“Households are the principal source of savings. But businesses are the main economic investors.” Briefly explain
What will be an ideal response?
The primary source of savings in any given economy comes from households in the form of lower present consumption. Savings get transferred to economic investors through banks and other financial institutions such as insurance companies and mutual funds. Our current economic system would not work properly without household savings and the economic investment that those saving generate.
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Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2012 and 2016
A) 30% B) 50% C) 66.7% D) 100%
Welfare programs satisfy the criteria of the benefit principle
a. True b. False
Suppose the minimum average total cost (ATC) of a firm competing in a competitive price-taker market was $1.00 per unit and that the firm's minimum average variable cost (AVC) was $.80 per unit. If the market price was $.75 per unit, a profit-seeking firm would
a. shut down immediately. b. produce where MR = MC in the short run. c. shut down in the long run but remain in business in the short run. d. do both b and c.
When new firms have an incentive to enter a competitive price-taker market, their entry will
a. increase the price of the product. b. drive down profits of existing firms in the market. c. shift the market supply curve to the left. d. increase demand for the product.