Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 4QR
To determine
Rate ofsaving and its effect on the standard of living.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
What might deter a policymaker from trying to raise the rate of saving?
What does it mean by the logic:
When output is too low, what needed is an increase in demand for goods and services. Investment is one component of demand, and saving equals investment. Therefore, if the government could just convince households to attempt to save more, then investment and output would increase.
How does a decrease in the tax rate on income earned on saving affect saving, investment, the interest rate, and economic growth?
Chapter 7 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
Knowledge Booster
Similar questions
- Is it possible for total saving to fall when people become more thirfty?arrow_forwardBriefly discuss THREE economic policies that encourages household savings.arrow_forwardThe Economist article, "Low interest rates leave savers with few good options", states that savers are likely to respond to low rates in one of the following three ways: Lincrease athletic activity, go back to school, or, spend more on entertainment O re-watch the movie Trading Places, invest in Treasury bills, or, move to Germany save more and spend less, set aside less money due to higher returns, or, decrease investments in risky assets save less and spend more, set aside more money to make up for low returns, or, increase investments in risky assetsarrow_forward
- Some studies have found that saving is not very sensitive to the rate of return on saving. a.true b.falsearrow_forwardA friend asks you to explain the difference between saving and investment. Explain the difference.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_forward
- 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.arrow_forwardThis 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…arrow_forwardWhat is the impact of a change in the savings rate on the output?arrow_forward
- Explain what happens to savings, investment and the real interest rate in an economy if the government reduces its military spending.arrow_forwardExplain how higher saving leads to a higher standardof living. What might deter a policymaker fromtrying to raise the rate of saving?arrow_forwardPlease explain the impact of a change in the savings rate on the output.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning