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WorksheetsSaving, Investment, and Financial System
Total questions: 15
Worksheet time: 9mins
Which of the following is an example of equity finance?
Corporate bonds
Bank loan
Government Bonds
Company shares
Credit risk refers to a bond's
probability of default.
price-earnings ratio.
tax treatment.
term to maturity.
A financial intermediary is a middleperson between
buyers and sellers.
husbands and wives.
borrowers and lenders.
labour unions and firms.
National saving (or just saving) is equal to
investment + consumption expenditures.
private saving + public saving.
GDP - government purchases.
GDP + consumption expenditures + government purchases.
Which of the following statements is true?
Long-term bonds tend to pay less interest than short-term bonds.
Government bonds pay less interest than comparable corporate bonds.
Investment funds are riskier than single stock purchases because the performance of so many different firms can affect the return of a mutual fund.
A stock index is a directory used to locate information about selected stocks.
If government spending exceeds tax collections,
there is a budget deficit.
public saving is positive.
there is a budget surplus.
private saving is positive.
Investment is
the purchase of goods and services.
the purchase of capital equipment and structures.
when we place our saving in the bank.
the purchase of stocks and bonds.
An increase in the budget deficit that causes the government to increase its borrowing
shifts the supply of loanable funds to the right.
shifts the demand for loanable funds to the left.
shifts the demand for loanable funds to the right.
shifts the supply of loanable funds to the left.
An increase in the budget deficit will...
raise the real interest rate and decrease the quantity of loanable funds demanded for investment.
lower the real interest rate and increase the quantity of loanable funds demanded for investment.
raise the real interest rate and increase the quantity of loanable funds demanded for investment.
lower the real interest rate and decrease the quantity of loanable funds demanded for investment.
If UK citizens become less concerned with the future and save less at each real interest rate,
real interest rates rise and investment falls.
real interest rates rise and investment rises.
real interest rates fall and investment rises
real interest rates fall and investment falls.
An increase in the budget surplus
shifts the supply of loanable funds to the left and increases the real interest rate.
shifts the supply of loanable funds to the right and reduces the real interest rate.
shifts the demand for loanable funds to the right and increases the real interest rate.
shifts the demand for loanable funds to the left and reduces the real interest rate.
If the government increases investment tax credits and reduces taxes on the return to saving at the same time,
the real interest rate should fall.
the real interest rate should rise.
the impact on the real interest rate is indeterminate.
the real interest rate should not change.
If an increase in the budget deficit reduces national saving and investment, we have witnessed a demonstration of
intermediation.
equity finance.
crowding out.
the investment fund effect.
An increase in the budget deficit is
an increase in public saving.
a decrease in private saving.
a decrease in public saving.
an increase in private saving.
Which of the following sets of government policies is the most growth oriented?
Lower taxes on the returns to saving, provide investment tax credits, and lower the deficit.
Increase tax on the returns to saving, provide investment tax credits, and increase the deficit.
Increase tax on the returns to saving, provide investment tax credits, and lower the deficit
Lower taxes on the returns to saving, provide investment tax credits, and increase the deficit.
