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Banks and mutual funds are examples of financial markets.

A) True
B) False

Correct Answer

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The financial system coordinates investment and saving,which are important determinants of long-run real GDP.

A) True
B) False

Correct Answer

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An increase in the demand for loanable funds increases the equilibrium interest rate and decreases the equilibrium level of saving.

A) True
B) False

Correct Answer

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Owners of bonds that were issued by the federal government are not required to pay federal income tax on the interest income.

A) True
B) False

Correct Answer

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Index funds are financial intermediaries,but municipal bonds are not.

A) True
B) False

Correct Answer

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By definition,government purchases and taxes are zero for a closed economy.

A) True
B) False

Correct Answer

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Corporations receive no proceeds from the resale of their stock.

A) True
B) False

Correct Answer

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Skeptics of government policy to reduce taxes on saving argue that it would primarily benefit the rich.

A) True
B) False

Correct Answer

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A decrease in taxes on interest income would increase the interest rate.

A) True
B) False

Correct Answer

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When a firm wants to borrow directly from the public to finance the purchase of new equipment,it does so by selling shares of stock.

A) True
B) False

Correct Answer

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Because of differences in tax treatment,municipal bonds pay a higher interest rate than do corporate bonds.

A) True
B) False

Correct Answer

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An increase in the demand for loanable funds increases the equilibrium interest rate and increases the equilibrium level of saving.

A) True
B) False

Correct Answer

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The conventions of national income accounting imply that saving and investment are equal for the economy as a whole and for individual households and firms.

A) True
B) False

Correct Answer

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Other things the same,corporate bonds generally feature higher interest rates than U.S.government bonds.

A) True
B) False

Correct Answer

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Mutual funds are a type of financial intermediary.

A) True
B) False

Correct Answer

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We interpret the term loanable funds to mean the flow of resources available to fund private investment.

A) True
B) False

Correct Answer

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The term loanable funds refers to all income that is not used for consumption or government expenditures.

A) True
B) False

Correct Answer

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If a share of stock in Dell sells for $70,the retained earnings per share are $5,and the dividend per share is $2,then the price-earnings ratio is 10.

A) True
B) False

Correct Answer

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Public saving is T - G,while private saving is Y - T - C.

A) True
B) False

Correct Answer

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If Congress instituted an investment tax credit,the demand for loanable funds would shift rightward.

A) True
B) False

Correct Answer

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