.  The government has proposed Rs1,289 billion for the defence budget for the year 2020-21, 5.1% more compared to last year’s revised defence estimates of Rs1,227 billion for the year 2019-20. If Government cut defence Budget, what happens to saving, investment, the trade balance, the interest rate, inflation rate and the exchange rate? And similarly, Government decreases the interest rate due to COVID-19 so explain what impact on consumption, investment and interest rate. Justify the answer with your own word and examples.

Q: QUESTION 8 As a result of entering the world economy, Neverland experiences economic boom and its…

A: *SOLUTION :- 8)   The answer is = 77.5

Q: raphically illustrate (draw) and explain the effect of a sustained increase in savings on the growth…

A: Economics refers to the social science that studies the production, distribution, and consumption of…

Q: Consider a closed economy. If national saving is 1000, GDP is 6000, and consumption is 4500. Further…

A: The financial value of all finished merchandise and services made within a rustic throughout an…

Q: Assuming there is no trade, if the Marginal Propensity to Save is 0.20 and the government increases…

A: So there is effect of multiplier will occur.

Q: Would each of the following transactions be included in net exports or net capital outflow? Be sure…

A:

Q: ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that…

A: Equilibrium level of GDP Y = C + I + G + NX Where C is consumption I is investment G is government…

Q: 19) For several years, household savings and the government surplus in Hong Kong have been more than…

A: A good savings and surplus base is beneficial for Hong Kong. But apart from that, the booms and…

Q: The table below shows aggregate values for a hypothetical economy. Suppose this economy has real GDP…

A: Private saving=consumption+-investment =10,000-300=97000

Q: Consider a classical economy. Assume that the GDP of an economy is 9000. Consumption is given by the…

A: GDP = 9000 C = 600 + (3/4)YD -40r I = 1200 - 120r NX = 1500 - 200e Budget deficit = 500 Government…

Q: (Bonus) In 2021, US. government spending was $6.8 trillion, tax revenue was $3.8 trillion, GDP was…

A:

Q: Consider an increase in (domestic) taxes (T). a.    Consider the event in the long-run closed…

A: "Small open economies" (SOEs) are economies that participate in international trade but whose…

Q: 10. If net foreign investments are -250, what are the net exports? Can you draw any conclusions…

A: Foreign investment refers to the capital flow from one country to another, this grants the foreign…

Q: Assume that GDP (Y) is 6,500, which is also the full employment level of real GDP. Consumption (C)…

A: Consumption refers to buying goods or services for use by households. The consumption equation gives…

Q: Consider an decrease in (domestic) taxes (T). a.    Consider the event in the long-run closed…

A: Closed economies are defined as the one where there are no trading activities outside the economy,…

Q: In a small open economy, output is $25 billion, government purchases are $6 billion, taxes are $5…

A: Given  Y=$25 billion Government purchases G=$6 billion taxes T=$5 billion C=2+0.6(Y-T)

Q: 10 Read the following paragraph and answer the question that follows. A number of factors…

A: When the Gross Domestic Product (GDP) fluctuates around its long-term natural growth rate, it is…

Q: Suppose that we’re in an open economy with this situation: - C = $85.890 - I = $125.000 - G =…

A: GDP = C + I + G + (X - M)GDP = 85,890 + 125,000 + 56,700 + (65,000 - 55,000)GDP = 277,590

Q: In the years leading up to the global financial crisis (say, around 2005-06), the large U.S.…

A: (Q)In the years leading up to the global financial crisis (say, around 2005-06), the large U.S.…

Q: ONLY answer! NO explanation! 1. Which of the following statement is true? a) Investment tax…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Consumption expenditure: Investment expenditure: C = 100 +0.8 Yª I= 120 - 500I Lump-sum taxes: T=150…

A: Equilibrium in the economy reaches where goods market and money market are in equilibrium. For goods…

Q: at is the value of net export? ne country lending to or borrowing from rest of the world? e the…

A:

Q: Question 2 (a) Distinguish between a government deficit and trade deficit? (b) Would you rather live…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The following graph shows a relationship between saving (S), investment (I) and world interest rate…

A: At world interest rate r, the saving is more than the investment, so the country is a net lender and…

Q: Consider a classical economy. Assume that the GDP of an economy is 9000. Consumption is given by the…

A: GDP = 9000 C = 600 + (3/4)YD -40r I = 1200 - 120r NX = 1500 - 200e Budget deficit = 500 Government…

Q: We showed in Eq. (2.10) that S =1 + CA, where S is national saving, I is investment, and CA is the…

A: The balance of payment is the record of all transactions between the residents of a country and the…

Q: Assume that GDP is $6,000, personal disposable income is $5,100, and the government budget deficit…

A: Gross Domestic Product (GDP): It refers to the value of all the goods and servicesmanufactured in an…

Q: The saving rate (gross domestic saving as a % of GDP) in Singapore, a small open economy, was 48% in…

A: In an economy, an individual uses his disposable income either in consumption or saving that money.…

Q: Use the equations for public and prívate saving to demonstrate how total saving equals investment…

A: PUBLIC SAVING = T-G PRIVATE SAVING = Y-T-C TOTAL SAVING = PUBLIC SAVING + PRIVATE SAVING  i.e. Total…

Q: 10. In Mankiw's model of a small open economy, domestio interest rates are set by the world's market…

A: (a). In the case of a small open economy, we take two assumptions- The economy is a small part of…

Q: 2. Use the open economy macro model (the one with 3 diagrams) to illustrate the con- sequences of a…

A: If foreigners bring in their investment to US, the private saving function in US increases, which…

Q: uppose a country has total GDP (Y) = $10 trillion, consumption = $7 trillion, government spending =…

A: Calculation of the Gross Domestic Product: The GDP is the monetary value of both goods and services…

Q: (Enter response here.) 4. Studies indicate that net exports and net capital outflows tend to be…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: 1) Consider economy T described by the parameters below: C=1500+0.6Y I = 1200 G=2500 X =500 M =…

A: Aggregate demand represents the total demand for all final goods and services that an economy…

Q: 2) Exchange rates and interest rates are connected through the parity conditions. Let the New…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: The table given below shows the levels of real GDP (Y) and the corresponding levels of consumption…

A: At equilibrium, Y=AE where Y=real GDP AE=Aggregate Expenditure AE=C+I+G+NX and NX=EX-IM

Q: “Fiscal policy is completely crowded out in a smnall open economy with floating exchange rate…

A: Fiscal policy is used by the government to stabilize the economy. The tools of fiscal policy are…

Q: Suppose that the government decides to cut spending. In a three graphs diagram, show theimpact of…

A: A decline in government spending implies contractionary fiscal policy. Fall in public spending…

Q: Consider the following data (in billion $) for a country in a particular year: (assume this country…

A:

Q: Ques tion 2 (a) Distinguish between a government deficit and trade deficit? (b) Would you rather…

A: Answer (d): (1).  There is an inverse relationship between the price of the bond and the interest…

Q: Investment can be increased both by reducing taxes on private saving and by reducing the government…

A: Investment can be increased both by reducing taxes on private savings and by reducing the government…

Q: Economics Consider a hypothetical open economy. The following table presents data on the…

A: The supply(ss) of loanable funds comes from the national-savings either from the private (that…

Q: Consider the following data for MILESTONES, a hypothetical economy and nation-state. GDP = 8500…

A: National savings = Private savings + Public savings. Current account balance = (Export - Imports) +…