Which of the following would be counted as gross private domestic investment?, assignment help
Which of the following would be counted as gross private domestic investment?, assignment help
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.