7 Problems and Applications Q6 Societies choose what share o

7. Problems and Applications Q6 Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some of these decisions involve private spending; others involve government spending. For each form of private spending, indicate whether it represents consumption or investment. Private Spending Firms buying computers People buying food People buying clothes People buying houses Firms buying trash cans Consumption Investment For each form of government spending, indicate whether it represents consumption or investment. Government Spending Paying workers to administer government programs Building bridges Building roads Buying military equipment Consumption Investment

Solution

1. Private spending:

Consumption- b, c and d.

Investment - a and e.

2. Government spending:

Consumption- a

Investment - b, c and d.

P.S.: The options are ordered serially.

Revert in case of any doubts.

Thanks!