--%>
Assignment Help - homework help

Investment based question

Utilizing the consumption and saving data in given table and supposing investment is $16 billion, describe saving and planned investment at the $380 billion level of domestic output? Determine saving & actual investment at that level? Determine saving and planned investment at the $300 billion level of domestic output? Describe levels of saving & actual investment? Employ the concept of unplanned investment to describe adjustments toward equilibrium through both the $380 and $300 billion levels of domestic output.

1939_consumption and saving data table.png

E

Expert

Verified

At the $380 billion level of GDP, saving is $24 billion; planned investment will be $16 billion (from the question). This deficiency of $8 billion of planned investment causes an unplanned $8 billion rise in inventories.  Actual investment is $24 billion (= $16 billion of planned investment as well as $8 billion of unplanned inventory investment), matching the $24 billion of actual saving.

    At the $300 billion level of GDP, saving is $8 billion; planned investment wills $16 billion (from the question). This excess of $8 billion of planned investment causes an unplanned $8 billion decline in inventories. Actual investment is $8 billion (= $16 billion of planned investment minus $8 billion of unplanned inventory disinvestment) matching the actual of $8 billion.

   While unplanned investments in inventories takes place, as at the $380 billion level of GDP, businesses revise their production plans downward and GDP drop. While unplanned disinvestments in inventories take place, as at the $300 billion level of GDP; businesses revise their production plans upward and GDP increase.  Equilibrium GDP—in this case, $340 billion—takes place where planned

 

   Related Questions in Finance Basics

  • Q : Problem of time lags in enacting and

    Normal 0 false false

  • Q : Gateways for biometric The different

    The different Gateways for biometric are as following: Transaction security: this is to secure customers transactions and so to protect their privacy both remotely and onsite.

  • Q : Explain Governors Budget Summary or

    Governor's Budget Summary (or A-Pages): This is a companion publication to the Governor’s Budget which outlines the Governor’s goals, policies, and objectives for the budget year. This gives a perspective on important fiscal and/or structu

    		•
  • Q : Effect of raising funds on rapidly

    Companies along with rapidly growing levels of sales do not require worrying about raising funds from outside the firm. Do you agree or disagree along with this statement? Describe. Disagree. Quickly growing firms require more assets to accom

    		•
  • Q : Near-term policy Normal 0 false false

    Normal 0 false false

  • Q : Correlate each to the New Economy

    Normal 0 false false

  • Q : Describe time value of money Describe

    Describe time value of money?The time value of money means that money you have in your hand today is worth more than money you expect to obtain in the future. Likewise, money you have to pay out today is a greater burden than the similar a

    		•
  • Q : Define Accrual Basis of Accounting

    Accrual Basis of Accounting: The foundation of accounting in which transactions are identified whenever they take place, regardless of when cash is disbursed or received. The revenue is recorded whenever earned, and expenses are recor

    		•
  • Q : Describe factors affecting minimum cash

    Describe the factors affecting the option of a minimum cash balance amount. The minimum cash balance amount is find out by how easy it is to increase funds when needed, how predictable the cash flows are, and how risk averse managers are.

    		•
  • Q : Slope of the budget line and the

    Consider someone won $15 on a Lotto Canada ticket at the local 7-Eleven & decided to spend all the winnings on bags of peanuts and candy bars. The cost of candy bars is estimated as $.75 and the cost of peanuts is $1.50. Plot the data in this table as a budget li

    		•