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Indicate whether each of the following is an example of investment spending, investing in financial assets, or investing in physical assets. Rupert Moneybucks buys 100 shares of existing Coca-Cola stock. Rhonda Moviestar spends $10 million to buy a mansion built in the 1970s. Ronald Basketballstar spends $10 million to build a new mansion with a view of the Pacific Ocean. Rawlings builds a new plant to make catcher’s mitts. Russia buys $100 million in U.S. government bonds. Match each person, company, and country to the kind of action they have taken. Investment spending Investing in financial assets Investing in physical assets

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ogorwyne

Answer:

Ronald basketball star and Rawlings engaged in investment spending.

Rupert money buckets and Russia engaged in investing in financial assets

Rhonda moviestar invested in physical assets.

Explanation:

Each investments by these entities have been grouped under 1, 2 and 3.

1. Investment Spending

- Ronald Basketballstar spends $10 million to build a new mansion with a view of the Pacific Ocean

- Rawlings builds a new plant to make catcher’s mitts

2. Investing in Financial Assets

- Rupert Moneybuckets buys 100 shares of existing Coca-Cola stock

- Russia buys $100 million in U.S. government bonds

3. Investing in Physical Assets

- Rhonda Moviestar spends $10 million to buy a mansion built in the 1970s.

jepessoa

Answer:

Rupert Moneybucks buys 100 shares of existing Coca-Cola stock.

  • RUPERT IS INVESTING IN A FINANCIAL ASSET, SINCE STOCKS ARE FINANCIAL ASSETS. IT DOESN'T ADD ANY PHYSICAL ASSETS TO THE ECONOMY OR PHYSICAL CAPITAL EITHER.

Rhonda Moviestar spends $10 million to buy a mansion built in the 1970s.

  • RHONDA IS INVESTING IN PHYSICAL ASSETS BECAUSE SHE IS PURCHASING A HOUSE THAT WAS BUILT IN THE 1970s. IF SHE HAD PURCHASED A NEWLY BUILT HOUSE IT WOULD HAVE BEEN CONSIDERED INVESTMENT SPENDING.

Ronald Basketballstar spends $10 million to build a new mansion with a view of the Pacific Ocean.

  • RONALD IS CARRYING OUT INVESTMENT SPENDING SINCE HE IS BUILDING A NEW MANSION, UNLIKE RHONDA THAT PURCHASED AN ALREADY BUILT MANSION.

Rawlings builds a new plant to make catcher’s mitts.

  • RAWLINGS IS ENGAGING IN INVESTMENT SPENDING BECAUSE THEY ARE BUILDING A NEW PLANT WHICH WILL INCREASE THE COUNTRY'S STOCK OF PHYSICAL CAPITAL.

Russia buys $100 million in U.S. government bonds.

  • RUSSIA IS INVESTING IN A FINANCIAL ASSET SINCE IT IS PURCHASING A TITLE THAT ENABLES THEM TO CLAIM FUTURE INCOME. IT DOESN'T ADD ANY PHYSICAL ASSETS TO THE ECONOMY OR PHYSICAL CAPITAL EITHER.

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