Macro Final Review

Dissaving means

• the same thing as disinvesting.

• that households are spending more than their current incomes.

• that saving and investment are equal.

• that disposable income is less than zero.

Money functions as

• a store of value.

• a unit of account.

• a medium of exchange.

• a store of value, a unit of account, and a medium of exchange.

Bonds represent

• a claim on company dividends.

• ownership of a company.

• all financial assets guaranteed to pay interest.

• loans to governments and corporations.

Compound interest

• describes how quickly an interest-bearing asset increases in value.

• measures the rate of return of a portfolio of stocks and bonds.

• measures the after-tax, inflation-adjusted rate of interest.

• refers to the multiple rates of interest of various types of bonds in a portfolio.

"International trade" refers to

• purchasing or selling currently produced goods or services across an international border.

• any transaction across an international border.

• any financial transaction across an international border.

• buying or selling of preexisting assets across an international border.

In the U.S. balance of payments, foreign purchases of assets in the United States are a

• money outflow.

• money inflow.

• current account item.

• debit, or outpayment.

What are the two most important factors influencing investor preferences?

• the desire for high rates of return and the thrill of uncertainty

• the desire for high rates of return and dislike of risk and uncertainty

• an equal balance between stocks and bonds, and high rates of return

• stable rates of return and balance between private and public sector financial assets

Which of the following statements is correct?

• Interest rates and bond prices vary directly.

• Interest rates and bond prices vary inversely.

• Interest rates and bond prices are unrelated.

• Interest rates and bond prices vary directly during inflation and inversely during recessions.

The M2 money supply includes

• stock certificates.

• currency in bank vaults.

• the cash value of life insurance policies.

• individual shares in money market mutual funds.

"Near monies" are included in

• both M1 and M2.

• M2 only.

• M1 only.

• neither M1 nor M2.