Question

What do you expect enrollment for colleges in the 2020-2021 academic year to be impacted by the pandemic? Make a prediction and support it with economic arguments. Be sure to address each side.

Assume one bond has a face value $10,000 while a second bond has a face value of $1,000. If the $10,000 bond is currently selling for $8,000, what must be the price of the $1,000 bond assuming both bonds are risk-free and the time to maturity is the same?

With your knowledge of banking and the market for loanable funds to explain what is meant when economists say “savings equals investment.”

When savings equals investment, and real output (GDP) for a closed economy is given by ? = ? + ? + ? How does my decision to save rather than spend a dollar affect aggregate demand?

Answer 1

What do you expect enrollment for colleges in the 2020-2021 academic year to be impacted by the pandemic? Make a prediction and support it with economic arguments. Be sure to address each side

Yes. Enrollment for colleges in the 2020-2021 academic year will be adversely impacted by the pandemic. As unemployment is increasing, people are wary of spending more on college tution fees. People will try and save as much as possible during the recession phase. So, this year enrollments are going to be impacted. From the side of universities, they should be using endowment fund to provide scholarships to as many candidates as they can, this will help them to create faith and run the college in a proper manner.

Assume one bond has a face value $10,000 while a second bond has a face value of $1,000. If the $10,000 bond is currently selling for $8,000, what must be the price of the $1,000 bond assuming both bonds are risk-free and the time to maturity is the same?

800. This can be said as both bonds are similar. As par value is 10 times, so the value of the bond will also be 10 times.

With your knowledge of banking and the market for loanable funds to explain what is meant when economists say “savings equals investment.”

Y = C + I + G (total expenditure for closed economy)

Y = C + S + T (total income)

Equating total income and expenditure

C + I + G = C + S + T

S - I = G - T

If government has balanced budget then G = T,

So, S = I, i.e. “savings equals investment.”

When savings equals investment, and real output (GDP) for a closed economy is given by ? = ? + ? + ? How does my decision to save rather than spend a dollar affect aggregate demand?

If households save rather than spend, the S increases and C decreases. Increase in S will increase I by the same amount. So aggregate demand or Y will remain unchanged.