ECON 2301 Week 7 Quiz | Assignment Help | Central Texas College
- Central Texas College / ECON 2301
- 30 Apr 2021
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ECON 2301 Week 7 Quiz | Assignment Help | Central Texas College
Review Test Submission: Quiz 7
Question 1
Figure 26-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves.
Refer to Figure 26-2. Which of the following events would shift the demand curve from D1 to D2?
Answers: a.
The government goes from running a budget deficit to running a budget surplus.
b.
A change in the tax laws encourages people to consume less and save more.
c.
A change in the tax laws encourages people to consume more and save less.
d.
Firms become optimistic about the future and, as a result, they plan to increase their purchases of new equipment and construction of new factories.
Question 2
Figure 26-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars.
Refer to Figure 26-4. Which of the following events could explain a shift of the demand-for-loanable-funds curve from to ?
Answers: a.
The tax code is reformed to encourage greater saving.
b.
The government starts running a budget deficit.
c.
The government starts running a budget surplus.
d.
The tax code is reformed to encourage greater investment.
Question 3
A tech company loses a high-profile patent-infringement case against its top competitor. Which of the following is true?
Answers: a.
Supply of the company's stock decreases, while the price of a share falls.
b.
Demand for the company's stock decreases, while the price of a share rises.
c.
Supply of the company's stock decreases, while the price of a share falls.
d.
Demand for the company's stock decreases, while the price of a share falls.
Question 4
As real interest rates fall, firms desire to
Answers: a.
buy more new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping.
b.
buy less new equipment and buildings. This response helps explain why the supply of loanable funds is upward sloping.
c.
buy less new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.
d.
buy more new equipment and buildings. This response helps explain why the demand for loanable funds is downward sloping.
Question 5
Figure 26-1. The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves.
Refer to Figure 26-1. Which of the following events would shift the supply curve from S1 to S2?
Answers: a.
In response to tax reform, firms are encouraged to invest more than they previously invested.
b.
In response to tax reform, households are encouraged to save more than they previously saved.
c.
Government goes from running a balanced budget to running a budget deficit.
d.
Any of the above events would shift the supply curve from S1 to S2.
Question 6
Suppose that in a closed economy GDP is equal to 20,000, consumption equal to 15,000, government purchases equal 4,000 and taxes equal 3,000. What are private saving, public saving, and national saving?
Answers: a.
-2,000, 1,000, and 2,000, respectively.
b.
1,000, 2,000, and 3,000, respectively.
c.
2,000, -1,000, and 1,000, respectively.
d.
2,000, 1,000, and 2,000, respectively.
• Question 7
According to the loanable funds model, which of the following events would result in higher interest rates and greater saving?
Answers: a.
Congress passes a reform of the tax laws that encourages greater saving.
b.
Firms become pessimistic about the future and, as a result, they cut back on their plans to buy new equipment and build new factories.
c.
The government goes from running a budget deficit to running a budget surplus.
d.
Congress passes a reform of the tax laws that encourages greater investment.
• Question 8
A national chain of grocery stores wants to finance the construction of several new stores. The firm has limited internal funds, so it likely will
Answers: a.
supply the required funds by buying bonds.
b.
demand the required funds by selling bonds.
c.
supply the required funds by selling bonds.
d.
demand the required funds by buying bonds.
• Question 9
A low price-earnings ratio indicates that either the stock is
Answers: a.
overvalued or people are relatively pessimistic about the corporation's prospects.
b.
undervalued or people are relatively pessimistic about the corporation's prospects.
c.
undervalued or people are relatively optimistic about the corporation's prospects.
d.
overvalued or people are relatively optimistic about the corporation's prospects.
• Question 10
Figure 26-2. The figure depicts a supply-of-loanable-funds curve and two demand-for-loanable-funds curves.
Refer to Figure 26-2. What is measured along the horizontal axis of the graph?
Answers: a.
the nominal interest rate
b.
the quantity of loanable funds
c.
the size of the government budget deficit or surplus
d.
the real interest rate
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