Transcript Chapter 4 Checkpoint - Georgia Regents University

Finance, Saving, and
Investment
25
CLICKER QUESTIONS
© 2013 Pearson
Finance, Saving,
and Investment
26
CLICKER QUESTIONS
© 2013 Pearson
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Checkpoint 26.1
Checkpoint 26.2
Checkpoint 26.3
Question 1
Question 4
Question 8
Question 2
Question 5
Question 9
Question 3
Question 6
Question 10
Question 7
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CHECKPOINT 26.1
Question 1
Economists use the term “financial markets” to mean the
markets in which _______.
A.
B.
C.
D.
E.
firms purchase their physical capital
firms supply their goods and services
households supply their labor services
firms get the funds that they use to buy physical capital
the government borrows to fund any budget surplus
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CHECKPOINT 26.1
Question 2
If the market value of what a financial institution has lent is
less than the market value of it has borrowed, then the
financial institution’s net worth is ____ and it is ____.
A. negative; illiquid but not necessarily insolvent
B. negative; insolvent but not necessarily illiquid
C. positive; illiquid and insolvent
D. negative; illiquid and insolvent
E. positive; insolvent but not necessarily illiquid
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CHECKPOINT 26.1
Question 3
When a student uses a credit card to buy an iPod, the
student is ________.
A.
B.
C.
D.
E.
borrowing in the bond market
lending in the bond market
lending in the loan market
borrowing in the loan market
lending in the stock market
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CHECKPOINT 26.2
Question 4
A fall in the real interest rate ______.
A. increases the quantity of loanable funds supplied
B. increases the supply of loanable funds but does not
change the demand for loanable funds
C. decreases the supply of loanable funds but does not
change the demand for loanable funds
D. decreases the quantity of loanable funds supplied
E. decreases the supply of loanable funds and increases
the demand for loanable funds
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CHECKPOINT 26.2
Question 5
The figure illustrates the effect
of an increase in ____. As a
result investment ____.
A. wealth; increases
B. expected profit; increases
C. default risk; decreases
D. expected future income;
decreases
E. disposable income;
increases
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CHECKPOINT 26.2
Question 6
If firms expect their profit to fall, the _____ loanable funds
____ and the real interest rate ____.
A.
B.
C.
D.
E.
demand for; increases; rises
supply of; increases; falls
demand for; decreases; rises
supply of; decreases; falls
demand for; decreases; falls
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CHECKPOINT 26.2
Question 7
An increase in wealth leads to ____ loanable funds and
_______ in investment.
A. an increase in the supply of; an increase
B. an increase in the demand for; an increase
C. a decrease in the supply of; a decrease
D. a decrease in the demand for; a decrease
E. a decrease in both the supply of and demand for; no
change
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CHECKPOINT 26.3
Question 8
When the government has a budget surplus, _____.
A. private saving and investment are equal
B. private saving exceeds investment by an amount equal
to the government surplus
C. investment exceeds private saving by an amount equal
to the government surplus
D. private saving minus the government surplus equals
investment
E. private saving exceeds investment and government
saving is negative.
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CHECKPOINT 26.3
Question 9
The “crowding-out effect” refers to how a government budget
deficit ______.
A. raises the real interest rate and decreases the supply of
loanable funds
B. lowers the real interest rate and increases the demand
for loanable funds
C. raises the real interest rate and decreases saving
D. raises the real interest rate and decreases investment
E. lowers the real interest rate and increases investment
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CHECKPOINT 26.3
Question 10
The Ricardo-Barro effect says that a government budget
deficit leads to ________.
A.
B.
C.
D.
increased investment and a higher real interest rate
increased saving and a lower real interest rate
increased saving and no change in the real interest rate
an increase in demand for loanable funds and a higher
real interest rate
E. a fall in the real interest rate and an increase in the
investment
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