Question

What is different about buying stocks and buying bonds?

		The future growth of a stock is more uncertain than the payments of a bond.
		Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future.
		A stock can possibly pay dividends forever, but bonds have a fixed number of payments.
		All these are differences between stocks and bonds.

Consumption expenditures	$800
Investment expenditures	200
Government purchases	300
Exports	100
Imports	200
Wages	800

Refer to Table Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

		$2,200.
		$1,600.
		$1,400.
		$1,200.

Answer 1

Ans. a) The future growth of a stock is more uncertain than the payments of a bond

A stock is an equity instrument that means when a person buys a stock he will be the owner of the firm and returns if there will be made in last. There is more uncertainty with returns on shares and the person has to bear loss also.

A bond is a debt instrument when a bond issued that means an entity has to pay the amount with interest for using the money. As it is a debt instrument, payment on the bond is certain.

Ans. d) $1,200

GDP = Consumption expenditures+ Investment expenditures+ Government purchases+ Net export ( Export - Import)

=$800+$200+$300+($100-$200)

= $1,200