ECON_120_chap_12_test_ans

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Unformatted text preview: < Your location: Assessments > View f—‘ill Submissions > View attempt View Attempt 1 of 1 Title: Ch 12 Quiz Started: November 15, 2009 10:58 PM Submitted: November 15, 2009 11:05 PM Time spent: 00:0?:34 Total score: SIS = 100% Total score adjusted by 0.0 Maximum possible score: 5 Done In his multiplier—accelerator theorv, Nobel laureate Paul Samuelson explained how lower real GDP: Student Value Correct Answer Feedback Response A. can be overturned bv higher investment, which later increases other tvpes of expenditures such as consumption and government spending. B. reduces the inflation rate and increases the value of our currencv as foreign demand rises. C. can lead to a 100% Correct. In his multiplier—accelerator theorv, Nobel laureate Paul sharp fall in Samuelson explained how a downturn in real GDP leads to a investment sharp fall in investment, which further reduces GDP through the which further multiplier for investment spending. reduces GDP through the multiplier for investment spending. D. can accelerate the pace of depreciation and result in negative net investment. Score: 1,-‘1 [-2 El Fill in the blanks. The present value of a given pavment in the future as the interest rate Student Value Correct Answer Feedback Response :3. is maximized: increases B. increases: 100% [3 Correct. The present value of a given pavment in the future decreases decreases as the interest rate increases. Here is why: IWith a higher interest rate, the opportunitv cost of lending out your monev is higher. Because vou can earn more on your money with a higher rate, vou will not be willing to pav as much now to get the same $105 dollars in the future. C. does not change: changes D. approximates future value: increases Score: 1,-‘1 Refer to the table below. At a market interest rate of 2% per vear, which investment should not be undertaken? HIP-HID"! («I Student Value Response 3 fl.A 100% 3.3 C.C D.D E.E Score: 1,-‘1 Correct Answer E Feedback Coaching: Correct. At a market interest rate of 2% per vear, for example, onlv investmentA is unprofitable. All the other investments have a return greater than the opportunitv cost of the funds. The Q—theorv of investment, developed bv Nobel laureate James Tobin of Yale University, establishes a relationship between: Score: . investment Student Value Response . inte re st rate 5 and return on investment. . investment risk and its corresponding rate of return. 100% spending and stock prices. . stock prices and future expected dividends. 1,41 CDI'I'BC‘t flI'ISWBI' El Feedback Correct. The Q—theorv of investment states that investment spending increases when stock prices are high. Then, the firm uses its proceeds from the sale of stock to undertake new investment. Financial intermediaries pool the funds of savers and make loans to individual businesses, an in the process thev are able t0: go. Score: Done Student Response Value . reduce the costs of negotiation. . acouire expertise in both evaluating and monitoring investments. . provide the liquidity households demand. All of the above. 100% 1,41 Correct Answer U Feedback Correct. Bv pooling the funds of savers and making loans to individual businesses, financial intermediaries reduce the costs of negotiation. Financial intermediaries also acquire expertise in both evaluating and monitoring investments. Some financial intermediaries also provide the liguiditv households demand. ...
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