AI66A-Saving, Investment and Financial System

When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures

• capital investment.

• investment in human capital.

• business consumption expenditures.

• personal saving.

We associate the term debt finance with

• the bond market, and we associate the term equity finance with the stock market.

• the stock market, and we associate the term equity finance with the bond market.

• financial intermediaries, and we associate the term equity finance with financial markets.

• financial markets, and we associate the term equity finance with financial intermediaries.

If the government's expenditures exceeded its receipts, it would likely

• lend money to a bank or other financial intermediary.

• borrow money from a bank or other financial intermediary.

• buy bonds directly from the public.

• sell bonds directly to the public.

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

• a lower interest rate because it has less risk.

• a lower interest rate because it has more risk.

• a higher interest rate because it has more risk.

• the same interest rate, because there is no relationship between term and risk.

A high demand for a company’s stock is an indication that

• the company is in need of funds.

• the company has recently sold a large quantity of bonds.

• people are optimistic about the company’s future.

• people are pessimistic about the company’s future.

Compared to stocks, bonds offer the holder

• lower risk and lower potential return.

• lower risk and higher potential return.

• higher risk and lower potential return.

• higher risk and higher potential return.

Stocks and bonds

• and checking accounts are all stores of value and commonly function as mediums of exchange.

• and checking accounts are all stores of value, but only stocks and bonds commonly function as mediums of exchange.

• and checking accounts are all stores of value, but only checking accounts commonly function as mediums of exchange.

• and checking accounts all commonly function as mediums of exchange, but only stocks and bonds are a store of value.

The primary advantage of mutual funds is that they

• always make a return that 'beats the market.'

• allow people with small amounts of money to diversify.

• provide customers with a medium of exchange.

It is claimed that a secondary advantage of mutual funds is that

• an investor can avoid investment charges and fees.

• they give ordinary people access to loanable funds for investing.

• they usually outperform stock market indexes.

• they give ordinary people access to the skills of professional money managers.

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

• national disposable income.

• national saving.

• public saving.

• private saving.