Financial market

When opening a construction company, you might need to buy trucks, tools, and a storage shed.  Economists call these expenditures

• business consumption expenditures.

• investment in human capital.

• capital investment.

• None of the above are correct.

Savers

• and borrowers demand money from the financial system.

• and borrowers supply money to the financial system.

• demand money from the financial system; borrowers supply money to the financial system.

• supply money to the financial system; borrowers demand money from the financial system

A bond is a

• a financial intermediary.

• a certificate of indebtedness.

• a certificate of partial ownership in an enterprise.

• None of the above are correct.

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

• have greater risk and so tend to pay greater interest.

• have greater risk and so tend to pay less interest.

• have less risk and so tend to pay greater interest.

• None of the above are correct.

The single most important piece of information about a stock is the

• price–earnings ratio.

• dividend.

• volume

• price.

Profits paid out to stockholders are

• retained earnings.

• dividends.

• the denominator in the price–earnings ratio.

• All of the above are correct.

Which of the following equations will always represent GDP in an open economy?

• Y = C + I + G + NX

• S = I - G

• I = Y - C + G

• Y = C + I + G

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

• interest rates would rise

• interest rates would be unaffected

• interest rates would fall

• the change in the interest rate would be ambiguous

National saving is equal to Y - T - C.

• True

• False

Mike buys furnishings and new cash registers for his guitar store.  A macroeconomist would refer to these purchase as investment.

• True

• False