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1. In your opinion, are you better off saving money or spending money? Why? Please explain.
Hint: Given what we have learned this quarter, are you happier/better off spending money or saving money from your personal perspective? Then take the question from a more macroeconomic perspective...does your spending or saving make the economy as a whole better off (and thus indirectly you)? How or why?
2. Say you are watching your favorite television program, and a commercial comes on. A soothing voice begins to describe your imaginary vacation in the lush, tropical paradise of Timbucktoo (a remote island in the South Pacific-fictitious of course), while pictures of rain forests and secluded beaches flash across your T.V. screen.
The commercial begins to describe your daily itinerary while showing you the “gentle and friendly” native peoples of Timbucktoo, performing native dances and other activities to the delight of the tourists.
You begin to think (sadly enough!) about macroeconomics. You wonder about these “gentle and friendly” people of Timbucktoo living on an island thousands of miles away from anything out in the middle of the South Pacific, and you ask yourself why the people of Timbucktoo would desire tourism to come to their peaceful and secluded island? What could they possibly do with that added aggregate income (generated by tourism) when they are out in the middle of nowhere. What could they possibly spend their money on? What about the pollution and the noise? The hustle and bustle, the crime! And what about their peaceful and gentle way of life? Is it worth sacrificing for more income?
As we have discussed, increases in GDP and aggregate income do not always mean the level of well-being and happiness increase as well for all citizens of a society. With this in mind, please explain your thoughts or insights regarding this hypothetical commercial.
Each answer has to be 700-1000 words
Explanation & Answer
Attached.
Running Head: MACROECONOMICS
1
Macroeconomics
Institution Affiliation
Date
MACROECONOMICS
2
In my opinion, it is better off when I engage in saving more money that I engage in
spending. This is because they help one to meet unexpected expenses. For instance, sometimes it
gets to a time of the month when I get broke and it is very far off from the next pay. Then something
comes up such as an illness. Savings help during such occurrences because an illness is not
something that one can anticipate and therefore if I have saved some money, it will help meet such
an expense other than having to go and borrow (Haeberle, 2016).
In addition, with savings, I am in a position to make plans for the future. If we look at
spending, this means spending any amount of money that I get or living from paycheque to
paycheque, not because I am not being paid enough but because I just want to spend more and
more. I can therefore not be able to make any investment. On the other hand, if I get to save some
money, I can be able for instance to plan on building a house or buying a piece of land. Such an
investment is also a form of saving which will not only be beneficial to me but even to many more
generations (Haeberle, 2016). Such a piece of land can even be sold when I have very burning
issues that require huge amounts of money but if it is not there and I have no cash with me, I will
be forced to borrow which is a negative aspect on my side.
Other than saving being beneficial to me as an individual, it is also very beneficial for the
economy in a country when people save more than they spend. This is because saving helps to
grow the economy in a very great way. To start with, savings usually help the economy to recover
very fast. This can happen when the economy has suffered a series of defaults and for instance
when the real mar...
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