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    Ramos MACRO

    Uploaded by

    Armie Ramos

    Copyright:

    © All Rights Reserved
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    Ramos MACRO

    Uploaded by

    Armie Ramos
    5 views3 pages

    Copyright

    © © All Rights Reserved

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    DOCX, PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    5 views3 pages

    Ramos MACRO

    Uploaded by

    Armie Ramos

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Lance Heart M.

    Ramos
    BSED 2C
    Answer the following questions in 2-3 sentences. (cite your sources if needed)
    A. Explain how the following affect savings:

    1. income level

    • Income significantly impacts an individual's capacity to save. Those with higher


    incomes tend to save more and larger sums since they have more disposable income
    to allocate towards savings. Conversely, individuals with lower incomes, who must
    allocate most of their earnings to meet basic needs, are less likely to save and tend
    to have lower saving rates.

    2. interest rates

     When interest rates are elevated, people tend to reduce their spending and increase
    their savings. This is because the cost of borrowing money for purchases such as homes
    and cars rises, while the returns on savings accounts increase. Conversely, when interest
    rates are low, the opposite effect occurs.

    3. consumer confidence

    • When confidence diminishes, individuals tend to prioritize saving over spending,


    indicating a potential crisis or imminent market decline. Essentially, the stronger
    people's confidence in their income security, the more likely they are to maintain or
    increase their spending behaviors.

    4. future expectations

     Desires can significantly influence saving habits. For instance, if an individual anticipates
    financial instability, they may save more as a precautionary measure. Conversely, if they
    foresee income growth or have confidence in future financial stability, they may save
    less and allocate more towards spending, whether for immediate needs or significant
    life events like purchasing a home.

    5. fiscal policies

     Fiscal measures have the capacity to impact investment resources by altering disposable
    income levels, investing in sectors like education or healthcare, and shaping future
    earning prospects and financial stability, thereby shaping patterns of saving.

    Explain how the following affect investment:

    1. interest rates

    Variations in interest rates can significantly impact various types of investments. Some
    stocks may see a decline as companies incur higher costs for loans and raw materials,
    leading to reduced profits. Additionally, fluctuations in interest rates can also have a
    predictable effect on at least one financial instrument bonds.

    2. expectations

     Anticipated positive outcomes from future deals often trigger an increase in overall
    demand and investments. Conversely, a pessimistic outlook on future sales is likely to
    instigate a decline in investments.

    3. level of economic activity

     A rise in production levels is expected to boost the need for capital, consequently
    driving up investment. Consequently, GDP growth is likely to push the investment
    demand curve towards the right.

    4. cost of capital goods

     The data from observational measures indicates that a 1 percent reduction in the
    relative cost of machinery and equipment correlates with a 0.3 percent increase in
    actual investment in machinery and equipment.
    5. stock of capital

     The current level of capital in use impacts investment in two primary ways. Firstly, since
    most investment replaces worn-out capital, a higher capital stock is likely to encourage
    more investment, as there's more capital needing replacement. However, secondly, a
    higher capital stock can also potentially decrease investment.

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