Saving & Investment
What is investment?
Refers only to the purchase of new capital
What are the three categories of unemployment?
Employed, Unemployed, Not in the labor force
What is the definition of money?
Set of assets in the economy that people regularly use to buy goods and services from others
Savings =
Y - C - G
What is saving?
Earning more than you spend and using the rest to buy stocks or bonds or to put into accounts at financial intermediaries
Describe someone not in the labor force
Anyone who doesn't fit into categories 1 or 2, examples include: Retiree, stay at home parent
What is the definition of liquidity?
the ease at which an asset can be converted into the economy's medium of exchange
unemployment rate =
(unemployed/unemployed + employed) x 100
A budget surplus occurs when Taxes are (greater than/less than) Government spending.
Choose 1
greater than
What is a discouraged worker?
Someone who wants to work but has given up searching for more than 4 weeks due to lack of success and are not counted as unemployed
What is the most liquid asset?
Money
Labor force =
unemployed + employed
A budget deficit occurs when Taxes are (greater than/ less than) Government spending.
Choose 1
less than
Why do some people pretend to be looking for work?
In order to receive unemployment compensation
One function of money is that it is a unit of account, what does this mean?
An item used to post prices and record debts
Labor force participation rate =
(labor force/adult population) x 100
What is the market for loanable funds?
Market in which those who want to save supply funds and those who want to borrow invest demand funds
Name a type of unemployment
Any one these: frictional, structural, cyclical
One function of money is a store of value, what does this mean?
An item people use to transfer purchasing power from the present to the future
For the economy as a whole, investment =
savings