Question 1

Bountiful Tractors has a share price of $60, retained earnings of $2 per share, and a dividend yield of 2 percent. What is Bountiful Tractor's price­earnings ratio?

Accepted Answer

A)   23.1
B)   18.75
C)   15
D)   30E) B) and D)
F) None of the above

Question 2

Suppose the economy is closed and consumption is 8 million, taxes are 2 million, and government purchases are 1.75 million. If national saving amounts to 1.25 million, then what is GDP?

Accepted Answer

A)   9 million.
B)   9.5 million.
C)   13 million.
D)   11 million.E) B) and D)
F) A) and B)

Question 3

Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if the government budget goes from a deficit to a surplus.

Accepted Answer

As shown in the graph below, the economy...

Question 4

Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?

Accepted Answer

A)   It would decrease.
B)   It would increase.
C)   It would stay the same.
D)   It might do any of the above.E) None of the above
F) B) and D)

Question 5

The primary advantage of mutual funds is that they

Accepted Answer

A)   always make a return that "beats the market."
B)   allow people with small amounts of money to diversify.
C)   provide customers with a medium of exchange.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 6

A larger budget deficit

Accepted Answer

A)   raises the interest rate and investment.
B)   reduces the interest rate and investment.
C)   raises the interest rate and reduces investment.
D)   reduces the interest rate and raises investment.E) B) and D)
F) A) and D)

Question 7

Queen City Sausage stock is selling at $40 per share, it has retained earnings of $1.00 per share, and dividends of $1.00 per share. What is the price-earnings ratio and what is the dividend yield?

Accepted Answer

A)   20, 2.5 percent.
B)   20, 5 percent.
C)   40, 2.5 percent.
D)   40, 5 percent.E) A) and D)
F) A) and B)

Question 8

In macroeconomics, refers to the purchase of new capital.

Accepted Answer

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

Question 9

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Accepted Answer

The answer of A does not engage in international trade...

Question 10

Suppose a country has a larger increase in debt in 2014 than it had in 2013. Then other things the same,

Accepted Answer

A)   the supply of loanable funds shifts rightward and the interest rate falls.
B)   the supply of loanable funds shifts leftward and the interest rate rises.
C)   the demand for loanable funds shifts leftward and the interest rate falls.
D)   the demand for loanable funds shifts rightward and the interest rate rises.E) A) and C)
F) None of the above

Question 11

If the government's expenditures exceeded its receipts, it would likely

Accepted Answer

A)   lend money to a bank or other financial intermediary.
B)   borrow money from a bank or other financial intermediary.
C)   buy bonds directly from the public.
D)   sell bonds directly to the public.E) B) and C)
F) A) and B)

Question 12

When the government has a budget surplus

Accepted Answer

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.E) A) and B)
F) A) and D)

Question 13

Lenders buy bonds and borrowers sell them.

Accepted Answer

A) True 
 B)False

Question 14

In a closed economy, investment must be equal to private saving.

Accepted Answer

A) True 
 B)False

Question 15

In the market for loanable funds, the interaction of the demand for, and supply of, loanable funds determines the equilibrium level of

Accepted Answer

A)   the inflation rate.
B)   gross domestic product.
C)   the real interest rate.
D)   the nominal interest rate.E) B) and D)
F) A) and B)

Question 16

A bond is a

Accepted Answer

A)   financial intermediary.
B)   certificate of indebtedness.
C)   certificate of partial ownership in an enterprise.
D)   None of the above is correct.E) B) and D)
F) A) and D)

Question 17

Other things the same, an increase in the interest rate

Accepted Answer

A)   would shift the demand for loanable funds to the right.
B)   would shift the demand for loanable funds to the left.
C)   would increase the quantity of loanable funds demanded.
D)   would decrease the quantity of loanable funds demanded.E) A) and B)
F) None of the above

Question 18

Banks and mutual funds are examples of financial markets.

Accepted Answer

A) True 
 B)False

Question 19

If federal tax rates increased, what would happen to the interest rate on municipal bonds?

Accepted Answer

the intere...

Question 20

Potential buyers of ABC Corporation bonds are concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are not concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct?

Accepted Answer

A)   Other things equal, the interest rate on XYZ Corporation bonds will be high relative to the interest rate on ABC Corporation bonds.
B)   An ABC Corporation bond must have a longer term than an XYZ Corporation.
C)   XYZ Corporation bonds carry less default risk than do ABC Corporation bonds.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Exam 13: Saving, Investment, and the Financial System

A larger budget deficit

Correct AnswerverifiedShow Answer

Potential buyers of ABC Corporation bonds are concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are not concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In the market for loanable funds, the interaction of the demand for, and supply of, loanable funds determines the equilibrium level of

Correct AnswerverifiedShow Answer

Suppose the economy is closed and consumption is 8 million, taxes are 2 million, and government purchases are 1.75 million. If national saving amounts to 1.25 million, then what is GDP?

Correct AnswerverifiedShow Answer

In a closed economy, investment must be equal to private saving.

Correct AnswerverifiedShow Answer

Bountiful Tractors has a share price of $60, retained earnings of $2 per share, and a dividend yield of 2 percent. What is Bountiful Tractor's price­earnings ratio?

Correct AnswerverifiedShow Answer

Suppose the Congress and president decreased the maximum annual contributions limits to retirement accounts and at the same time reduced the budget deficit. What would happen to the interest rate?

Correct AnswerverifiedShow Answer

Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if the government budget goes from a deficit to a surplus.

Correct AnswerverifiedAs shown in the graph below, the economy...View AnswerShow Answer

If federal tax rates increased, what would happen to the interest rate on municipal bonds?

Correct Answerverifiedthe intere...View AnswerShow Answer

Lenders buy bonds and borrowers sell them.

Correct AnswerverifiedShow Answer

Suppose a country has a larger increase in debt in 2014 than it had in 2013. Then other things the same,

Correct AnswerverifiedShow Answer

When the government has a budget surplus

Correct AnswerverifiedShow Answer

Banks and mutual funds are examples of financial markets.

Correct AnswerverifiedShow Answer

A bond is a

Correct AnswerverifiedShow Answer

In macroeconomics, refers to the purchase of new capital.

Correct AnswerverifiedShow Answer

The primary advantage of mutual funds is that they

Correct AnswerverifiedShow Answer

If the government's expenditures exceeded its receipts, it would likely

Correct AnswerverifiedShow Answer

Other things the same, an increase in the interest rate

Correct AnswerverifiedShow Answer

Queen City Sausage stock is selling at $40 per share, it has retained earnings of $1.00 per share, and dividends of $1.00 per share. What is the price-earnings ratio and what is the dividend yield?

Correct AnswerverifiedShow Answer

A does not engage in international trade in goods and services and it does not engage in international borrowing and lending.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Bountiful Tractors has a share price of $60, retained earnings of $2 per share, and a dividend yield of 2 percent. What is Bountiful Tractor's priceearnings ratio?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As shown in the graph below, the economy...
View Answer

Correct Answer
verified
the intere...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified