26 - Chapter 8 Saving, Investment, and the Financial System...

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Chapter 8 Saving, Investment, and the Financial System MULTIPLE CHOICE 1. When opening a restaurant you may need to by ovens, freezers, tables, and cash registers. Economists call these expenditures a. capital investment. b. investment in human capital. c. business consumption expenditures. d. None of the above are correct. ANSWER: a. capital investment. TYPE: M DIFFICULTY: 1 SECTION: 8.0 2. When a country saves a larger portion of its GDP, it will have a. less investment, and so have more capital and higher productivity. b. less investment, and so have less capital and higher productivity. c. more investment, and so have more capital and higher productivity. d. more investment, and so have less capital and higher productivity. ANSWER: c. more investment, and so have more capital and higher productivity. TYPE: M DIFFICULTY: 1 SECTION: 8.0 3. Institutions in the economy that help to match one person's saving with another person's investment are collectively called the a. Federal Reserve system. b. banking system. c. monetary system. d. financial system. ANSWER: d. financial system. TYPE: M DIFFICULTY: 1 SECTION: 8.0 4. Alfred’s income exceeds his expenditures. Alfred is a a. saver who demands money from the financial system. b. saver who supplies money to the financial system. c. borrower who demands money from the financial system. d. borrower who demands money from the financial system. ANSWER: b. saver who supplies money to the financial system. TYPE: M DIFFICULTY: 1 SECTION: 8.1 5. Lucy wants to start her own psychiatric practice, but her expenditures exceed her income. Lucy is a a. saver who demands money from the financial system. b. saver who supplies money to the financial system. c. borrower who demands money from the financial system. d. borrower who supplies money to the financial system. ANSWER: c. borrower who demands money from the financial system. TYPE: M DIFFICULTY: 1 SECTION: 8.1 6. A bond is a a. financial intermediary. b. certificate of indebtedness. c. certificate of partial ownership in an enterprise. d. None of the above are correct. ANSWER: b. certificate of indebtedness. TYPE: M DIFFICULTY: 1 SECTION: 8.1 199
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200   Chapter 8/Saving, Investment, and the Financial System 7. A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a a. bond. b. stock. c. mutual fund. d. All of the above are correct. ANSWER: a.
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This note was uploaded on 07/23/2009 for the course BUS BUS217 – taught by Professor Staff during the Spring '09 term at California Baptist University.

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26 - Chapter 8 Saving, Investment, and the Financial System...

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