Investment Spending: Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending. Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets. Investing in Physical Asset: Spending which are made on goods or services that do not add up to an economy’s existing capital.

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Answer 1

Question

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

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Students have asked these similar questions

Sue is a sole proprietor of her own sewing business. Revenues are $150,000 per year and raw material (cloth, thread) costs are $130,000 per year. Sue pays herself a salary of $60,000 per year but gave up a job with a salary of $80,000 to run the business. ○ A. Her accounting profits are $0. Her economic profits are - $60,000. ○ B. Her accounting profits are $0. Her economic profits are - $40,000. ○ C. Her accounting profits are - $40,000. Her economic profits are - $60,000. ○ D. Her accounting profits are - $60,000. Her economic profits are -$40,000.

Select a number that describes the type of firm organization indicated. Descriptions of Firm Organizations: 1. has one owner-manager who is personally responsible for all aspects of the business, including its debts 2. one type of partner takes part in managing the firm and is personally liable for the firm's actions and debts, and the other type of partner takes no part in the management of the firm and risks only the money that they have invested 3. owners are not personally responsible for anything that is done in the name of the firm 4. owned by the government but is usually under the direction of a more or less independent, state-appointed board 5. established with the explicit objective of providing goods or services but only in a manner that just covers its costs 6. has two or more joint owners, each of whom is personally responsible for all of the partnership's debts Type of Firm Organization a. limited partnership b. single proprietorship c. corporation Correct Number

The table below provides the total revenues and costs for a small landscaping company in a recent year. Total Revenues ($) 250,000 Total Costs ($) - wages and salaries 100,000 -risk-free return of 2% on owner's capital of $25,000 500 -interest on bank loan 1,000 - cost of supplies 27,000 - depreciation of capital equipment 8,000 - additional wages the owner could have earned in next best alternative 30,000 -risk premium of 4% on owner's capital of $25,000 1,000 The economic profits for this firm are ○ A. $83,000. B. $82,500. OC. $114,000. OD. $83,500. ○ E. $112,500.

Answer 2

Question

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

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Answer 3

Question

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

Answer 6

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

Answer 7

Chapter 10, Problem 12P

To determine

Concept Introduction:

Investment Spending:Spending done on physical capital that increases an economy’s level of physical capital is known as investment spending.

Investment in Financial Assets: Spendingwhich are made on financials assets like bonds, securities, stocks and bills are known as investment in financial assets.

Investing in Physical Asset:Spending which are made on goods or services that do not add up to an economy’s existing capital.

Answer 8

Expert Solution & Answer

Answer to Problem 12P

a.Buying shares

Buying of shares is an example of investment in financial assets.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

100 Shares bought by Mr. R is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in financial assets as it involves buying of shares which has a paper claim promising him to pay in the future.

b. Buying an old mansion

Buying old mansion is an example of investment in physical assets.

Spending made by Mr. R on an old mansion is not an example of investment spending. It is because there is no addition made in the stock of physical capital in the economy.

It is an example of investment in physical assets because mansion already existed in the economy.The transaction has only led to transfer of ownership of the mansion.

c. Building a new mansion

Building a new mansion is an example of investment spending.

Building a new mansion is an example of investment spending.

$10 Spent by Mr. R on building a new mansion is an example ofinvestment spending. It is because there isan addition made in the stock of physical capital in the economy.

d. Building a new plant to make catcher’s mitts

Building a new plant is an example of investment spending.

Spending made by Mr. R on building a new plant to make catcher’s mitts is an example of investment spending.

It is because there is an addition made in the stock of physical capital in the economy.

e. Russia buying US bonds

Buying of US bonds by Russia is an example of investment in financial assets.

When Russia buys $100 million US bonds then it is not considered as the investment spending rather it is an investment in financial assets.

It is because the given transaction does not add up to the stock of physical capital in an economy.It involves buying of bonds which has a paper claim promising him to pay in the future.

Answer 12

Ch. 10.A - Prob. 1P Ch. 10.A - Prob. 2P Ch. 10.A - Prob. 3P Ch. 10 - Prob. 1QFT Ch. 10 - Prob. 2QFT Ch. 10 - Prob. 3QFT Ch. 10 - Prob. 1P Ch. 10 - Prob. 2P Ch. 10 - Prob. 3P Ch. 10 - Prob. 4P

Answer to Problem 12P

Explanation of Solution

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