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Which of the following terms refers to institutions that help to match one person's saving with another person's investment?


A) the Bank of Canada
B) the banking system
C) the monetary system
D) the financial system

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

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Suppose equilibrium exists in the market for loanable funds. Using the following table, what is the quantity of funds supplied in this market? Suppose equilibrium exists in the market for loanable funds. Using the following table, what is the quantity of funds supplied in this market? A) $2.2 trillion B) $2.5 trillion C) $2.8 trillion D) $3.1 trillion


A) $2.2 trillion
B) $2.5 trillion
C) $2.8 trillion
D) $3.1 trillion

E) All of the above
F) B) and C)

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Which of the following best describes the evolution of Canadian national debt between 1996 and 2008?


A) It fell by 10 percent of GDP.
B) It fell, and then it rose.
C) It fell by $60 billion.
D) It fell to 32 percent of GDP.

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

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In a closed economy, what remains after paying for consumption and government purchases?


A) national disposable income
B) national saving
C) public saving
D) private saving

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

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Which of the following identities shows that GDP is both total income and total expenditure?


A) GDP = Y
B) Y = PI + DI + NX
C) GDP = GNP - NX
D) Y = C + I + G + NX

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

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The model of the market for loanable funds shows that an investment tax credit will cause interest rates to rise and investment to rise. Yet we also suppose that higher interest rates lead to lower investment. How can these two conclusions be reconciled?

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The claim that an increase in the intere...

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If the current market interest rate for loanable funds is below the equilibrium level, which of the following is most likely to happen?


A) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will rise.
B) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will rise.
C) The quantity of loanable funds demanded will exceed the quantity of loanable funds supplied and the interest rate will fall.
D) The quantity of loanable funds supplied will exceed the quantity of loanable funds demanded and the interest rate will fall.

E) None of the above
F) All of the above

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What is the face value of a bond?


A) the market price of the bond
B) the difference between the amount owned by the issuer and the market price of the bond
C) the amount owned by the issuer
D) the interest earned by the owner of the bond

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

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You have two sets of estimates of national account numbers for a closed economy for next year. In the first set, government expenditures will be $30 billion, transfer payments will be $10 billion, and taxes will be $45 billion. Under the second set, GDP will be $200 billion, taxes will be $50 billion, transfer payments will be $20 billion, consumption will be $120 billion, and investment will be $40 billion. Based on these numbers, what are the respective estimated results?


A) $15 billion surplus and a $10 billion surplus
B) $15 billion surplus and a $10 billion deficit
C) $5 billion surplus and a $10 billion surplus
D) $5 billion surplus and a $10 billion deficit

E) C) and D)
F) B) and C)

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Suppose Sarah Lee Corporation stock has a P/E ratio of 8. Which of the following best describes this P/E ratio?


A) The P/E ratio is low, indicating that buyers may expect earnings to rise.
B) The P/E ratio is low, indicating that buyers may expect earnings to fall.
C) The P/E ratio is high, indicating that buyers may expect earnings to rise.
D) The P/E ratio is high, indicating that buyers may expect earnings to fall.

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

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A company releases the following information: Number of shares (in thousands) = 7500 Dividend = $0.12 Dividend yield = 0.7% Profit (in thousands) = $1500 a.Calculate the share price b.Calculate the market value of the firm (the total value of the firm's stock) c.Calculate Earnings per share and the P/E ratio d.Is this company expensive relative to its earnings?

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a.The dividend yield is the percentage o...

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In a closed economy, how does national saving compare with investment?


A) National saving is usually greater than investment.
B) National saving is equal to investment.
C) National saving is usually less than investment because of the leakage of taxes.
D) National saving is usually less than investment.

E) None of the above
F) A) and D)

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When opening a restaurant, you may need to buy ovens, freezers, tables, and cash registers. What do economists call these expenditures?


A) capital investment
B) investment in human capital
C) business consumption expenditures
D) inventories

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

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Assuming that other things remain the same, if the government increases transfer payments to households, which of the following will most likely happen?


A) Investment will rise.
B) The rate of interest will rise.
C) Public saving will rise.
D) The market for loanable funds will be unaffected.

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

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


A) national saving
B) investment
C) private saving
D) public saving

E) A) and B)
F) None of the above

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What do stockholders receive every year?


A) a fixed share of the price of the stock
B) the face value of the stock at the maturity date
C) a share of the company's profit
D) interest

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

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What has the typical price-earnings ratio been historically?


A) about 3
B) about 8
C) about 15
D) about 20

E) B) and D)
F) C) and D)

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Table 8-2. Table 8-2. -Refer to Table 8-2. Which company had the lowest dollar dividend? A) Boeing Co. B) Eli Lily and Co. C) H.J. Heinz and Co. D) Kellogg Co. -Refer to Table 8-2. Which company had the lowest dollar dividend?


A) Boeing Co.
B) Eli Lily and Co.
C) H.J. Heinz and Co.
D) Kellogg Co.

E) A) and D)
F) A) and C)

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Other things the same, the higher the rate of saving and investment in a country, the higher will be the standard of living.

A) True
B) False

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What is the "volume" as reported in stock tables?


A) the number of shares traded
B) the percentage of shares outstanding traded
C) the number of shares traded times the price they sold at
D) the number of shares of a company traded divided by the shares of all companies traded

E) None of the above
F) A) and B)

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