Homework 3 - construction was such that the government...

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Homework #3 1. List and briefly describe the economic policy objectives of the United States. To summarize, the United States’ economic policy actions are directed toward these four general goals: Economic growth High employment Price stability Balance in international transactions 3. Describe the major components of gross domestic product. Gross domestic product consists of four components: Personal consumption expenditures Government expenditures, including gross investment Gross private domestic investment Net exports of goods and services 5. What is meant by the savings-investment process? The savings-investment process involves the direct or indirect transfer of individual savings to business firms in exchange for their financial instruments or securities. 7. Briefly describe the historical role of savings in the United States. Developments in public transportation were often too costly and speculative for private promoters to undertake. The magnitude of early canal, turnpike, and railroad
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Unformatted text preview: construction was such that the government undertook much of the financing of these projects. Since the government financing was accomplished largely through bond issues rather than current revenues, the ultimate source of funds was the savings of individuals who bought the bonds. • Foreign sources of savings • Domestic supply of savings • Creation of savings 9. Define personal saving. Also, differentiate between voluntary and contractual savings. Personal savings are savings of individuals equal to personal income less personal current taxes less personal outlays. Voluntary savings are savings in the form of financial assets held or set aside for use in the future. Contractual savings are savings accumulated on a regular schedule for a specified length of time by prior agreement. Contractual savings are not determined by current decisions. They are disciplined by previous commitments that the saver has some incentive to honor....
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