2. Formulas GDP: Y = C + I + G + NX GDP closed economy: Y= C + I
+ G Investment: I = Y C G Saving equals Investment, so S = Y C G
Saving also equals Private Saving + PublicSaving S = (Y C T) + (T
G)Definitions Saving = Deposit or purchase of stocks or bonds
Investment = Purchase by firms of capital, buildings orequipment
(also purchase of new home) Saving is the source of Loanable Funds
Saving is thesource of SUPPLY of Loanable funds Investment is the
source of DEMAND of Loanable funds On the slides that follow, click
to select the correct
responsehttp://www.youtube.com/watch?v=MqVr2BhuGlA&feature=plcp
3. Your family takes out a mortgage and buys anew houseClick
InvestmentClick Saving 4. Your family takes out a mortgage and buys
a new houseInvestment Right!!! 5. You use your $200 paycheck to buy
stock inVerizon (or ATT)Click Investmentclick Saving 6. You use
your $200 paycheck to buy stock in Verizon (orATT) Saving Right!!!
7. Your roommate earns $100 and deposits it in heraccount at a
bankClickInvestmentclick Saving 8. Your roommate earns $100 and
deposits it in her accountat a bank Saving Right!!! 9. You borrow
$1000 from a bank to buy a car touse in your pizza delivery
businessClick InvestmentClick Saving 10. You borrow $1000 from a
bank to buy a car to use in yourpizza delivery businessInvestment
Right!!! 11. According to the macroeconomic principles in the text
and the laws of supply and demand, a change in the tax laws to
increase taxes on investment income will cause which of the
following: Supply of Loanable Funds7%6%Interest5%Rate4%3%2%1%
01,2001,600 Loanable funds $billionsClick 1. Increase the supply of
loanable funds, 2. reduce the equilibriuminterest rate, 3. raise
the equilibrium quantity of loanable fundsClick1 Reduce the supply
of loanable funds, 2. increase the equalibriuminterest rate, 3.
lower the equilibrium quantity of loanable funds 12. Accordingto
the macroeconomic principles in thetext and the laws of supply and
demand, a changein the tax laws to increase taxes on
investmentincome will cause which of the
following:InterestRateSupply and demand diagram of Loanable 7%Funds
6%S2 5% 4% S1 3% 2% 1%01,200 1,600Loanable funds $billions1 Reduce
the supply of loanable funds, 2. increase the equilibriuminterest
rate, 3. lower the equilibrium quantity of loanable funds 13. End
of Slide Show 14. Click here toreturn toprevious slide
