UARK ECON 2143 - Final Exam Study Guide
With Complete Solutions
When opening a print shop you need to buy printers, computers, furniture, and similar items.
Economists call these expenditures...
a. capital investment
b. investment in human capital
c. business consumption expenditures
d. personal saving - ANSWER a. Capital investment
Institutions that help match one person's saving with another person's investment are
collectively called the...
a. financial system
b. Federal Reserve system
c. banking system
d. monetary system - ANSWER a. Financial system
Given that Monika's income exceeds her expenditures, Monika is best described as a...
a. saver or as a supplier of funds
b. saver or as a demander of funds
c. borrower or as a supplier of funds
,d. borrower or as a demander of funds - ANSWER a. Saver or as a supplier of funds
The economy's two most important financial markets are...
a. the investment market and the savings market
b. the bond market and the stock market
c. banks and the stock market
d. financial markets and financial institutions - ANSWER b. the bond market and the stock
market
Long-term bonds are...
a. riskier than short-term bonds, and so interest rates on long-term bonds are usually lower
than interest rates on short-term bonds
b. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher
than interest rates on short-term bonds
c. less risky than short-term bonds, and so interest rates on long-term bonds are usually lower
than interest rates on short-term bonds
d. less risky than short-term bonds, and so interest rates on long-term bonds are usually
higher than interest rates on short-term bonds - ANSWER b. Riskier than short-term bonds,
and so interest rates on long-term bonds are usually higher than interest rates on short-term
bonds
A bond that never matures is known as a...
,a. perpetuity
b. an intermediary bond
c. an indexed bond
d. a junk bond - ANSWER a. perpetuity
The price of a stock will rise if the...
a. managers of a stock exchanged decide the price should be higher
b. demand for the stock rises
c. supply of the stock rises
d. demand for the stock falls - ANSWER b. demand for the stock rises
Financial intermediaries are...
a. the same as financial markets
b. individuals who make profits by buying a stock low and selling it high
c. a more general name for financial assets such as stocks, bonds, and checking accounts
d. financial institutions in which savers can indirectly provide funds to borrowers - ANSWER d.
financial institutions in which savers can indirectly provide funds to borrowers
, In a closed economy, what does the difference between the tax revenue and government
purchases, (T-G), represent?
a. National saving
b. Investment
c. private saving
d. public saving - ANSWER d. public saving
In a closed economy, private saving is...
a. the amount of income that households have left after paying for their taxes and
consumption
b. the amount of income that businesses have left after paying for the factors of production
c. the amount of tax revenue that the government has left after paying for its spending
d. always equal to investment - ANSWER a. the amount of income that households have left
after paying for their taxes and consumption
What do economists call financial institutions through which savers can indirectly provide
funds to borrowers?
a. stock markets
b. monetary institutions
With Complete Solutions
When opening a print shop you need to buy printers, computers, furniture, and similar items.
Economists call these expenditures...
a. capital investment
b. investment in human capital
c. business consumption expenditures
d. personal saving - ANSWER a. Capital investment
Institutions that help match one person's saving with another person's investment are
collectively called the...
a. financial system
b. Federal Reserve system
c. banking system
d. monetary system - ANSWER a. Financial system
Given that Monika's income exceeds her expenditures, Monika is best described as a...
a. saver or as a supplier of funds
b. saver or as a demander of funds
c. borrower or as a supplier of funds
,d. borrower or as a demander of funds - ANSWER a. Saver or as a supplier of funds
The economy's two most important financial markets are...
a. the investment market and the savings market
b. the bond market and the stock market
c. banks and the stock market
d. financial markets and financial institutions - ANSWER b. the bond market and the stock
market
Long-term bonds are...
a. riskier than short-term bonds, and so interest rates on long-term bonds are usually lower
than interest rates on short-term bonds
b. riskier than short-term bonds, and so interest rates on long-term bonds are usually higher
than interest rates on short-term bonds
c. less risky than short-term bonds, and so interest rates on long-term bonds are usually lower
than interest rates on short-term bonds
d. less risky than short-term bonds, and so interest rates on long-term bonds are usually
higher than interest rates on short-term bonds - ANSWER b. Riskier than short-term bonds,
and so interest rates on long-term bonds are usually higher than interest rates on short-term
bonds
A bond that never matures is known as a...
,a. perpetuity
b. an intermediary bond
c. an indexed bond
d. a junk bond - ANSWER a. perpetuity
The price of a stock will rise if the...
a. managers of a stock exchanged decide the price should be higher
b. demand for the stock rises
c. supply of the stock rises
d. demand for the stock falls - ANSWER b. demand for the stock rises
Financial intermediaries are...
a. the same as financial markets
b. individuals who make profits by buying a stock low and selling it high
c. a more general name for financial assets such as stocks, bonds, and checking accounts
d. financial institutions in which savers can indirectly provide funds to borrowers - ANSWER d.
financial institutions in which savers can indirectly provide funds to borrowers
, In a closed economy, what does the difference between the tax revenue and government
purchases, (T-G), represent?
a. National saving
b. Investment
c. private saving
d. public saving - ANSWER d. public saving
In a closed economy, private saving is...
a. the amount of income that households have left after paying for their taxes and
consumption
b. the amount of income that businesses have left after paying for the factors of production
c. the amount of tax revenue that the government has left after paying for its spending
d. always equal to investment - ANSWER a. the amount of income that households have left
after paying for their taxes and consumption
What do economists call financial institutions through which savers can indirectly provide
funds to borrowers?
a. stock markets
b. monetary institutions
