Financial Planning 2 || All Solved.
Capital formation correct answers Process of constructing real property, manufacturing
producers' durable equipment and increasing business inventories
Personal consumption expenditures (PCE) correct answers Expenditures by individuals for
durable goods, nondurable goods, and services
Government expenditures (GE) correct answers Expenditures for goods and services plus gross
investments by federal, state and local governments
Gross private domestic investment (GPDI) correct answers Measures fixed investments in
residential and nonresidential structures, producers' durable equipment, and changes in business
inventories
Gross domestic product (GDP) correct answers measures output of goods and services in an
economy over a specified time period
-measured in dollars
-shows growth
GDP = consumption spending + investment spending + govt. spending + net exports (exports-
imports)
Net exports (NE) correct answers exports of goods and services minus imports
Budgetary deficit correct answers When tax and other general revenues fail to meet expenditures
Federal statutory debt limits correct answers limits on the federal debt set by Congress
,Savings correct answers Occur when all of an economic unit's income is not consumed and are
represented by the accumulation of cash and other financial assets...Savings rate is personal
savings/disposable personal income
Savings surplus correct answers Occurs when an economic unit, such as individuals taken as a
group, has current income that exceeds its direct investment in real assets
Undistributed profits (earnings retained in the business) correct answers Profits remaining after
taxes and, in the case of corporations, after the cash dividends are paid to stockholders
Savings deficit correct answers A situation in which it becomes necessary to acquire funds from
a savings surplus unit
Personal saving correct answers Savings of individuals equal to personal income less personal
current taxes less personal outlays...Note: personal income - taxes = disposable personal income
Voluntary savings correct answers Savings in the form of financial assets held or set aside for use
in the future
Contractual savings correct answers Savings accumulated on a regular schedule for a regular
specified length of time by prior agreement
Capital consumption adjustment (depreciation) correct answers the estate of the "using up" of
plant and equipment assets for business projects
Dissave correct answers spend accumulated savings rather than further reduce consumption
spending
Capital market securities correct answers Debt securities with maturities longer than one year
and corporate stocks
, Mortgage correct answers Loan backed by real property in the form of buildings and houses
Treasury Bond correct answers A debt instrument or security issued by the U.S. federal govt.
with a typical maturity ranging from five to twenty years
Municipal bond correct answers Debt instrument issued by a state or local govt.
Corporate bond correct answers Debt instrument issued by a corporation to raise long term funds
Common stock correct answers Ownership interest in corporation
Derivative security correct answers Financial contract that derives its value from the value of
another asset, such as a bond or stock
Mortgage markets correct answers Markets in which mortgage loans are created to purchase
buildings and houses and are originated in primary markets and traded in secondary markets
Fixed-rate mortgage correct answers Fixed interest rate with constant monthly payments over the
life of the loan, which is typically 15 or 30 years
Adjustable rate mortgage (ARM) correct answers Has an interest rate that changes or varies over
time with market determined interest rates on a U.S. Treasury Bill or other debt security
Securitization correct answers Process of pooling and packaging mortgage loans into debt
securities
Mortgage backed security correct answers A debt security created by pooling together a group of
mortgage loans whose periodic payments belong to the holders of the security
Capital formation correct answers Process of constructing real property, manufacturing
producers' durable equipment and increasing business inventories
Personal consumption expenditures (PCE) correct answers Expenditures by individuals for
durable goods, nondurable goods, and services
Government expenditures (GE) correct answers Expenditures for goods and services plus gross
investments by federal, state and local governments
Gross private domestic investment (GPDI) correct answers Measures fixed investments in
residential and nonresidential structures, producers' durable equipment, and changes in business
inventories
Gross domestic product (GDP) correct answers measures output of goods and services in an
economy over a specified time period
-measured in dollars
-shows growth
GDP = consumption spending + investment spending + govt. spending + net exports (exports-
imports)
Net exports (NE) correct answers exports of goods and services minus imports
Budgetary deficit correct answers When tax and other general revenues fail to meet expenditures
Federal statutory debt limits correct answers limits on the federal debt set by Congress
,Savings correct answers Occur when all of an economic unit's income is not consumed and are
represented by the accumulation of cash and other financial assets...Savings rate is personal
savings/disposable personal income
Savings surplus correct answers Occurs when an economic unit, such as individuals taken as a
group, has current income that exceeds its direct investment in real assets
Undistributed profits (earnings retained in the business) correct answers Profits remaining after
taxes and, in the case of corporations, after the cash dividends are paid to stockholders
Savings deficit correct answers A situation in which it becomes necessary to acquire funds from
a savings surplus unit
Personal saving correct answers Savings of individuals equal to personal income less personal
current taxes less personal outlays...Note: personal income - taxes = disposable personal income
Voluntary savings correct answers Savings in the form of financial assets held or set aside for use
in the future
Contractual savings correct answers Savings accumulated on a regular schedule for a regular
specified length of time by prior agreement
Capital consumption adjustment (depreciation) correct answers the estate of the "using up" of
plant and equipment assets for business projects
Dissave correct answers spend accumulated savings rather than further reduce consumption
spending
Capital market securities correct answers Debt securities with maturities longer than one year
and corporate stocks
, Mortgage correct answers Loan backed by real property in the form of buildings and houses
Treasury Bond correct answers A debt instrument or security issued by the U.S. federal govt.
with a typical maturity ranging from five to twenty years
Municipal bond correct answers Debt instrument issued by a state or local govt.
Corporate bond correct answers Debt instrument issued by a corporation to raise long term funds
Common stock correct answers Ownership interest in corporation
Derivative security correct answers Financial contract that derives its value from the value of
another asset, such as a bond or stock
Mortgage markets correct answers Markets in which mortgage loans are created to purchase
buildings and houses and are originated in primary markets and traded in secondary markets
Fixed-rate mortgage correct answers Fixed interest rate with constant monthly payments over the
life of the loan, which is typically 15 or 30 years
Adjustable rate mortgage (ARM) correct answers Has an interest rate that changes or varies over
time with market determined interest rates on a U.S. Treasury Bill or other debt security
Securitization correct answers Process of pooling and packaging mortgage loans into debt
securities
Mortgage backed security correct answers A debt security created by pooling together a group of
mortgage loans whose periodic payments belong to the holders of the security
