3. The meaning of saving and investment Classify each of the following scenarios listed in the table below using the macroeconomic definitions of saving and investment. Maria buys a new crane for her construction firm. Simone purchases shares of stock in Warm Breeze, a cloud computing company. Rajiv takes out a loan and uses it to build a new cabin in Idaho. Kevin purchases a corporate bond issued by an automotive firm. Saving O Investment
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- Which of the following situations represents investment? Saving? ExplainYour family takes out a mortgage and buys a new house. You use your paycheque to buy stock in Sagicor Financial Services.Economics Which of the following situations represent saving? a) Mike borrows $8,000 from a bank and buys a truck for his personal use. b) John uses his $500 paycheck to buy stock in Microsoft. c) Austin borrows $9,000 from a bank to buy a truck to use in his lawn mowing business. d) Your roommate earns $2000 and spends itThree students have each saved $1,000. Each has an investment opportunity in which he or she can invest up to $2,000. Here are the rates of return on the students’ investment projects: Student Return (Percent) Carlos 4 Felix 7 Janet 15 Assume borrowing and lending is prohibited, so each student uses only personal saving to finance his or her own investment project. Complete the following table with how much each student will have a year later when the project pays its return. Student Money a Year Later (Dollars) Carlos Felix Janet Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate rr. A student would choose to be a lender in this market if his or her expected rate of return is than rr. Suppose the interest rate is 6 percent. Among these three students, the quantity of loanable funds supplied would be ,…
- 3. The meaning of saving and investment Classify each of the following scenarios listed in the table below using the macroeconomic definitions of saving and investment. Saving Eleanor buys a new crane for her construction firm. Kyoko purchases shares of stock in Bayzer, a pharmaceutical company. Darnell buys a government bond. Jacques takes out a mortgage for a new house in Cleveland. Investment3. The meaning of saving and investment Classify each of the following scenarios listed in the table below using the macroeconomic definitions of saving and investment. Saving Investment Becky purchases new mixers for her commercial bakery. Alex purchases a certificate of deposit at his bank. Eileen purchases shares of stock in Bayzer, a pharmaceutical company. Clancy purchases a new townhouse in Hartford.Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Neha borrows money to build a new lab for her engineering firm. Teresa purchases stock in Pherk, a pharmaceutical company. Sam purchases a new condominium in San Francisco. Lorenzo purchases a certificate of deposit at his bank.
- Problem 1: Identify each of the following acts as representing either saving or investment. a. Lan uses some of his income to buy government bonds. b. Minh takes some of his income and buys mutual funds. c. Linh purchases a new truck for his delivery business using borrowed funds. d. Peter uses some of his income to buy stock in a major corporation, e. Dave hires a builder to construct a new home using borrowed funds.Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Crystal borrows money to build a new lab for her engineering firm. Hilary purchases stock in Pherk, a pharmaceutical company. Edison takes out a mortgage for a new home in Detroit. Brian purchases a corporate bond issued by a car company.This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. A tax law change that successfully encourages saving will (increase/decrease) interest rates, which leads to (less/more) investment and economic growth. To better understand how changes in tax laws can affect saving, suppose that Madison, a rising third-year in college, plans to save $550 from her summer job in order to buy textbooks for the upcoming fall semester. Madison's parents are so impressed with her plans that they offer to pay her an additional 30% interest per month on the money she saves, which means that Madison is now earning a large rate of return on her saving. By the end of the…
- Classify each of the following scenarios listed in the table below using the macroeconomic definitions of saving and investment. Saving Investment Manuel buys a government bond. Poornima borrows money to build an addition to a lab owned by her engineering firm. Valerie purchases shares of stock in Warm Breeze, a cloud computing company. Shen takes out a loan and uses it to build a new cabin in Idaho.A friend asks you to explain the difference between saving and investment. Explain the difference.7. For each of the following, decide whether you agree or disagree and explain your answer: a. Savings and investment are just two words for the same thing. b. When I buy a share of Microsoft stock, I have invested; when I buy a certificate of deposit, I have not. c. Higher interest rates lead to more investment because those investments pay a higher return.
