ECON 1BB3 Study Guide - Inverse Relation, Loanable Funds, Chicago Mercantile Exchange

42 views6 pages

orchidmouse779

6 Apr 2014

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

For unlimited access to Study Guides, a Grade+ subscription is required.

adrianagreen0110 and 39672 others unlocked

ECON 1BB3 Full Course Notes

Verified Note

11 documents

Document Summary

Federal reserve system. banking system. monetary system. financial system. If mary buys equipment for her factory, mary is engaging in capital investment. financial intermediary. certificate of indebtedness. certificate of partial ownership in an enterprise. When a country saves more, it has more capital. The interest rate adjusts to balance the quantity supplied of and the quantity demanded of loanable: multiple choices. Choose the one alternative that best completes the statement to answer the question: institutions in the economy that help to match one person"s saving with another person"s investment are collectively called the. Ans: d: which of the following is not correct? funds. Ans: b: the length of time until a bond matures is called the. Ans: b: a bond that never matures is known as a. Ans: a: a mutual fund are mutually beneficial to the firm and community. high interest to obtain credit. types of stocks, bonds, or both stocks and bonds.

Related Questions

6. If there is a shortage of loanable funds, then

a.	the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is above equilibrium.
b.	the quantity of loanable funds demanded is greater than the quantity of loanable funds supplied and the interest rate is below equilibrium.
c.	the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is above equilibrium.
d.	the quantity of loanable funds supplied is greater than the quantity of loanable funds demanded and the interest rate is below equilibrium.

7. We associate the term debt finance with

a.	the bond market and we associate the term equity finance with the stock market.
b.	the stock market and we associate the term equity finance with the bond market.
c.	financial intermediaries and we associate the term equity finance with financial markets.
d.	financial markets and we associate the term equity finance with financial intermediaries.

8. If the demand for loanable funds shifts to the right, then the equilibrium interest rate

a.	and the quantity of loanable funds rises.
b.	and the quantity of loanable funds falls.
c.	rises and the quantity of loanable funds falls.
d.	falls and the quantity of loanable funds rises.

9. Long-term bonds are

a.	riskier than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds.
b.	riskier than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.
c.	less risky than short-term bonds, and so interest rates on long-term bonds are usually lower than interest rates on short-term bonds.
d.	less risky than short-term bonds, and so interest rates on long-term bonds are usually higher than interest rates on short-term bonds.

10. Compared to bondholders, stockholders

a.	face higher risk and have the potential for higher returns.
b.	face higher risk but receive a fixed payment.
c.	face lower risk and have the potential for higher returns.
d.	face lower risk but receive a fixed payment.

11. The old adage, 'don't put all your eggs in one basket', is very similar to a modern bit of advice concerning financial matters:

a.	Buy low-risk bonds.
b.	Use a medium of exchange.
c.	Diversify.
d.	Intermediate.

12. A budget surplus is created if

a.	the government sells more bonds than it buys back.
b.	the government spends more than it receives in tax revenue.
c.	private saving is greater than zero.
d.	None of the above is correct.

greenwildebeest673

13. Fred is considering expanding his dress shop. If interest rates rise he is

a.	less likely to expand. This illustrates why the supply of loanable funds slopes downward.
b.	more likely to expand. This illustrates why the supply of loanable funds slopes upward.
c.	less likely to expand. This illustrates why the demand for loanable funds slopes downward.
d.	more likely to expand. This illustrates why the demand for loanable funds slopes upward.

14. You are thinking of buying a bond from Knight Corporation. You know that this bond is long term and you know that Knight's business ventures are risky and uncertain. You then consider another bond with a shorter term to maturity issued by a company with good prospects and an established reputation. Which of the following is correct?

a.	The longer-term would tend to make the interest rate on the bond issued by Knight higher, while the higher risk would tend to make the interest rate lower.
b.	The longer-term would tend to make the interest rate on the bond issued by Knight lower, while the higher risk would tend to make the interest rate higher.
c.	Both the long-term and the higher risk would tend to make the interest rate lower on the bond issued by Knight.
d.	Both the long-term and the higher risk would tend to make the interest rate higher on the bond issued by Knight.

15. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?

a.	$1.87
b.	$2.08
c.	$2.32
d.	$3.00

16. An increase in the price of Irish whiskey regularly purchased by Americans will be reflected in

a.	both the U.S. GDP deflator and the U.S. CPI.
b.	neither the U.S. GDP deflator nor the U.S. CPI.
c.	the U.S. GDP deflator, but not the U.S. CPI.
d.	the U.S. CPI, but not the U.S. GDP deflator.

17. Which of the following would be human capital and physical capital, respectively?

a.	for an accounting firm, the accountants' knowledge of tax laws and the number of hours worked by those accountants
b.	for a grocery store, grocery carts, and cash registers.
c.	for a restaurant, the chefs' knowledge about preparing food and equipment in the kitchen
d.	for a library, the building, and the reference librarians' knowledge of the Internet

18. If a production function has increasing returns to scale, the output can be more than doubled if

a.	labor alone doubles.
b.	all inputs but labor double.
c.	all of the inputs double.
d.	None of the above is correct.

19.Suppose that an American company opens and operates a restaurant in Ireland. This is an example of

a. foreign direct investment. American saving is used to finance Irish investment.

b. foreign direct investment. American saving is used to finance American investment.

c. foreign portfolio investment. American saving is used to finance Irish investment.

d. foreign portfolio investment. American saving is used to finance American investment.

taupegerbil625

ECON 1BB3 Study Guide - Inverse Relation, Loanable Funds, Chicago Mercantile Exchange

ECON 1BB3 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1BB3 Study Guide - Opportunity Cost, Nominal Interest Rate, The Hudsucker Proxy

ECON 1BB3 Lecture Notes - Lecture 13: Loanable Funds, Foreign Exchange Market, Real Interest Rate

ECON 1BB3 Chapter Notes - Chapter 13: Loanable Funds, Real Interest Rate, Government Budget Balance

Related Questions