How does the relationship between saving and intended investment affect the economy?
The economy is in equilibrium when saving equals intended investment. When saving exceeds intended
investment, unplanned inventory investment will signal firms to cut production, and employment and
national income will fall. When savings is less than intended investment, unplanned inventory depletion
will signal firms to increase production, and employment and national income will rise.
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When a country allows trade and becomes an exporter of a good,
a. the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. b. the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. c. the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. d. the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.
The economy has gone into a recession. You have majored in computer science and, because of the recession, have difficulty in finding a job. According to the information in the chapter, should you go back to school and get a second major?
A) Yes, the recession will ensure that you will never find a job as a programmer. B) Yes, the recession will lower income in my field permanently. C) No, the recession will most likely be short-lived and I can get a job after it is over. D) No, the recession will have no impact on my ability to get a job or my future income.