Societies choose what share of their resources to devote to consumption and what
ID: 1154542 • Letter: S
Question
Societies choose what share of their resources to devote to consumption and what share to devote to investment. Some government spending. a) Describe some forms of private spending that represent consumption and some forms that represent investment. The national income accounts include tuition as part of consumer spending. In your opinion, are the resources you devote to your education a form of consumption or a form of investment? b) Describe some forms of government spending that represent consumption and some forms that represent investment. In your opinion, should we view government spending on health programs as a form of consumption or investment? Would you distinguish between health programs for the young and health programs for the elderly?Explanation / Answer
Ans
A spending on food, entertainment, mollie phones etc is consumption while spending on new house, initial public offerings etc is investment. For me it is investment since it will give me significant earnings in future through raising my skills, knowledge etc which are in demand in market
2 spending on police, Army, employees, press conferences etc is consumption while as spending on roads, bridges, dams, power plants etc is investment For me spending on health is investment since health is part of human capital. But only medical spending on young people should be viewed as investment since it pays back in future through more output and gdp.Healthcare spending on old should be viewed as consumption since it hardly pays back
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