Econ quizzes 6, 7, 8 - Assignment Essays

question

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

answer

The first of these is public saving; the second one is private saving.

question

An increase in the budget deficit would cause a

answer

shortage of loanable funds at the original interest rate, which would lead to rising interest rates.

question

As chief financial officer you sell newly issued bonds on behalf of your firm. Your firm is

answer

borrowing directly.

question

A mutual fund

answer

All of the above are correct.

question

For a closed economy, GDP is $11 trillion, consumption is $7 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

answer

$2 trillion and $1 trillion, respectively

question

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries.

answer

Fran is saving; Miller is investing.

question

If there is a surplus of loanable funds, then

answer

the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.

question

True or False: The supply of, and demand for, loanable funds depend on the real (rather than nominal) interest rate.

answer

True

question

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

answer

The supply of loanable funds would shift left.

question

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the

answer

supply of loanable funds to the right, causing interest rates to fall.

question

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S.. Then

answer

the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

question

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

answer

the real interest rate.

question

Two of the economy's most important financial intermediaries are

answer

banks and mutual funds.

question

True or False: Financial intermediaries are the only type of financial institution.

answer

False

question

People who buy stock in a corporation such as General Electric become

answer

part owners of General Electric, so the benefits of holding the stock depend on General Electric's profits.

question

True or False: Purchases of capital goods are excluded from GDP.

answer

False

question

If national saving in a closed economy is greater than zero, which of the following must be true?

answer

All of the above are correct.

question

The purchase of a new house is the one form of

answer

household spending that is investment rather than consumption.

question

In a small closed economy investment is $50 billion and private saving is $55 billion. What are public saving and national saving?

answer

-$5 billion and $50 billion

question

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchases equal 2,000. What are private saving, public saving, and national saving?

answer

1,000, 500, and 1,500, respectively

question

The slope of the demand for loanable funds curve represents the

answer

negative relation between the real interest rate and investment.

question

The supply of loanable funds slopes

answer

upward because an increase in the interest rate induces people to save more.

question

Which of the following best illustrates the medium of exchange function of money?

answer

You pay for your oil change using currency.

question

If an economy uses silver as money, then that economy's money

answer

is commodity money.

question

The Federal Reserve

answer

is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks

question

A bank's reserve ratio is 6.5 percent and the bank has $1,950 in reserve. Its deposits amount to

answer

$30,000.00.

question

On a bank's T-account, which are part of the banks liabilities?

answer

deposits made by its customers but not reserves

question

A bank has $200,000 in deposits and $190,000 in loans. It has loaned out all it can. It has a reserve ratio of

answer

5 percent.

question

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank,

answer

All of the choices are correct

question

The money multiplier equals

answer

1/R, where R represents the reserve ratio for all banks in the economy.

question

If the reserve ratio is 4 percent, then $81,250 of new money can be generated by

answer

$3,250 of new reserves.

question

When the Fed makes open-market purchases bank

answer

deposits and lending increase.

question

Which of the following both increase the money supply?

answer

a decrease in the discount rate and a decrease in the interest rate on reserves

1 of 33

question

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

answer

The first of these is public saving; the second one is private saving.

question

An increase in the budget deficit would cause a

answer

shortage of loanable funds at the original interest rate, which would lead to rising interest rates.

question

As chief financial officer you sell newly issued bonds on behalf of your firm. Your firm is

answer

borrowing directly.

question

A mutual fund

answer

All of the above are correct.

question

For a closed economy, GDP is $11 trillion, consumption is $7 trillion, taxes are $2 trillion and the government runs a deficit of $1 trillion. What are private saving and national saving?

answer

$2 trillion and $1 trillion, respectively

question

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries.

answer

Fran is saving; Miller is investing.

question

If there is a surplus of loanable funds, then

answer

the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.

question

True or False: The supply of, and demand for, loanable funds depend on the real (rather than nominal) interest rate.

answer

True

question

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

answer

The supply of loanable funds would shift left.

question

Suppose a government that taxed all interest income changed its tax law so that the first $5,000 of a taxpayer's interest income was tax free. This would shift the

answer

supply of loanable funds to the right, causing interest rates to fall.

question

Suppose the U.S. offered a tax credit for firms that built new factories in the U.S.. Then

answer

the demand for loanable funds would shift rightward, initially creating a shortage of loanable funds at the original interest rate.

question

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

answer

the real interest rate.

question

Two of the economy's most important financial intermediaries are

answer

banks and mutual funds.

question

True or False: Financial intermediaries are the only type of financial institution.

answer

False

question

People who buy stock in a corporation such as General Electric become

answer

part owners of General Electric, so the benefits of holding the stock depend on General Electric's profits.

question

True or False: Purchases of capital goods are excluded from GDP.

answer

False

question

If national saving in a closed economy is greater than zero, which of the following must be true?

answer

All of the above are correct.

question

The purchase of a new house is the one form of

answer

household spending that is investment rather than consumption.

question

In a small closed economy investment is $50 billion and private saving is $55 billion. What are public saving and national saving?

answer

-$5 billion and $50 billion

question

answer

1,000, 500, and 1,500, respectively

question

The slope of the demand for loanable funds curve represents the

answer

negative relation between the real interest rate and investment.

question

The supply of loanable funds slopes

answer

upward because an increase in the interest rate induces people to save more.

question

Which of the following best illustrates the medium of exchange function of money?

answer

You pay for your oil change using currency.

question

If an economy uses silver as money, then that economy's money

answer

is commodity money.

question

The Federal Reserve

answer

is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks

question

A bank's reserve ratio is 6.5 percent and the bank has $1,950 in reserve. Its deposits amount to

answer

$30,000.00.

question

On a bank's T-account, which are part of the banks liabilities?

answer

deposits made by its customers but not reserves

question

A bank has $200,000 in deposits and $190,000 in loans. It has loaned out all it can. It has a reserve ratio of

answer

5 percent.

question

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank,

answer

All of the choices are correct

question

The money multiplier equals

answer

1/R, where R represents the reserve ratio for all banks in the economy.

question

If the reserve ratio is 4 percent, then $81,250 of new money can be generated by

answer

$3,250 of new reserves.

question

When the Fed makes open-market purchases bank

answer

deposits and lending increase.

question

Which of the following both increase the money supply?

answer

a decrease in the discount rate and a decrease in the interest rate on reserves

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