Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 23, Problem 2.1P
To determine
Actual investment versus the planned investment.
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Students have asked these similar questions
Explain why investment (I) varies more from year-to-year than consumption (C).
Explain how each of the following will affect the consumption and saving schedules (as they
relate to GDP) or the investment schedule, other things equal:
a) A large increase in the value of real estate, including private houses.
b) A decline in the real interest rate.
c) An increase in the rate of population growth.
d) An increase in the Federal personal income tax.
According to the life-cycle income hypothesis, if the retirement age increases but life expectancy decreases:
a. consumption increases and savings increase
b. consumption increases and savings might increase or decrease
c. consumption decreases and savings decrease
d. consumption decreases and savings might increase or decrease
e. consumption might increase or decrease and savings decrease
Chapter 23 Solutions
Principles of Economics (12th Edition)
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- Please help with the following economic question : Explain the relationship between Investment spending and the interest rate.arrow_forwardWhich of the following is an example of an investment or I when computing the real GDP______? A. B. C. D. A new furnace that I purchased to make my house more energy efficient. Computer chips by Dell to install in their personal computers. A 20 year old apartment building. The purchase of a new home by a married couple.arrow_forwardExplain how the current level of investment depends on the following factors: 1) the current level of national income; 2) the current level of the interest rate; 3) the expected net profits in future time periods; 4) the expected interest rates in future time periods; 5) the current level of profit.arrow_forward
- Draw a savings and investment graph. Explain the logic of why investment slopes down and savings slopes up.arrow_forwardWhich of the following can cause planned investment by firms to increase? a. To reduce constant budget deficits, the government announces plans to increase the corporate tax rate. b. An increase in the interest rate due to an increase in the cost of making financial transactions. c. Firms become optimistic about economic conditions after seeing reports of strong growth in consumer spending. d. A major recession has reduced consumption spending, hurting profit levels for high-end car manufacturers.arrow_forwardWho gave the relative income hypothesis of consumption?arrow_forward
- Explain and compare the following terms: Saving intensity and break-even investment intensity.arrow_forwardClassify 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.arrow_forwardClearly explain the characteristics of the consumption function.arrow_forward
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