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30 Cards in this Set

  • Front
  • Back
saving
current income minus spending on current needs
saving rate
saving divided by income
flow
a measure that is defined per unit of time
stock
a measure that is defined at a point in time
wealth
the value of assets minus liabilities
assets
anything of value that one owns
liabilities
the debts one owes
capital gains
increases in the value of existing assets
capital losses
decreases in the values of existing assets
life-cycle saving
saving to meet long-term objectives, such as retirement, college attendance, or the purchase of a home
precautionary saving
saving for protection against unexpected setbacks, such as the loss of a job or a medical emergency
bequest saving
saving done for the purpose of leaving an inheritance
national saving
the saving of the entire economy, equal to GDP less consumption expenditures and government purchases of goods and services, or Y-C-G
transfer payments
payments the government makes to the public for which it receives no current goods or services in return
private saving
the saving of the private sector of the economy is equal to the after-tax income of the private sector minus consumption expenditures (Y-C-G); can be further broken down into household saving and business saving
public saving
the saving of the government sector is equal to net tax payments minus government purchases (T-G)
government budget deficit
the excess of government spending over tax collections (G-T)
government budget surplus
the excess of government tax collections over government spending (T-G); equals public saving
factors that affect investment:
1)a decline in the price of new capital goods
2)a decline in the real interest rate
3)technological improvement that raises the marginal product of capital
4)lower taxes on the revenues generated by capital
5)a higher relative price for the firms output
__________ are current income minus spending on current needs.
savings
__________ are anything of value that one owns.
assets
Stock is a measure that is defined at a point in time. True/False?
true
Saving is a stock concept. True/False?
false
Saving to meet long-term objectives, such as retirement, is known as life-cycle saving. True/False?
true
If taxes are $1,000, consumption is $25,000, government purchases are $25 million, and private sector income is $30,000, then private saving is $__________.
$4000
If government purchases are $25 million, net taxes are $25 million, consumption expenditures are $100 million, and income is $150 million, then national saving is $__________.
$25 million
If the government collects $1 billion in taxes, spends $1.5 billion on its purchases, and consumption is $2 billion, then the government is running a budget deficit. True/False?
True
The value of the marginal product of the new capital determines business investment. True/False?
true
A technological breakthrough raises the marginal product of new capital goods, desired investment, the damand for savings, and the real interest rate. True/False?
true
A decrease in the governments budget deficit decreases the real interest rate. True/False?
true