Finance, Saving, and Investment 25 CLICKER QUESTIONS © 2013 Pearson Finance, Saving, and Investment 26 CLICKER QUESTIONS © 2013 Pearson Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem Checkpoint 26.1 Checkpoint 26.2 Checkpoint 26.3 Question Question 11 Question Question 44 Question Question 88 Question Question 22 Question Question 55 Question Question 99 Question Question 33 Question Question 66 Question Question 10 10 Question Question 77 © 2013 Pearson CHECKPOINT 26.1 Question Economists use the term “financial markets” to mean the markets in which _ A B C D E 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 © 2013 Pearson CHECKPOINT 26.1 Question 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 A negative; illiquid but not necessarily insolvent B negative; insolvent but not necessarily illiquid C positive; illiquid and insolvent D negative; illiquid and insolvent E positive; insolvent but not necessarily illiquid © 2013 Pearson CHECKPOINT 26.1 Question When a student uses a credit card to buy an iPod, the student is A B C D E 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 © 2013 Pearson CHECKPOINT 26.2 Question A fall in the real interest rate A increases the quantity of loanable funds supplied B increases the supply of loanable funds but does not change the demand for loanable funds C decreases the supply of loanable funds but does not change the demand for loanable funds D decreases the quantity of loanable funds supplied E decreases the supply of loanable funds and increases the demand for loanable funds © 2013 Pearson CHECKPOINT 26.2 Question The figure illustrates the effect of an increase in As a result investment A wealth; increases B expected profit; increases C default risk; decreases D expected future income; decreases E disposable income; increases © 2013 Pearson CHECKPOINT 26.2 Question If firms expect their profit to fall, the _ loanable funds and the real interest rate A B C D E demand for; increases; rises supply of; increases; falls demand for; decreases; rises supply of; decreases; falls demand for; decreases; falls © 2013 Pearson CHECKPOINT 26.2 Question An increase in wealth leads to loanable funds and _ in investment A an increase in the supply of; an increase B an increase in the demand for; an increase C a decrease in the supply of; a decrease D a decrease in the demand for; a decrease E a decrease in both the supply of and demand for; no change © 2013 Pearson CHECKPOINT 26.3 Question When the government has a budget surplus, _ A private saving and investment are equal B private saving exceeds investment by an amount equal to the government surplus C investment exceeds private saving by an amount equal to the government surplus D private saving minus the government surplus equals investment E private saving exceeds investment and government saving is negative © 2013 Pearson CHECKPOINT 26.3 Question The “crowding-out effect” refers to how a government budget deficit A raises the real interest rate and decreases the supply of loanable funds B lowers the real interest rate and increases the demand for loanable funds C raises the real interest rate and decreases saving D raises the real interest rate and decreases investment E lowers the real interest rate and increases investment © 2013 Pearson CHECKPOINT 26.3 Question 10 The Ricardo-Barro effect says that a government budget deficit leads to A B C D 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 E a fall in the real interest rate and an increase in the investment © 2013 Pearson ... A increases the quantity of loanable funds supplied B increases the supply of loanable funds but does not change the demand for loanable funds C decreases the supply of loanable funds but does... quantity of loanable funds supplied E decreases the supply of loanable funds and increases the demand for loanable funds © 2013 Pearson CHECKPOINT 26.2 Question The figure illustrates the effect of. .. supply of; an increase B an increase in the demand for; an increase C a decrease in the supply of; a decrease D a decrease in the demand for; a decrease E a decrease in both the supply of and