Saving/Investment

Question 1

Savings

Answer 1

depositing or lending money to borrowers; provides the funds for people who borrow

Question 2

Investment

Answer 2

Borrowing money or business spending that comes in the form of borrowed money

Question 3

three types of savings

Answer 3

buy bonds, buy stocks, and deposit money in the bank

Question 4

three types of investments

Answer 4

sell bonds, sell stocks, and get a loan from the bank

Question 5

do savers want high or low interest?

Answer 5

high interest rate, which means quantity saving increases

Question 6

do investors want high or low interest?

Answer 6

low interest rate, which means quantity investment increases

Question 7

difference between stocks and bonds?

Answer 7

when you sell a stock or bond you receive money; you pay back through ownership (stock) or through the money they gave you plus interest (bond)

Question 8

stocks

Answer 8

certificate in exchange for the money you gave that says you get % of ownership of the company.
sell stock cause they don’t know when they can pay back
risky & higher return
dividends

Question 9

Types of bonds

Answer 9

Treasury (federal) bond
Corporate bone -> riskier
paper
coupons

Question 10

interest rates

Answer 10

the cost of borrowing money or the price you charge for lending money

Question 11

why is savings curve upward sloping?

Answer 11

because as interest rate increase, quantity saving increases.
as interest rates decrease, quantity saving decreases.

Question 12

why is investment curve downward sloping?

Answer 12

because as interest rates increase, quantity investment decreases.
as interest rates decreases, quantity investment increases.

Question 13

why are we learning about savings and investments

Answer 13

because you need savings and investments for the determinists of productivity to exist

Question 14

the link between investment and borrowing?

Answer 14

investing is spending on businesses through money they borrowed

Question 15

why does an increase on interest rates not help the financial market?

Answer 15

surplus of savings and a shortage of investments

Question 16

how can you increase savings on the financial market graph?

Answer 16

1) lowering interest income tax
2) lowering capital gains tax
3) lowering tax on dividends and coupons
(opposite will decrease saving curve)
increase sales tax savings go down ??

Question 17

how can you increase investments on the financial market graph?

Answer 17

1) lowering tax on anything that has to do with borrowing
-lowering property taxes
(opposite will decrease investment curve)

Question 18

National savings formula

Answer 18

S = (Y-T-C) + (T-G)
(Y-T-C) is private savings
(T-G) is public savings

Question 19

private savings

Answer 19

(Y-T-C)

Question 20

public savings

Answer 20

(T-G)

Question 21

T=G

Answer 21

balanced budget

Question 22

T>G

Answer 22

budget surplus

Question 23

T<G

Answer 23

budget deficit

Question 24

How to fix budget deficit

Answer 24

Print money
Sell bonds
Raise taxes

Question 25

crowding out

Answer 25

budget deficit; the federal reserve need to sell more bonds to make up for the difference T<G ; interest rates go up so people buy it; negative so much savings we aren’t borrowing so quantity investment goes down

Question 26

balanced budget

Answer 26

graph doesn’t shift

Question 27

budget deficit

Answer 27

saving curve shifts to the left
interest rates increase
quantity investments decreased

Question 28

budget surplus

Answer 28

saving curve shifts to the right
interest rates decrease
quantity investments increase

Question 29

Coupons

Answer 29

periodic payments for holding a bonds

Question 30

Dividends

Answer 30

periodic payments for holding a stocks

Question 31

equations and variables to know

Answer 31

Y=C+I+G
S=I
S=(Y-T-C) + (T-G)
Y(GDP)
C(Consumption)
I(Investment)
G(Government)
S(Saving)
T(Taxes)