Correct Answer:
Making new additions to a firm’s stock of capital.
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2. Money market securities are sometimes referred to as cash equivalents because _____.
Answer
Correct Answer:
They are safe and marketable.
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3. One of the main reasons that Lehman Brothers failed is that it ______.
Answer
Correct Answer:
Underestimated the risk of mortgage-backed securities
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4. Quickly buying and selling houses is known as ______.
Answer
Correct Answer:
Flipping
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5. In 2005–2006, the Fed ______.
Answer
Correct Answer:
Raised interest rates
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6. Many of the people who took out subprime loans early in the 21st century ______.
Answer
Correct Answer:
Were ineligible for traditional loans
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7. Fed policy after the 2001 recession ______.
Answer
Correct Answer:
Created low interest rates
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8. The theory that government borrowing drives up the interest rate, lowering consumption by households and investment spending by firms is known as ______.
Answer
Correct Answer:
The crowding-out effect
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9. The supply of loanable funds curve is ______.
Answer
Correct Answer:
Positively sloped
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10. Vera is studying the national budget of her country. She has found that, for her nation, T > G + TR. Vera’s country has ______.
Answer
Correct Answer:
A budget surplus
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11. The sum of private saving and public saving in an economy is known as its ______ saving.
Answer
Correct Answer:
National
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12. The relationship between saving and investment for an entire economy is represented by the equation ______.
Answer
Correct Answer:
S = I
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13. If Company Q were to go bankrupt, the owners of Company Q’s ______ would be most exposed to risk.
Answer
Correct Answer:
Common stock
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14. Financial institutions that accept funds from households and make them available to firms are known as ______.
Answer
Correct Answer:
Financial intermediaries
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15. Stocks and bonds are often referred to as ______.
Answer
Correct Answer:
Securities
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16. A stock that pays fixed, regular dividend payments that do not vary with the profits of the corporation is known as ______.
Answer
Correct Answer:
Preferred stock
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17. Entities that hold shares of stock in a corporation are called ______.
Answer
Correct Answer:
Stockholders
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18. Entities that hold shares of stock in a corporation are called
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Correct Answer:
Stakeholders
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19. Stocks and bonds are securities
Answer
Correct Answer:
True
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20. The practice of using corporate profits for capital investment rather than dividend payouts is called
Answer
Correct Answer:
Retaining earnings
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21. A stock that pays fixed, regular dividend payments that do not vary with the profits of the corporation is called
Answer
Correct Answer:
Preferred stock
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22. The theory that government borrowing drives up the interest rate, lowering consumption by households and investment spending by firms is called
Answer
Correct Answer:
Crowding out effect
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23. Residual claimants of corporate resources who receive a proportion of profits based upon the ratio of shares held is called
Answer
Correct Answer:
Common stock
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24. Bonds are obligations issued by the corporation that promise the holder to receive fixed annual interest payments and payment of the principal upon maturity
Answer
Correct Answer:
True
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