i need it in words not handwritten 6. The government of Fisclandia is planning its budget for the 2022 financialyear. Projected exports are $61 million, and projected imports are $73million. Expected investment in the economy is $128 million per year.Consumption is given as 70% of income after tax, with the income tax ratecurrently set at 12%. Government spending is planned to be $117 million.a) i) Calculate the Balance of Trade for the nation.ii) Explain briefly what effect you would expect this to have on theexchange rate with other currencies, assuming a clean float.Calculate the equilibrium level of income in the economy in the 2022financial year.b) i)ii) Calculate the amount of income tax received by the government andhence explain whether there is a budget surplus or deficit.c) The government decides to replace the planned government spending of$117 million with a commitment to set government spending equal to taxrevenues (a balanced budget) with the tax rate increased to 15% ofnational income. Write down the aggregate demand function in this caseand hence determine the new equilibrium level of income.

“Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

6. The government of Fisclandia is planning its budget for the 2022 financial year. Projected exports are $61 million, and projected imports are $73 million. Expected investment in the economy is $128 million per year. Consumption is given as 70% of income after tax, with the income tax rate currently set at 12%. Government spending is planned to be $117 million. a) i) Calculate the Balance of Trade for the nation. ii) Explain briefly what effect you would expect this to have on the exchange rate with other currencies, assuming a clean float. b) i) Calculate the equilibrium level of income in the economy in the 2022 financial year.

6. The government of Fisclandia is planning its budget for the 2022 financial year. Projected exports are $61 million, and projected imports are $73 million. Expected investment in the economy is $128 million per year. Consumption is given as 70% of income after tax, with the income tax rate currently set at 12%. Government spending is planned to be $117 million. a) i) Calculate the Balance of Trade for the nation. ii) Explain briefly what effect you would expect this to have on the exchange rate with other currencies, assuming a clean float. b) i) Calculate the equilibrium level of income in the economy in the 2022 financial year.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter36: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 3PA

See similar textbooks

Similar questions

Explain how a shift from a government budget deficit to a budget surplus might affect the exchange rate.
Based on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?
14. Suppose that Korea has been in recession and many economists have concerns about the long-term recession. Therefore, the Bank of Korea and the government are preparing stimulus packages for the economy. (1) Using both AA and DD curves, describe the effect of the government’s temporarily expansionary fiscal policy on the change of equilibrium of national output and foreign exchange rate. (2) The Korean government decides to annually spend an extra budget on constructing and maintaining social infrastructure forever. Using both AA and DD curves, describe the impact of the government’s policy on the change of equilibrium of national output and foreign exchange rate.
QUESTION 7 07. What factors make an expansionary "stimulus" fiscal policy effective? a) A government budget deficit associated with fiscal stimulus should should borrow money from those who spend less and save more, to those who spend more and save less. b) A permanent decrease in taxes is more effective in stimulating spending than a temporary one c) An increase in government purchases of goods and services should be temporary and should not permanently displace private spending d) The most expansionary way of financing the budget deficit associated with a fiscal stimulus policy is by the central bank expanding the quantity of money in circulation. e) Infrastructure investment belongs with long-term growth policy, but invariably makes a poor element in stimulus policy because such investment normally take a long time to implement. f) All the above.
1. If NX=0, then savings must be equal to invesment Select one: True False 2. When the government runs a fiscal deficit, it finances it by: a. issuing stocks b. decreasing taxes c. borrowing money from a commercial bank d. issuing bonds 3. If taxes increase, then: a. disposable income decreases b. disposable income increases c. consumption increases d. private savings increase 4. Primary fiscal surplus refers to: a. private savings b. total savings c. public savings d. trade balance 5. Calculate Private Savings using the proper information below: Private Consumption=€12,000 Public Spending=€5,000 Taxes= €7,000 GDP=€30,000 Investment=€13,000 6. When the interest rate falls: a. the cost of borrowing money increases b. investment decreases c. investment increases d. savings increase 7. When the government runs a fiscal deficit and as a result private investment falls, this is called: 8. An economy has the following…
36) An automatic fiscal stabiliser is A) a monetary or fiscal policy that aims to smooth out the business cycle. B) the tendency for inflation to fall as unemployment rises. C) a tax or form of government expenditure that has the effect of reducing the size of the multiplier. D) the tendency for exchange rates to adjust automatically to changes in the demand and supply of foreign currency
Data is provided below for a small closed economy. Output/Income = 10,000 Consumption = 600 + 0.75(Y - T) Investment = 400 Taxes = 2,000 Government expenditure = 2,000 Assuming that fiscal policy has a multiplier effect and that investment and taxes remain unchanged, what will happen to output if government expenditure decreased by 500? Select one: It would increase by 500 It would decrease by 667 It would decrease by 500 It would increase by 2,000 It would decrease by 2,000 It would increase by 667
1. Suppose a closed economy hasnational income of $50 million,Investment of $2 million,Inflation rate of 5%, net tax rateof 15% and a budget surplus of$4 million. Find value of government purchases (G).
1. Which of the situations is an example of the crowding-out effect on investment as it pertains to macroeconomics? - The government of Walla Walla spent $4.3 billion dollars and collected $2.2 billion dollars in tax revenue. - Candex, an eyeglass frame company, decides to cut the price on all of its frames to $10, which successfully drives out all other firms from the market. - The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that taxes will increase in the future. - Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However, the government is running a deficit which has increased interest rates so much that Jack can no longer afford to borrow the money.
A. Calculate the levels of consumption and savings that occurs when the economy is in equilibrium. B. Computer the government budget deficit in this economy. C. If government spending in banana land increases by $1000 what is the amount of the increase in equilibrium output? D. If taxes in banana land decrease by $1000 what is the new equilibrium output in this economy? E. To keep the government budget balanced, of both government spending and taxes in banana land increase by $1000 what is the change in equilibrium income level?
6. After a tax increase, households often reduce spending and save more. This canresult in:a. An increase in the national budget deficitb. An increase in public and private savingsc. A long-run decrease in capital accumulationd. A short-run decrease in national savings and investment, and a long-rundecrease in productivity
Suppose the GDP of a country with a closed economy is $22 trillion, (net) taxes are $4.2 trillion, public saving is $0.8 trillion, and private saving is $1.3 trillion. What are the values of consumption, investment, national saving, and government spending? 1b Is the government of this country running a budget surplus or a deficit?