, a change in tax laws that encouraged households to save more would likely cause

Accepted Answer

A)   the quantity of loanable funds traded to increase to $125 and the interest rate fall to 5% point 
D)  .
B)   the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% point 
C)  .
C)   the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% point 
B)  .
D)   the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% point 
E)  .E) B) and C)
F) C) and D)

Question 6

Other things the same, as the maturity of a bond becomes longer, the bond will pay

Accepted Answer

A)   a lower interest rate because it has less risk.
B)   a lower interest rate because it has more risk.
C)   a higher interest rate because it has more risk.
D)   the same interest rate, because there is no relationship between term and risk.E) None of the above
F) All of the above

Question 7

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) None of the above
F) All of the above

Question 8

The income that households have left after paying their taxes and paying for their consumption is known as .

Accepted Answer

The answer of The income that households have left after...

Question 9

Because of differences in tax treatment, municipal bonds pay a higher interest rate than do corporate bonds.

Accepted Answer

A) True 
 B)False

Question 10

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Accepted Answer

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

Question 11

Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders. This failure is referred to as a

Accepted Answer

A)   breach.
B)   default.
C)   risk.
D)   term failure.E) C) and D)
F) B) and D)

Question 12

Late in the 2000-2009 decade, real estate prices in the U.S. fell by a greater percentage than they had fallen since the

Accepted Answer

A)   1890s.
B)   1930s.
C)   1950s.
D)   1970s.E) C) and D)
F) A) and B)

Question 13

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

Accepted Answer

A)   bond.
B)   stock.
C)   mutual fund.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 14

Which of the following is correct?

Accepted Answer

A)   The maturity of a bond refers to the amount to be paid back.
B)   The principal of the bond refers to the person selling the bond.
C)   A bond buyer cannot sell a bond before it matures.
D)   None of the above is correct.E) B) and C)
F) A) and D)

Question 15

The source of the supply of loanable funds

Accepted Answer

A)   is saving and the source of demand for loanable funds is investment.
B)   is investment and the source of demand for loanable funds is saving.
C)   and the demand for loanable funds is saving.
D)   and the demand for loanable funds is investment.E) A) and B)
F) None of the above

Question 16

National saving

Accepted Answer

A)   is the total income in the economy that remains after paying for consumption.
B)   is the total income in the economy that remains after paying for consumption and government purchases.
C)   is always greater than investment for a closed economy.
D)   is equal to private saving minus public saving.E) All of the above
F) B) and D)

Question 17

Which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why.
a. a U.S. government bond or a Venezuelan government bond
b. a U.S. government bond or a municipal bond with the same term and issued by a creditworthy municipality.
c. a 6-month Treasury bill or a 20-year Treasury bond
d. a Microsoft bond or a bond issued by a new recording company

Accepted Answer

a. The Venezuelan government bond would ...

Question 18

A bond buyer is a

Accepted Answer

A)   saver. Bond buyers must hold their bonds until maturity.
B)   saver. Bond buyers may sell their bonds prior to maturity.
C)   borrower. Bond buyers must hold their bonds until maturity.
D)   borrower. Bond buyers may sell their bonds prior to maturity.E) A) and B)
F) C) and D)

Question 19

The supply of loanable funds slopes

Accepted Answer

A)   upward because an increase in the interest rate induces people to save more.
B)   downward because an increase in the interest rate induces people to save less.
C)   downward because an increase in the interest rate induces people to invest less.
D)   upward because an increase in the interest rate induces people to invest more.E) B) and C)
F) A) and D)

Question 20

An increase in the budget deficit shifts the demand for loanable funds to the right.

Accepted Answer

A) True 
 B)False

Exam 13: Saving, Investment, and the Financial System

In the terminology of macroeconomics, what's the difference between a saver and an investor?

Correct Answer
verified
A saver earns more than he spe...
View Answer

Other things the same, as the maturity of a bond becomes longer, the bond will pay

Correct Answer
verified

The income that households have left after paying their taxes and paying for their consumption is known as .

Correct Answer
verified

Late in the 2000-2009 decade, real estate prices in the U.S. fell by a greater percentage than they had fallen since the

Correct Answer
verified

The supply of loanable funds slopes

Correct Answer
verified

Correct Answer
verified
a. The Venezuelan government bond would ...
View Answer

Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. -Refer to Figure 26-5. Starting at point A, a change in tax laws that encouraged households to save more would likely cause

Correct Answer
verified

National saving

Correct Answer
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The source of the supply of loanable funds

Correct Answer
verified

What does the maturity of a bond indicate?

Correct Answer
verified
The date a...
View Answer

Which of the following statements is correct?

Correct Answer
verified

An increase in the budget deficit shifts the demand for loanable funds to the right.

Correct Answer
verified

A bond buyer is a

Correct Answer
verified

Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders. This failure is referred to as a

Correct Answer
verified

A stock index is

Correct Answer
verified

Because of differences in tax treatment, municipal bonds pay a higher interest rate than do corporate bonds.

Correct Answer
verified

When the government goes from running a balanced budget to running a budget surplus,

Correct Answer
verified

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

Correct Answer
verified

Exam 13: Saving, Investment, and the Financial System

In the terminology of macroeconomics, what's the difference between a saver and an investor?

Correct AnswerverifiedA saver earns more than he spe...View AnswerShow Answer

Other things the same, as the maturity of a bond becomes longer, the bond will pay

Correct AnswerverifiedShow Answer

The income that households have left after paying their taxes and paying for their consumption is known as .

Correct AnswerverifiedShow Answer

Late in the 2000-2009 decade, real estate prices in the U.S. fell by a greater percentage than they had fallen since the

Correct AnswerverifiedShow Answer

The supply of loanable funds slopes

Correct AnswerverifiedShow Answer

Correct Answerverifieda. The Venezuelan government bond would ...View AnswerShow Answer

Figure 26-5. Figure 26-5 shows the loanable funds market for a closed economy. -Refer to Figure 26-5. Starting at point A, a change in tax laws that encouraged households to save more would likely cause

Correct AnswerverifiedShow Answer

National saving

Correct AnswerverifiedShow Answer

The source of the supply of loanable funds

Correct AnswerverifiedShow Answer

What does the maturity of a bond indicate?

Correct AnswerverifiedThe date a...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

An increase in the budget deficit shifts the demand for loanable funds to the right.

Correct AnswerverifiedShow Answer

A bond buyer is a

Correct AnswerverifiedShow Answer

Suppose the issuer of a bond fails to pay some of the interest or principal that was promised to the bondholders. This failure is referred to as a

Correct AnswerverifiedShow Answer

A stock index is

Correct AnswerverifiedShow Answer

Because of differences in tax treatment, municipal bonds pay a higher interest rate than do corporate bonds.

Correct AnswerverifiedShow Answer

When the government goes from running a balanced budget to running a budget surplus,

Correct AnswerverifiedShow Answer

What would happen in the market for loanable funds if the government were to increase the tax on interest income?

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a

Correct AnswerverifiedShow Answer

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verified
A saver earns more than he spe...
View Answer

Correct Answer
verified

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Correct Answer
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Correct Answer
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verified
a. The Venezuelan government bond would ...
View Answer

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Correct Answer
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Correct Answer
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The date a...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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