Pick 3 to answer. Cite sources please. 1. Which of the following would be counted as gross private domestic investment? a. General Motors issues 1 million shares of stock. b. Consolidated Construction purchases 1,000 acres of land for a regional shopping center it plans to build in a few years. c. A K-Mart store adds 1,000 T-shirts to its inventory. d. Crew buys computers for its office staff. e. Your family buys a house. 2. If saving dropped sharply in the economy, what would likely happen to investment? Why? 3. Suppose local governments throughout the United States increase their tax on business inventories. What would you expect to happen to U.S. investment? Why? 4. Suppose the government announces it will pay for half of any new investment undertaken by firms. How will this affect the investment demand curve? 5. White House officials often exude more confidence than they actually feel about future prospects for the economy. Why might this be a good strategy? Are there any dangers inherent in it? 6. Suppose everyone expects investment to rise sharply in three months. How would this expectation be likely to affect bond prices? 7. Suppose that every increase of $1 in real GDP automatically stimulates .20 in additional investment spending. How would this affect the multiplier? 8. If environmental resources were counted as part of the capital stock, how would a major forest fire affect net investment? 9. In the Case in Point on reducing private capital in the Great Depression, we saw that net investment was negative during that period. Could gross investment ever be negative? Explain. 10. The Case in Point on lowering the tax rate for one year for companies that repatriated profits suggests that investment did not increase, even though company representatives are quoted as saying that they were using the repatriated profits for investment. Explain this seeming contradiction. 11. Use the model of aggregate demand and aggregate supply to evaluate the argument that an increase in investment would raise the standard of living.

 
 

Pick 3 to answer. Cite sources please.

1. Which of the following would be counted as gross private

domestic investment?

a. General Motors issues 1 million shares of stock.

b. Consolidated Construction purchases 1,000 acres of land for a

regional shopping center it plans to build in a few years.

c. A K-Mart store adds 1,000 T-shirts to its inventory.

d. Crew buys computers for its office staff.

e. Your family buys a house.

2. If saving dropped sharply in the economy, what would likely happen to

investment? Why?

3. Suppose local governments throughout the United States increase their

tax on business inventories. What would you expect to happen to U.S.

investment? Why?

4. Suppose the government announces it will pay for half of any new

investment undertaken by firms. How will this affect the investment

demand curve?

5. White House officials often exude more confidence than they actually

feel about future prospects for the economy. Why might this be a good

strategy? Are there any dangers inherent in it?

6. Suppose everyone expects investment to rise sharply in three months.

How would this expectation be likely to affect bond prices?

7. Suppose that every increase of $1 in real GDP automatically stimulates

.20 in additional investment spending. How would this affect the

multiplier?

8. If environmental resources were counted as part of the capital stock,

how would a major forest fire affect net investment?

9. In the Case in Point on reducing private capital in the Great Depression,

we saw that net investment was negative during that period. Could gross

investment ever be negative? Explain.

10. The Case in Point on lowering the tax rate for one year for companies

that repatriated profits suggests that investment did not increase, even

though company representatives are quoted as saying that they were

using the repatriated profits for investment. Explain this seeming

contradiction.

11. Use the model of aggregate demand and aggregate supply to evaluate

the argument that an increase in investment would raise the standard of

living.

order btn