Assume That Planned Expenditure Consists of Consumption, Investment, and Government

question 4

Essay

Assume that planned expenditure consists of consumption, investment, and government expenditures only. Further, assume that consumption C= c(Y - tY), where tY denotes taxes as a function of income. Calculate the equilibrium level of Y and the government expenditure multiplier.

Identify and differentiate between fixed and variable expenses in personal budgeting.

Understand the relationship between personal financial decisions, opportunity costs, and financial security.

Understand the concept and calculation of budget surplus and deficit.

Identify the purpose and appropriate contents of a safe deposit box.

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Definitions:

Market Value

The trading price at which an asset or service can be currently bought or sold in the open market.

Coupon Rate

The interest rate stated on a bond at the issuance time, which the issuer promises to pay to the bondholder on the face value of the bond.

Coupon Yield

The per annum rate of interest a bond delivers, depicted as a proportion of its par value.

Yield to Maturity

The complete earnings projected from a bond assuming it is retained up to its expiration date.