曼昆经济学题库chapter18.docx

曼昆经济学题库chapter18.docx

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曼昆经济学题库chapter18

Chapter18

Saving,Investment,andtheFinancialSystem

MULTIPLECHOICE

1.Whenopeningarestaurantyoumayneedtobyovens,freezers,tables,andcashregisters.Economistscalltheseexpenditures

a.capitalinvestment.

b.investmentinhumancapital.

c.businessconsumptionexpenditures.

d.Noneoftheabovearecorrect.

ANSWER:

a.capitalinvestment.

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2.WhenacountrysavesalargerportionofitsGDP,itwillhave

a.lessinvestment,andsohavemorecapitalandhigherproductivity.

b.lessinvestment,andsohavelesscapitalandhigherproductivity.

c.moreinvestment,andsohavemorecapitalandhigherproductivity.

d.moreinvestment,andsohavelesscapitalandhigherproductivity.

ANSWER:

c.moreinvestment,andsohavemorecapitalandhigherproductivity.

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3.Institutionsintheeconomythathelptomatchoneperson'ssavingwithanotherperson'sinvestmentarecollectivelycalledthe

a.FederalReservesystem.

b.bankingsystem.

c.monetarysystem.

d.financialsystem.

ANSWER:

d.financialsystem.

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4.Alfred’sincomeexceedshisexpenditures.Alfredisa

a.saverwhodemandsmoneyfromthefinancialsystem.

b.saverwhosuppliesmoneytothefinancialsystem.

c.borrowerwhodemandsmoneyfromthefinancialsystem.

d.borrowerwhodemandsmoneyfromthefinancialsystem.

ANSWER:

b.saverwhosuppliesmoneytothefinancialsystem.

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5.Lucywantstostartherownpsychiatricpractice,butherexpendituresexceedherincome.Lucyisa

a.saverwhodemandsmoneyfromthefinancialsystem.

b.saverwhosuppliesmoneytothefinancialsystem.

c.borrowerwhodemandsmoneyfromthefinancialsystem.

d.borrowerwhosuppliesmoneytothefinancialsystem.

ANSWER:

c.borrowerwhodemandsmoneyfromthefinancialsystem.

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6.Abondisa

a.financialintermediary.

b.certificateofindebtedness.

c.certificateofpartialownershipinanenterprise.

d.Noneoftheabovearecorrect.

ANSWER:

b.certificateofindebtedness.

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7.Acertificateofindebtednessthatspecifiestheobligationsoftheborrowertotheholderiscalleda

a.bond.

b.stock.

c.mutualfund.

d.Alloftheabovearecorrect.

ANSWER:

a.bond.

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8.Ifthegovernment’sexpendituresexceededitsreceipts,itwouldlikely

a.lendmoneytoabankorotherfinancialintermediary.

b.borrowmoneyfromabankorotherfinancialintermediary.

c.directlybuybondsfromthepublic.

d.directlysellbondstothepublic.

ANSWER:

d.directlysellbondstothepublic.

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9.IfMicrosoftsellsabondtheyare

a.borrowingdirectlyfromthepublic.

b.borrowingindirectlyfromthepublic.

c.lendingdirectlytothepublic.

d.lendingindirectlytothepublic.

ANSWER:

a.borrowingdirectlyfromthepublic.

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10.Whichofthefollowingiscorrect?

a.Thematurityofabondreferstotheamounttobepaidback.

b.Theprincipalofthebondreferstothepersonsellingthebond.

c.Abondbuyercannotsellabondbeforeitmatures.

d.Noneoftheabovearecorrect.

ANSWER:

d.Noneoftheabovearecorrect.

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11.WhichofthefollowingisNOTanonsensicalheadline?

a.Britishperpetuitiesabouttomature.

b.Disneyissuesnewbondswithtermof$1,000each.

c.Governmentbondscurrentlypaylessinterestthancorporatebonds.

d.StandardandPoor’sjudgesnewjunkbondtohaveverylowcreditrisk.

ANSWER:

c.Governmentbondscurrentlypaylessinterestthancorporatebonds.

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12.Thelengthoftimeuntilabondmaturesiscalledthe

a.duration.

b.term.

c.maturity.

d.intermediation.

ANSWER:

b.term.

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13.Aperpetuityisdistinguishedfromotherbondsinthatit

a.payscontinuouslycompoundedinterest.

b.paysinterestonlywhenitmatures.

c.nevermatures.

d.willbeusedtopurchaseanotherbondwhenitmaturesunlesstheownerspecifiesotherwise.

ANSWER:

c.nevermatures.

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14.Whichofthefollowingiscorrect?

a.Somebondshavetermsasshortasafewmonths.

b.Becausetheyaresorisky,junkbondspayalowrateofinterest.

c.Corporationsbuybondstoraisefunds.

d.Alloftheabovearecorrect.

ANSWER:

a.Somebondshavetermsasshortasafewmonths.

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15.Whichofthefollowingiscorrect?

a.Lenderssellbondsandborrowersbuythem.

b.Long-termbondsusuallypayalowerinterestratethandoshort-termbondsbecauselong-termbondsareriskier.

c.Junkbondsrefertobondsthathavebeenresoldmanytimes.

d.Noneoftheabovearecorrect.

