BUSI620 Module 2: Questions
BUSI620: FORUM 2 - Questions 5 and 1
BUSI620: FORUM 2 - Questions 5 and 1 This paper explores the importance of savings in households and in the economy. It also compares finds the elasticity of a good and seeks to compare its effects to a second good through point price (and cross-price) elasticity of demand. Question 5
How important is saving for a household and the economy? How much should be saved?
Saving may be important to a household for Biblical and retirement reasons, but also because it affects the savings of the economy (Feldstein, 2008). According to Feldstein, national saving is the aggregate of household saving and corporate savings minus any national deficit (2008). Corporate retained earnings have been high but …show more content…
Point cross-price elasticity of demand: Exy = -1.5 * (10/20) = -.75
Exy is negative so Good X and Good Y are complimentary.
Absolute value of -.75 is close to zero, so Good X and Good Y could be independent commodities or just not very strong compliments.
Conclusion
The importance of savings for the economy is discussed and juxtaposed with the calling of Jesus to rely on him rather than on money. Finally, point price elasticity was found for Good X while Good Y was found to be its compliment.
References
Feldstein, M. (2008, Summer). Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate. The Journal of Economic Perspectives, 22(3), 113-125. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/pqcentral/docview/212100008/1432735BF913740AA11/22?accountid=12085#
Froeb, L. M., McCann, B. T., Shore, M., & Ward, M. R. (2014). Managerial Economics (3rd ed.). Mason, OH: South-Western Cengage Learning.
YCharts. (2014, January 23). US Personal Saving Rate. Retrieved from YCharts:
BUSI620: FORUM 2 - Questions 5 and 1 This paper explores the importance of savings in households and in the economy. It also compares finds the elasticity of a good and seeks to compare its effects to a second good through point price (and cross-price) elasticity of demand. Question 5
How important is saving for a household and the economy? How much should be saved?
Saving may be important to a household for Biblical and retirement reasons, but also because it affects the savings of the economy (Feldstein, 2008). According to Feldstein, national saving is the aggregate of household saving and corporate savings minus any national deficit (2008). Corporate retained earnings have been high but …show more content…
Point cross-price elasticity of demand: Exy = -1.5 * (10/20) = -.75
Exy is negative so Good X and Good Y are complimentary.
Absolute value of -.75 is close to zero, so Good X and Good Y could be independent commodities or just not very strong compliments.
Conclusion
The importance of savings for the economy is discussed and juxtaposed with the calling of Jesus to rely on him rather than on money. Finally, point price elasticity was found for Good X while Good Y was found to be its compliment.
References
Feldstein, M. (2008, Summer). Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate. The Journal of Economic Perspectives, 22(3), 113-125. Retrieved from http://search.proquest.com.ezproxy.liberty.edu:2048/pqcentral/docview/212100008/1432735BF913740AA11/22?accountid=12085#
Froeb, L. M., McCann, B. T., Shore, M., & Ward, M. R. (2014). Managerial Economics (3rd ed.). Mason, OH: South-Western Cengage Learning.
YCharts. (2014, January 23). US Personal Saving Rate. Retrieved from YCharts: