--%>
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 : Effect of change on equilibrium

    Normal 0 false false

  • Q : Explain Merger Merger : A merger takes

    Merger: A merger takes place whenever two companies unite to form a single company. This is very alike to an acquisition or takeover, apart from that the existing stock-holders of both companies comprised retain a shared interest in the latest corpora

    		•
  • Q : Consumers advocates expressed concern

    Consumer's advocates expressed concern over such merger possibilities. Elucidate this statement.

    		•
  • Q : Define Expenditure Expenditure : The

    Expenditure: The expenditures reported on a department’s annual financial reports and “past year” budget documents comprises of amounts paid and accruals (comprising encumbrances and payables) for obligations made for the fiscal year

    		•
  • Q : Describe factors cause change in

    Normal 0 false false

    		•
  • Q : Compare and contrast the potential

    Normal 0 false false

  • Q : Define Price Increase Price Increase :

    Price Increase: Budget adjustment to reflect the inflation factors for particular operating expenses constant with the budget instructions from the Department of Finance.

    		•
  • Q : Financial strategy describe the sales

    describe the sales forecasting process ?

    		•
  • Q : Role of depreciation in estimating

    What kind of role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and therefore affects cash flow through its effect on taxes. Depreciation expense which is incremental to a proposed

    		•
  • Q : Analysis On Financial Indices On a

    On a weekly basis, starting from week ending on 18/1, you need to produce a weekly performance report of the major indices around the world following this structure:  Currencies a. USD vs Yen, vs GBP(GBP/USD), vs. Swiss Franc (USD/CHF) b. Euro vs USD, Y

    		•