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14 Cards in this Set
- Front
- Back
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Define Net Fixed Investment
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accumulation of physical capital. It is provided by savings
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What are the 3 sources of savings for an economy?
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1. Private
-households -businesses 2. Government -federal -state -local 3.Foreign |
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What is capital gain?
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Capital gain is an increase in the value of exisiting assets (housing or stock prices)
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What is capital loss?
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Decrease in the value of existing assets
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What is the relationship between wealth, saving and capital gain/losses?
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AWealth= Savings + Net Cpaital Gains
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Given the following data calculate the net change in national wealth
GDP= 14,000 billion National Savings Rate= 10% Decline in household and business wealth due to falling stock and housing prices= 8,000 billion |
FIRST, must know
national savings= national income- spending on current needs Answer: -6,600 billion |
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What are the components of national saving
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Y=C+I+G+NX
C= Household Consumption I=Total Private Investment G=Government Spending NX= Net spending by foreign residents |
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Given the following data for 2008 determine the NATIONAL SAVINGS
GDP=14,200 billion Household Consumption=9,924 billion Total Government Spending= 2,913 billion Total net tax collections= 2,265 billion |
14,200-9,924-2,913= 1, 363 billion
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Given the following data for 2008 determine the PRIVATE SAVING
GDP=14,200 billion Household Consumption=9,924 billion Total Government Spending= 2,913 billion Total net tax collections= 2,265 billion |
First* PRIVATE SAVING= Saving-
Net Taxes- Consumption 14,200-2,265-9,924= 2,011 |
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Given the following data for 2008 determine the PUBLIC SAVING
GDP=14,200 billion Household Consumption=9,924 billion Total Government Spending= 2,913 billion Total net tax collections= 2,265 billion |
First** PUBLIC SAVINGS= Net Taxes- Government Spending
2265-2913=-648 |
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Given the following data for 2008 determine the TOTAL INVESTMENT
,assuming NX=0 GDP=14,200 billion Household Consumption=9,924 billion Total Government Spending= 2,913 billion Total net tax collections= 2,265 billion |
KEEP IN MIND that Investment = Private+Government
so, 2,011+-648=1,363 |
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In what market is the real rate of interest determined?
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The loanable funds market
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What is the relationship between the government budget deficit or surplus and government savings?
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Well, Government Budget Deficit
is the excess of government spending over taxes collections G-T and the Government Budget Surplus is the excess of government tax collections over government spending so T-G |
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What is meant by "mobilization of savings?" Who or what accomplishes this?
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to collect savings and make it available for productive investment.
the financial markets accomplish this. |
