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Chapter 26

Terms in this set (30)

Which of the following lists correctly identifies the four expenditure categories of GDP?
consumption, government purchases, investment, net-exports
When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures
capital investment.
Most entrepreneurs do not have enough money of their own to start their businesses. When they acquire the necessary funds from someone else,
their investments are being financed by someone else's saving.
When a country saves a larger portion of its GDP than it did before, it will have
more capital and higher productivity.
At the broadest level, the financial system moves the economy's scarce resources from
savers to borrowers.
A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a
bondW
We associate the term debt finance with
the bond market, and we associate the term equity finance with the stock market.
When a large, well-known corporation wishes to borrow directly from the public, it can
sell bonds.
Atlas Corporation is in sound financial condition. It sells a long-term bond. Which of the following make the interest rate on this bond lower than otherwise?
Atlas' soubd finances but not the long term of the bond.
Skyline Chili wants to finance the purchase of new equipment for its restaurants. The firm has limited internal funds, so Skyline likely will
demand funds from the financial system by selling bonds.
If the Apple corporation sells a bond it is
borrowing directly from the public
If the government's expenditures exceeded its receipts, it would likely
sell bonds directly to the public.
Which of the following is not correct?
Term refers to the scheduling of periodic interest rate payments on a bond.
A municipal bond is
issued by state and local governments
Owners of municipal bonds
are not requires to pay federal income tax on the interest income
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