Give three examples of ways in which financial markets channel household savings into investment projects
What will be an ideal response?
(1.) Banks make loans to businesses using funds saved by households.
(2.) A corporation uses its retained earnings to purchase new equipment.
(3.) A new firm issues stock to get funds to set up its business.
(4.) Venture capital
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If consumption was 70 percent of GDP and investment and government expenditure were both 18 percent each, then we see that
A) exports must be less than imports. B) exports must be more than imports. C) the error is due to rounding. D) we must subtract depreciation from investment so that the components of GDP do not exceed 100 percent. E) GDP can be over 100 percent because it is "gross" rather than "net."
The maximum amount a rent seeker would pay for a monopoly is the ________
A) market price B) deadweight loss C) monopoly's economic profit D) monopoly's normal profit
To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government sponsored enterprises, ________, to sell bonds to investors and use the funds to purchase mortgages from banks
A) the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) B) ACORN and the Federal Housing Administration (FHA) C) Fannie Mae and Freddie Mac D) the Fed and the Treasury Department
The outcome of a competitive oligopoly:
A. is less efficient than that of colluding oligopolists. B. is more efficient than that of a perfectly competitive outcome. C. is more efficient than that of a monopolist. D. is less efficient than that of a monopolist.