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Homework answers / question archive / 1)The purchase of a new house is the one form of a) investment that is financed by private saving rather than public saving
1)The purchase of a new house is the one form of a) investment that is financed by private saving rather than public saving. b) household spending that is not counted as part of investment in the national income accounts. c) household spending that is investment rather than consumption. d) household spending that does not contribute to GDP.
2)Identify and analyze a current public policy issue in terms of equity and efficiency, including the pros and cons of differing approaches to addressing the issue you have identified.
3) Jakob, a Canadian student who just began studying at Bocconi, rapidly discovers and loves Italian food prepared using the best ingredients available. In particular, he becomes a huge fan of pici (a traditional Italian home-made pasta), 21, and Florentine steaks, 12. His utility function over pici and steaks can be represented as follows: In x2 + In 12 The prices of a dish of pici and the price of a steak are pi and p2 (both expressed in €). Jakob's monthly budget for food amounts to I (in €).
5. What is the economic meaning of the slope of the budget constraint? 6. Derive analytically Jakob's demand functions for pici and steaks, Q. and Q2 as a function of the prices and his income. 7. Calculate the income elasticity of the two demand functions. 8. Based on the income elasticity, what kind of goods are pici and steaks for Jakob?
1)The correct answer is HOUSEHOLD SPENDING THAT IS INVESTMENT RATHER THAN CONSUMPTION.
[OPTION - C].
Explanation: Normally, GDP comprises of only newly generated goods and services that are within the country. Therefore, homes those are constrcuted newly are included in the GDP. But when it comes to the investements on the new homes, they aren't considered as a consumption spending but an investment spending and thus is taken in the GDP component's investment.
2)Current issue - Covid -19 , trade off between labour protection and industries profits .
During covid -19 , unskilled labour has lost employment in the countries due to lockdown and closure of industries
Problem is -
Labour laws which protects the labour from exploitation of the labourers are being started to consider as barriers for firms and industries which already are in losses due to long closures and less liquidity with them to invest in their industries again.
Labour laws like fixed working hours , minimum wages ,etc increases the cost of production of industries.
Efficiency is attained when cost of prouduction is reduced in order to have profits which will increase investment and AD in the economy which will further result in growth.
Industries doesn't have much liquidity with them they need incentives to work again , for this they started to decrease the wages of workers, long working hours ,no holidays etc
Equity is achieved when all can get opportunity to develop according to needs and it means quality of being fair and impartial.
Labour laws are important to protect the workers from the market conditions . If labour laws are started to dilute then labourers will become more poor and deprived of many necessities.
Government's in different countries are trying to trade off between the both interests of labourers and industries by trading off between efficiency and equity.
Pros
If industrialists interests are upheld more than labourers
1 it will Kickstart the economy as investment increases which will increase AD and growth which is the need of this time as all world is going into recession.
2 profits if industries increases which will increase demand and economic activities.
3 industries and corporate sector are the major source of revenues of government and government's in the world needs more revenues to fight the covid -19 situation.
Cons -
1 exploitation of workers , decrease in standard if living if the labourers
2. More job losses and more people going into vicious cycle of poverty.
3 In the long run, harmful effect as it will increase inequality as the equity motive of government is not achieved.
3)Please use this google drive link to download the answer file.
https://drive.google.com/file/d/1vMyf6D3_1N0wQ_xEZDMGeZY-6Kdvv_Ed/view?usp=sharing
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https://helpinhomework.org/blog/how-to-obtain-answer-through-google-drive-link
