Assume that you have saved $20,000 and that you are considering a couple of options. One of
Question:
Assume that you have saved $20,000 and that you are considering a couple of options. One of them is to use these funds as a down payment on a newly built house. The other one is to buy a U.S. savings bond.
a) Which option will add to the economy’s capital stock, and which one will not?
Explain why.
b) How would a decrease in the real interest rate affect your decision?
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a Adding to Capital Stock Buying a newly built house This option will add to the economys capital stock A newly built house represents a physical asse...View the full answer
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