Investment is defined as what consumers do with their savings. financial capital. O spending on capital goods by governments. the purchase of new capital goods by firms. the purchase of a stock or bond.
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- Suppose the government runs fewer budget deficit and there is a decrease in the average household income. Then, O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would increase. O The new EQ quantity of loanable funds would decrease, but the new EQ interest rate would be indeterminate. O The new EQ quantity of loanable funds would be indeterminate, , but the new EQ interest rate would decrease. The new EQ quantity of loanable funds would be indeterminate, but the new EQ interest rate would increase. The new EQ quantity of loanable funds would increase, but the new EQ interest rate would be indeterminate.a. Economists referring to investment mean the: O purchase of financial assets within an economy. O purchase of financial and physical assets within an economy. O formation of new productive capital within an economy. O development of new technologies to increase productivity. O b. Investment is used to buy: O goods and services that will enhance productivity and increase output. O services, but not goods, that will enhance productivity and increase output. O goods, but not services, that will enhance productivity and increase output. c. Determine whether the following transactions are included in gross investment. i. New residential hòusing: Included in gross investment ii. Changes in inventories: Included in gross investment O iii. Changes in depreciation: Included in gross investment iv. Purchase new shares of a company: Included in gross investment x v. Firms purchasing new capital: | Included in grøss investment archInterest Rate 0 Multiple Choice O O A O S₁ BC Quantity Refer to the diagram. Suppose that the demand for loanable funds is D₁ and the supply of loanable funds initially is S₁. If the supply of loanable funds increases to So, the equilibrium quantity of funds borrowed will increase from E to F. increase from A to B. increase from B to C. So decrease from G to F. Do D₁
- a. The supply of loanable funds slopes upward because O higher interest rates make it more costly to borrow. O savers will make more funds available at lower interest rates. O investors will want more money made available at higher interest rates. savers will make more funds available at higher interest rates. b. The demand for loanable funds slopes downward because O few investment projects yield a high rate of return. O many investment projects yield an equal.rate of return. O many investment projects yield a high rate of return. O few investment projects yield a low rate of return.Economists define saving as: that part of after-tax income which is not consumed. O bank accounts. total income less taxes. O purchases of stocks and bonds.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.
- Suppose the market for loanable funds is currently in equilibrium. Which of the following factors will cause an increase in the interest rate? Select one: O a. An increase in the household saving rate O b. An expansionary monetary policy Oc. An increase in business confidence O d. A decrease in government budget deficits Travis buys a 20-year, $10,000 US Treasury bond with a coupon rate of 5%. After three years, he has some unexpected expenses and decides to sell the bond. In which market will Travis sell his bond? Select one: O a. The secondary bond market O b. The primary bond market O c. The Treasury bond market Od. The T-bond marketA good example of a policy to increase an economy's saving rate is_ a. to reduce poverty O b. to reduce interest rates O c. to increase government spending © d. to increase sales taxes e. to increase the economic growth rate3. The meaning of saving and investment Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Dmitri purchases a new condominium in San Diego. Caroline purchases new ovens for her cupcake-baking business. Antonio purchases a certificate of deposit at his bank. Frances purchases stock in Goohoo, an information technology company.
- 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 Investment O O Clancy purchases a certificate of deposit at his bank. Hubert takes out a loan and uses it to build a new cabin in Idaho. Kate purchases shares of stock in Warm Breeze, a cloud computing company. Eileen purchases new mixers for her commercial bakery. C O O O O OThree students have each saved $1,000.each has an investment opportunity in which he or she can invest upto $2,000.Here are the rates of return on the students investment project:a.If borrowing and lendind are prohibited,so each student uses only personal saving to finance his or her own investment project ,how much will each student have a year later when the project pays its return?b.Now suppose their school opens up a market for loanable funds in which students ran borrow and lend among themselves at an interest rate r.What would determine whether a student would choose to be a borrower or lender in this market?c.Among these three students,what would be the quantity of loanable funds supplied and quantity demanded at an interest rate of 7 percent?At 10percent?d.At what interest rate would the loanable funds market among these three students be in equilibrium?At this interest rate,which student(s) would borrow and which student(s) would lend?e.At the equilibrium interest rate,how…Lenders of funds in financial market gets opportunity to invest in O a. Banks of the government O b. Productive assets without owning them O c. Goods of a business O d. Provision of utilities for the public