Ch 13 HW - d. You borrow $1000 from a bank to buy a car to...

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1 Homework Ch 13: Production and Growth Q1. For each of the following bonds, which bond would you expect to pay a higher interest rate? Explain. a. A bond of the U.S. government or a bond of an East European government b. A bond that repays the principal in year 2015 or a bond that repays the principal in year 2040. c. A bond from Coca-Cola or bond from a software company you run in your garage d. A bond issued by the federal government or a bond issued by New York State Q3. Explain the difference between saving and investment as defined by a macroeconomist. Which of the following situations represent investment? Explain. a. Your family takes out a mortgage and buys a new house. b. You use your $200 paycheck to buy stock in AT&T. c. Your roommate earns $100 and deposits it in her account at a bank.
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Unformatted text preview: d. You borrow $1000 from a bank to buy a car to use in your pizza delivery business. Q4. Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment. Q5. Economists in Funlandia, a closed economy, have collected the following information about the economy for a particular year: Y = 10,000 C = 6,000 T = 1,500 2 G = 1,700 The economists also estimate that the investment function is: I = 3,300 – 100r where r is the country’s real interest rate, expressed as a percentage. Calculate private saving, public saving, national saving, investment, and the equilibrium real interest rate....
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This note was uploaded on 11/16/2011 for the course ECON 202 taught by Professor Kim during the Fall '11 term at CSU Fullerton.

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Ch 13 HW - d. You borrow $1000 from a bank to buy a car to...

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