wk 7 Wednesday notes
wk 7 Wednesday notes ECON 22061-001
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This 2 page Class Notes was uploaded by Marissa McKinney on Sunday October 18, 2015. The Class Notes belongs to ECON 22061-001 at Kent State University taught by Dandan Liu (P) in Summer 2015. Since its upload, it has received 18 views. For similar materials see Principles of Macroeconomics in Economcs at Kent State University.
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Date Created: 10/18/15
Wed 1014 Total effects on national saving 1 No change in c 2 Savings will decrease due to increase of private household consumption Then we will have less money for future investment and it will hurt the country and it39s growth C Discussion questions Scenario 2 is more realistic ls important because future generations could hurt from this Tax cut could be good or bad depends on the current situation The market for oanabe funds If you have extra money we all put it in this market and if you want to borrow you have to borrow from this market Savings rate and lending rate are essentially the same all other interest rates are based off of it You are a saver if you have already bought everything you need to buy Our government is poor Supply national saving curve is upward sloping Higher interest rate will make saving more attractive Anyone can borrow households to build a new house or businesses to purchase new equipment Interest rate is the cost of borrowing The lower the interest rate the more people borrow This curve is downward sloping Where the supply and demand curve intersect is the equilibrium Equilibrium is when national saving investment The price will go up and down to eventually gure out the equilibrium Policy 1 saving incentives The more you save the savings curve shifts to the right This will bene t the country in the long term Policv 2 investment incentive The bank needs to attract more savings so they raise the interest rate ncass practice Effects of tax free retirement account Tax free account is good This means you do not need to pay tax on this money you are saving right now until you reach the age of 65 Here the interest rate decreases and the equilibrium increases Practice 3 effects of rst time home buver tax credit in Obamas stimulus package You get 8000 back This is a good policy This is about savinginvesting Demand curve will shift to the right this is an investment incentive In class practice 4 effects of govt defecit
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