Question 1

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

Question 2

Other things being constant,when a firm sells new shares of stock,the

Accepted Answer

A)   supply of the stock increases and the price decreases.
B)   supply of the stock decreases and the price increases.
C)   demand for the stock increases and the price increases.
D)   demand for the stock decreases and the price decreases.E) B) and C)
F) A) and B)

Question 3

Figure 13-3.The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 1 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." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 13-3.A shift of the supply curve from S1 to S2 is called

Accepted Answer

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.E) A) and C)
F) A) and B)

Question 4

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

Accepted Answer

the intere...

Question 5

Midwestern corporation issues bonds.Southern corporation issues stock.Which corporation used equity financing?

Accepted Answer

A)   both Midwestern corporation and Southern corporation
B)   Midwestern corporation but not Southern corporation
C)   Southern corporation but not Midwestern corporation
D)   neither Midwestern nor Southern corporationE) C) and D)
F) A) and B)

Question 6

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold.What type of risk for bondholders falls? What happens to the interest rate on this company's bonds.

Accepted Answer

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Question 7

Other things the same,a higher interest rate induces people to

Accepted Answer

A)   save more,so the supply of loanable funds slopes upward.
B)   save less,so the supply of loanable funds slopes downward.
C)   invest more,so the supply of loanable funds slopes upward.
D)   invest less,so the supply of loanable funds slopes downward.E) B) and C)
F) A) and B)

Question 8

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

Question 9

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Accepted Answer

A) True 
 B)False

Question 10

Scenario 13-1.Assume the following information for an imaginary,closed economy.
 
-Refer to Scenario 13-1.For this economy,taxes amount to

Accepted Answer

A)   $28,000.
B)   $38,000.
C)   $41,000.
D)   $44,000.E) B) and C)
F) A) and C)

Question 11

Which of the following equations represents GDP for an open economy?

Accepted Answer

A)   Y = C + I + G + NX
B)   NX = I - G
C)   I = Y - C + G + NX
D)   Y = C + I + GE) A) and C)
F) A) and D)

Question 12

A U.S.Treasury bond is a

Accepted Answer

A)   store of value and common medium of exchange.
B)   store of value,but not a common medium of exchange.
C)   a common medium of exchange,but not a store of value.
D)   neither a store of value nor a common medium of exchange.E) C) and D)
F) B) and D)

Question 13

A policy that induces people to save more shifts

Accepted Answer

A)   the supply of loanable funds and raises interest rates.
B)   the supply of loanable funds and reduces interest rates.
C)   the demand for loanable funds and raises interest rates.
D)   the demand for loanable funds and reduces interest rates.E) B) and C)
F) A) and C)

Question 14

If a firm's price-earnings ratio is relatively low,then it might be an indication that

Accepted Answer

A)   the demand for the stock is relatively high.
B)   the supply of the stock is relatively low.
C)   people expect the firm's earnings to rise.
D)   people expect the firm's earnings to fall.E) A) and B)
F) B) and C)

Question 15

Which of the following would a macroeconomist consider as investment?

Accepted Answer

A)   Marisa purchases a bond issued by Proctor and Gamble Corp.
B)   Karlee purchases stock issued by Texas Instruments,Inc.
C)   Charlie builds a new coffee shop.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 16

Atlas Corporation is in sound financial condition.It sells a long-term bond.Which of the following make the interest rate on this bond lower than otherwise?

Accepted Answer

A)   Both Altas' sound finances and the long term of the bond.
B)   Atlas' sound finances but not the long term of the bond.
C)   The long term of the bond but not Atlas' sound finances.
D)   Neither Atlas' sound finances nor the long term of the bond.E) A) and D)
F) A) and B)

Question 17

Kroger's grocery chain wants to finance the purchase of a new warehouse.It decides to sell bonds.

Accepted Answer

A)   Kroger's plans to use equity financing and its action is part of the demand for loanable funds.
B)   Krogers' plans to use equity financing and its action is part of the supply of loanable funds.
C)   Kroger's plans to use debt financing and its action is part of the demand for loanable funds.
D)   Krogers' plans to use debt financing and its action is part of the supply of loanable funds.E) A) and B)
F) None of the above

Question 18

If the tax rate fell,holding municipal bonds would be less desirable so the interest rates on them would fall.

Accepted Answer

A) True 
 B)False

Question 19

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) B) and D)
F) None of the above

Question 20

Scenario 13-1.Assume the following information for an imaginary,closed economy.
 
-Refer to Scenario 13-1.For this economy,investment amounts to

Accepted Answer

A)   $4,000.
B)   $9,000.
C)   $12,000.
D)   $16,000.E) C) and D)
F) A) and B)

Exam 26: Saving,investment,and the Financial System

If a firm's price-earnings ratio is relatively low,then it might be an indication that

Correct AnswerverifiedShow Answer

If the tax rate fell,holding municipal bonds would be less desirable so the interest rates on them would fall.

Correct AnswerverifiedShow Answer

Atlas Corporation is in sound financial condition.It sells a long-term bond.Which of the following make the interest rate on this bond lower than otherwise?

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

Scenario 13-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 13-1.For this economy,taxes amount to

Correct AnswerverifiedShow Answer

Midwestern corporation issues bonds.Southern corporation issues stock.Which corporation used equity financing?

Correct AnswerverifiedShow Answer

A policy that induces people to save more shifts

Correct AnswerverifiedShow Answer

A U.S.Treasury bond is a

Correct AnswerverifiedShow Answer

Scenario 13-1.Assume the following information for an imaginary,closed economy. -Refer to Scenario 13-1.For this economy,investment amounts to

Correct AnswerverifiedShow Answer

Other things the same,a higher interest rate induces people to

Correct AnswerverifiedShow Answer

Other things being constant,when a firm sells new shares of stock,the

Correct AnswerverifiedShow Answer

The source of the supply of loanable funds

Correct AnswerverifiedShow Answer

Kroger's grocery chain wants to finance the purchase of a new warehouse.It decides to sell bonds.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would a macroeconomist consider as investment?

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedthe intere...View AnswerShow 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.A shift of the supply curve from S1 to S2 is called

Correct AnswerverifiedShow Answer

Which of the following equations represents GDP for an open economy?

Correct AnswerverifiedShow Answer

The term loanable funds refers to all income that is not used for consumption or government expenditures.

Correct AnswerverifiedShow Answer

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold.What type of risk for bondholders falls? What happens to the interest rate on this company's bonds.

Correct Answerverifieddefault ri...View AnswerShow 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.A shift of the supply curve from S₁ to S₂ is called

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