Chapter 7.1, Problem 10Q

Question 9 Which of the following is the best example of an economic investment? Apple builds a new plant to manufacture iPads in California. Your college purchases a 5-year old building in order to offer more classes A retiree purchases U.S. Treasury bonds A company like Bank of America acquires another company like Merrill Lynch

Societies choose what share of their resources to devote to consumption and what share to devote to investment.Some of these decisions involve private spending; others involve government spending. a. Describe some forms of private spending that represent consumption and some forms that represent investment. The national income accounts include tuition as a part of consumer spending. In your opinion, are the resources you devote to your education a form of consumption or a form of investment? b. Describe some forms of government spending that represent consumption and some forms that represent investment. In your opinion, should we view government spending on health programs as a form of consumption or investment?Would you distuinguish between health programs for the young and health programs for the elderly?

Is the purchase of equipment or machinery a part of consumption or investment? Why?

An economy has three sectors: manufacturing, underwater basket weaving, and energy. Manufacturing sells 30% of its output to underwater basket weaving, 30% of its output to energy, and keeps the rest. Underwater basket weaving sells 10% of its output to manufacturing, 80% of its output to energy, and keeps the rest. Energy sells 40% of its output to manufacturing, 35% of its output to underwater basket weaving, and keeps the rest. If the economy is in equilibrium, and the value of energy is $8,500,000,000, find the value of underwater basket weaving. You are encouraged to use Octave for this problem. Your answer should be exact so use "format rat."

Could you say that the consumers are a significant aspect of an economy? If so, why?

If two economies are identical, except the savings rate in one economy is higher, explain why we might expect the economy with the higher savings rate to grow faster and in that sense be healthier.

Explain why there is a strong relationship between increasing urbanization and per capita spending

Which of the following questions would be studied in the area of microeconomics? Select one: a. What determines the number of hours an individual works? b. Do interest rates affect net exports? c. Will an increase in government spending cause inflation? d. What portion of total spending comes from households in the economy?

How can an economy increase the production of one good without reducing the production of another? Identify at least three factors that contribute to this increase and explain how they contribute to the increase.