DonnaMcNeill_AC114unit4

DonnaMcNeill_AC114unit4 - Name Donna McNeill BU204-06...

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Name: Donna McNeill BU204-06 Sharon Smith-Silva HOMEWORK - UNIT 4 The Big Picture & Tracking the Macroeconomy Chapter 6: Problems 2 and 4. Chapter 7: Problems 2 and 11. Chapter 6: The Big Picture 2. When one person saves, that person’s wealth is increased, meaning that he or she can consume more in the future. But when everyone saves, everyone’s income falls, meaning that everyone must consume less today. Explain this seeming contradiction. If everyone is saving then businesses will earn less money and then they will begin to lay off people, and will make people want to save more. The consumption rate will decrease. If everyone is saving then some people will save less than others and the consumption rate will not fall as much. When someone saves they accumulate wealth and this could create higher consumption in the future. To sum it up saving is good to do but it is not always healthy for the economy. 4. Why do we consider a business-cycle expansion different from long-run economic growth? Why do we care about the size of the long-run growth
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