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.

Question

Want to see more full solutions like this?

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.

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!

Students have asked these similar questions

A movie theater is showing two different movies: a Hollywood blockbuster (with 100 customers willing to pay $10 for a ticket, and 100 willing to pay $8) and an independent film that attracts 50 film buffs, willing to pay $20 each. Marginal costs are zero and neither movie can fill theater capacity. What is the theater's maximum profit if it cannot price discriminate (it must charge the same price for both movies) and if it can price discriminate (it may charge different prices for different movies)? a. $2,000; $2,600 b. $1,500; $2,100 c. $1,500; $2,000

What profi is most important in business ?

5. Download the Excel sheet from Brightspace. The data contains the GDP per capita and GNI per capita of OECD member countries in 2014 (both figures are reported in US dollars). The countries are ranked by GDP per capita. a. Compute the ratio of GNI to GDP for each country (GNI per capita/GDP per capita). What does this imply about net factor income from abroad for each country? b. Rank the countries based on the GNI/GDP ratio, starting with the country with the highest ratio and ending with the country with the lowest ratio. Which country has the highest ratio, and which has the lowest? c. Comment on why the countries you identified in the previous question have a large difference between GDP and GNI? What does the difference imply?

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.

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 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

Want to see more full solutions like this?

Chapter 10 Solutions