Consider the following algebraic identity discussed in class: C+I+G+(X-M) = C+S+T Modify the algebraic identity to account for Trade and Federal Budget issues. Identify the magnitude of the U.S. Budget Surplus or Budget Deficit.
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Consider the following algebraic identity discussed in class:
C+I+G+(X-M) = C+S+T
Modify the algebraic identity to account for Trade and Federal Budget issues.
Identify the magnitude of the U.S. Budget Surplus or Budget Deficit.
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- Twin deficits refer to the combination of government budget deficit and trade deficit. The relationship between the 2 types of deficit is If the government budget deficit decreases, then the trade deficit would rise. During a recession, both deficits are likely to fall. If the trade deficit increases, so does the government budget deficit. An increase in the government budget deficit can lead to a greater trade deficit, but not always.Which of the following must be true of an economy in equilibrium with no foreign sector (check all that apply)? Question options: There are no savings (S = 0) The sum of all injections equals the sum of all leakages Any private surplus will be equal to a public (government) deficit of the same size (dollar value) Actual investment (including inventories) is equal to intended investment G – T = S – II S + II = T + GThe following table shows the approximate value of exports and imports for the United States from 2006 through 2010. Complete the table by calculating the surplus or deficit both in absolute (dollar) terms and as a percentage of GDP. If necessary, round your answers to the nearest hundredth. Year GDP Exports Imports Exports – Imports (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Percentage of GDP) 2006 13,399.0 1,471.0 2,240.3 2007 14,062.0 1,661.7 2,375.7 2008 14,369.0 1,843.4 2,553.8 2009 14,119.0 1,578.4 1,964.7 2010 14,660.0 1,837.5 2,353.9 Source: “Income, Expenditures, Poverty, & Wealth: Gross Domestic Product (GDP),” United States Census Bureau, United States Department of Commerce, last modified September 2011, accessed June 10, 2013, https://www.census.gov/library/publications/2011/compendia/statab/131ed/income-expenditures-poverty-wealth.html.…
- Consider three different closed economies with the following national income statistics. Country A has taxes of $40 billion, transfers of $20 billion, and government expenditures on goods and services of $30 billion. Country B has private savings of $60 billion, and investment expenditures of $50 billion. Country C has GDP of $300 billion, investment of $70 billion, consumption of $180 billion, taxes of $60 billion, and transfers of $20 billion. Based on this information, which country has a $10 billion deficit? Country A Country B Country C All the three countries.Assume a government that runs consecutive budget deficits and trade surpluses. They decide to implement a new tax policy, resulting in a budget surplus. Everything else equal, what is the impact of that new budget surplus in private investment, private savings, and trade surplus, respectively? Group of answer choices Rises, falls, rises Rises, falls, falls Falls, rises, rises Falls, rises, fallsSuppose that the government of Smallville spends $2 trillion in 2020 and receives tax revenues of $1.5 trillion in that same year. Which of the following is TRUE? Smallville has a trade surplus of $0.5 trillion. Smallville has a trade deficit of $0.5 trillion. Smallville has a budget surplus of $0.5 trillion. Smallville has a budget deficit of $0.5 trillion. t
- In the late 1970s, several countries in Latin America, notably Mexico, Brazil, and Argentina, had accumulated large external debt burdens. A significant share of this debt was denominated in U.S. dollars. The United States pursued contractionary monetary policy from 1979 to 1982, raising dollar interest rates. a.How would this affect the value of the Latin American currencies relative to the U.S. dollar? b. How would this affect their external debt in local currency terms? c. If these countries had wanted to prevent a change in their external debt, what would have been the appropriate policy response, and what would be the drawbacks?Consider the equilibrium in the market for government bonds and provide clear graphs illustrating the following situations: The domestic economy is undergoing a recession and inflation is raising; The domestic government is facing an unexpected deficit.Twin deficits refer to the combination of government budget deficit and trade deficit. The relationship between the 2 types of deficit is If the government budget deficit decreases, then the trade deficit would rise. An increase in the government budget deficit can lead to a greater trade deficit, but not always. During a recession, both deficits are likely to fall.
- The following table shows the approximate value of exports and imports for the United States from 2006 through 2010. Complete the table by calculating the surplus or deficit both in dollar terms and as a percentage of GDP. If necessary, round your answers to the nearest hundredth. Year GDP Exports Imports Exports – Imports (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Percentage of GDP) 2006 13,399.0 1,471.0 2,240.3 2007 14,062.0 1,661.7 2,375.7 2008 14,369.0 1,843.4 2,553.8 2009 14,119.0 1,578.4 1,964.7 2010 14,660.0 1,837.5 2,353.9 Source: “Income, Expenditures, Poverty, & Wealth: Gross Domestic Product (GDP),” United States Census Bureau, United States Department of Commerce, last modified September 2011, accessed June 10, 2013, https://www.census.gov/library/publications/2011/compendia/statab/131ed/income-expenditures-poverty-wealth.html.…The following table shows the approximate value of exports and imports for the United States from 2006 through 2010. Complete the table by calculating the surplus or deficit both in absolute (dollar) terms and as a percentage of GDP. If necessary, round your answers to the nearest hundredth. Year GDP Exports Imports Exports – Imports Exports – Imports (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of Dollars) (Percentage of GDP) 2006 13,399.00 1,471.00 2,240.30 -769.30 -5.74 2007 14,062.00 1,661.70 2,375.70 -714.00 -5.08 2008 14,369.00 1,843.40 2,553.80 -710.40 -4.94 2009 14,119.00 1,578.40 1,964.70 -386.30 -2.74 2010 14,660.00 1,837.50 2,353.90 -516.40 -3.52 Step 3 In 2006, Net Exports = $1471.0 - $2240.30 = -$769.30. Net Exports as percentage of GDP = -769.30 / 13399 * 100 = - 5.74% Similarly has been calculated for other years Between 2007 and 2008, the _____________ in dollar terms and…The following table shows the approximate value of exports and imports for the United States from 1983 through 1987. Complete the table by calculating the surplus or deficit both in absolute (dollar) terms and as a percentage of GDP. If necessary, round your answers to the nearest hundredth. Year GDP Exports Imports Exports – Imports (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Percentage of GDP) 1983 3,535.0 277.0 328.6 1984 3,931.0 302.4 405.1 1985 4,218.0 302.0 417.2 1986 4,460.0 320.3 452.9 1987 4,736.0 363.8 508.7 Source: “Income, Expenditures, Poverty, & Wealth: Gross Domestic Product (GDP),” United States Census Bureau, United States Department of Commerce, last modified September 2011, accessed June 10, 2013, https://www.census.gov/library/publications/2011/compendia/statab/131ed/income-expenditures-poverty-wealth.html. Between 1983 and…