When is a budget surplus created?

a. when the government sells more bonds than it buys back

b. when the government spends less than the tax revenue

c. when private savings are greater than zero

d. when the government spends more than it receives in tax revenue

Suppose Canadian aerospace company Bombardier sells a bond. What is the company doing?

a. borrowing directly from the public

b. lending indirectly to the public

c. borrowing indirectly from the public

d. lending directly to the public

Suppose Tesla sells common stock. What type of financing are they using?

a. They are using equity financing, and the return shareholders earn depends on how profitable the company is.

b. They are using debt financing, and the return debt holders earn is fixed.

c. They are using equity financing, and the return shareholders earn is fixed.

d. They are using debt financing, and the return debt holders earn depends on how profitable the company is.

Which statement below best defines stock indexes?

a. They are reports in the newspaper that report on the price of the stock and earnings of the corporation.

b. They are measures of the risk relative to the profitability of corporations.

c. They are the average of a group of stock yields.

d. They are the average of a group of stock prices.

If the inflation rate is 2 percent and the real interest rate is 6 percent, what is the nominal interest rate?

a. 6 percent

b. 8 percent

c. 4 percent

d. 3 percent