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Finance, Saving, and Investment

25. Finance, Saving, and Investment. CLICKER QUESTIONS. 26. Finance, Saving, and Investment. CLICKER QUESTIONS. Checkpoint 26.3. Checkpoint 26.1. Checkpoint 26.2. Question 8. Question 1. Question 4. Question 9. Question 2. Question 5. Question 6. Question 10. Question 3.

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Finance, Saving, and Investment

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  1. 25 Finance, Saving, and Investment CLICKER QUESTIONS

  2. 26 Finance, Saving, and Investment CLICKER QUESTIONS

  3. Checkpoint 26.3 Checkpoint 26.1 Checkpoint 26.2 Question 8 Question 1 Question 4 Question 9 Question 2 Question 5 Question 6 Question 10 Question 3 Question 7

  4. CHECKPOINT 26.1 Question 1 Economists use the term “financial markets” to mean the markets in which _______. • 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

  5. 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 ____. • negative; illiquid but not necessarily insolvent • negative; insolvent but not necessarily illiquid • positive; illiquid and insolvent • negative; illiquid and insolvent • positive; insolvent but not necessarily illiquid

  6. CHECKPOINT 26.1 Question 3 When a student uses a credit card to buy an iPod, the student is ________. • 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

  7. CHECKPOINT 26.2 Question 4 • A fall in the real interest rate ______. • increases the quantity of loanable funds supplied • increases the supply of loanable funds but does not change the demand for loanable funds • decreases the supply of loanable funds but does not change the demand for loanable funds • decreases the quantity of loanable funds supplied • decreases the supply of loanable funds and increases the demand for loanable funds

  8. CHECKPOINT 26.2 Question 5 The figure illustrates the effect of an increase in ____. As a result investment ____. • wealth; increases • expected profit; increases • default risk; decreases • expected future income; decreases • disposable income; increases

  9. CHECKPOINT 26.2 Question 6 If firms expect their profit to fall, the _____ loanable funds ____ and the real interest rate ____. • demand for; increases; rises • supply of; increases; falls • demand for; decreases; rises • supply of; decreases; falls • demand for; decreases; falls

  10. CHECKPOINT 26.2 Question 7 An increase in wealth leads to ____ loanable funds and _______ in investment. • an increase in the supply of; an increase • an increase in the demand for; an increase • a decrease in the supply of; a decrease • a decrease in the demand for; a decrease • a decrease in both the supply of and demand for; no change

  11. CHECKPOINT 26.3 Question 8 When the government has a budget surplus, _____. • private saving and investment are equal • private saving exceeds investment by an amount equal to the government surplus • investment exceeds private saving by an amount equal to the government surplus • private saving minus the government surplus equals investment • private saving exceeds investment and government saving is negative.

  12. CHECKPOINT 26.3 Question 9 The “crowding-out effect” refers to how a government budget deficit ______. • raises the real interest rate and decreases the supply of loanable funds • lowers the real interest rate and increases the demand for loanable funds • raises the real interest rate and decreases saving • raises the real interest rate and decreases investment • lowers the real interest rate and increases investment

  13. CHECKPOINT 26.3 Question 10 The Ricardo-Barro effect says that a government budget deficit leads to ________. • 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 • a fall in the real interest rate and an increase in the investment

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