ANSWER:

d.Noneoftheabovearecorrect.

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16.Long-termbondsaregenerally

a.lessriskythanshort-termbondsandsopayhigherinterest.

b.lessriskythanshort-termbondsandsopaylowerinterest.

c.moreriskythanshort-termbondsandsopayhigherinterest.

d.moreriskythanshort-termbondsandsopaylowerinterest.

ANSWER:

c.moreriskythanshort-termbondsandsopayhigherinterest.

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17.Comparedtolong-termbonds,otherthingsthesame,short-termbondsgenerallyhave

a.moreriskandsopayhigherinterest.

b.lessriskandsopaylowerinterest.

c.lessriskandsopayhigherinterest.

d.aboutthesameriskandsopayaboutthesameinterest.

ANSWER:

b.lessriskandsopaylowerinterest.

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18.Onwhichbondisdefaultmostlikely?

a.ajunkbond

b.amunicipalbond

c.aU.S.governmentbond

d.acorporatebondissuedbyProctorandGamble.

ANSWER:

a.ajunkbond

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19.Assumingthatthebondsbelowhavethesametermandprincipalandthatthestateorlocalgovernmentwhichissuesthemunicipalbondhasagoodcreditrating,whichlisthasbondsorderedfromtheonethatpaysthemostinteresttotheonethatpaystheleastinterest?

a.corporatebond,municipalbond,U.S.governmentbond

b.corporatebond,U.S.governmentbond,municipalbond

c.municipalbond,U.S.governmentbond,corporatebond

d.U.S.governmentbond,municipalbond,corporatebond

ANSWER:

b.corporatebond,U.S.governmentbond,municipalbond

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20.Otherthingsthesame,asthematurityofabondbecomeslonger,thebondwillpay

a.lessinterestbecauseithaslessrisk.

b.lessinterestbecauseithasmorerisk.

c.moreinterestbecauseithasmorerisk

d.Thereisnorelationbetweentermtomaturityandrisk.

ANSWER:

c.moreinterestbecauseithasmorerisk

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21.WhichofthefollowingbondbuyersdidNOTbuythebondthatbestmettheirobjective?

a.Miawantedabondwithahighinterestrate,regardlessoftherisk.Shepurchasedajunkbond.

b.Annawantedabondthatwouldletherbestavoidtaxes.Shepurchasedamunicipalbond.

c.Billwantedtopurchaseabondthatwasunlikelytohavedefault.HepurchasedabondthatStandardsandPoor’sratedalowcreditrisk.

d.Toreducerisk,Tobypurchasedalong-termbondratherthanashort-termone.

ANSWER:

d.Toreducerisk,Tobypurchasedalong-termbondratherthanashort-termone.

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22.Stephanieisinterestedonlyintherateofinterestandiswillingtotakeagreatdealofriskinexchangeforahighreturn.Sheshouldlookforbondswith

a.taxexemptionsandshortterms.

b.taxexemptionsandlongterms.

c.notaxexemptionsandshortterms.

d.notaxexemptionsandlongterms.

ANSWER:

d.notaxexemptionsandlongterms.

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23.Municipalbondspaya

a.lowrateofinterestbecauseoftheirhigh-defaultriskandbecausetheinteresttheypayissubjecttofederalincometax.

b.lowrateofinterestbecauseoftheirlow-defaultriskandbecausetheinteresttheypayisnotsubjecttofederalincometax.

c.highrateofinterestbecauseoftheirhigh-defaultriskandbecausefederaltaxesmustbepaidontheinteresttheypay.

d.highrateofinterestbecauseoftheirlow-defaultriskandbecausetheinteresttheypayisnotsubjecttofederalincometax.

ANSWER:

b.lowrateofinterestbecauseoftheirlow-defaultriskandbecausetheinteresttheypayisnotsubjecttofederalincometax.

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24.Whichbondwouldyouexpecttopaythehighestinterestrate?

a.abondissuedbytheU.S.government

b.abondissuedbyGeneralMotors

c.abondissuedbyNewYorkState

d.abondissuedbyanewrestaurantchain

ANSWER:

d.abondissuedbyanewrestaurantchain

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25.Jerryhasthechoiceoftwobonds,onethatpays3percentinterestandonethatpays6percentinterest.Whichofthefollowingismostlikely?

a.The6percentbondislessriskythanthe3percentbond.

b.The6percentbondisaU.S.governmentbond,andthe3percentbondisajunkbond.

c.The6percentbondhasalongertermthanthe3percentbond.

d.The6percentbondisamunicipalbond,andthe3percentbondisaU.S.governmentbond.

ANSWER:

c.The6percentbondhasalongertermthanthe3percentbond.

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26.Lacey,afinancialadvisorhastoldherclientsthefollowingthings.Whichofherstatementsisincorrect?

a.“U.S.governmentbondsgenerallyhavealowerrateofinterestthanmunicipalbonds.”

b.“Theinterestrece