Consider the following consumption function: C(Y)=0.8 (Y-T), where Y represents income and T represents het taxes. Suppose that investment, I, is 100; government spending, G, is 200; and, net taxes, T, are 100. The budget deficit is equal to: O a.-200 O b.0 O c. 300 O d. 100
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- 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…3)Show and explain how an expansionary fiscal policy can cause crowding-out effect by using aggregateexpenditure and aggregate output curves.2)What action could the TCMB take to reduce the crowding-out effect of an expansionary fiscal policy?1)By using graphs, show and explain the effects of an expansionary fiscal policy on the goods market by taking thelink between two markets into accountLet’s assume that in 2017, Sweden’s government had no debt and held $120 billion dollars. To stimulate its economy during 2018, the government of Sweden decides to spend $65 billion more than it will receive in tax revenue and in 2019, the government of Sweden’s expenditures will exceed tax revenues by $75 billion. What will the government of Sweden’s total debt equal at the end of 2019? Group of answer choices $20 billion $120 billion $140 billion $260 billion
- Refer to the accompanying table for Waxwania. Government Expenditures, G Tax Revenues, T Real GDP $190 100 $500 190 120 600 190 140 700 190 160 800 190 180 900 a. What is the marginal tax rate in Waxwania? ____percent --The average tax rate? _____percent b. Suppose Waxwania is producing $600 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $700.-How large is its budget deficit? $____ -Its cyclically adjusted budget deficit? $____ -Its cyclically adjusted budget deficit as a percentage of potential real GDP?________ percentAssume 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 the government's present value of current and projected future outlays is 75 percent of GDP and its present value of current and projected future revenues is 50 percent of GDP. What gap does this describe, and what is the size of the gap? This information describes the _______. A. fiscal gap, which is 25 percent of GDP B. generational gap, which is 25 percent of GDP C. fiscal gap, which is 125 percent of GDP D. fiscal gap, which is – 25 percent of GDP
- Q No.3 What we mean by Economic dues in case of Fiscal Policy in Islamic Economy? Discuss the function of Economic dues in the context of Zakah as a non-discretionary fiscal policy tool of Islamic Economy.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?16. Which of the following statements is (are) correct? I. If the current inflation rate is positive, the inflation-adjusted government budget deficit will be smaller than the nominal government budget deficit.II. Under the capital budgeting, if the Government pays off its debt by selling an infrastructure it owns, it will not affect the government budget deficit. Answer: ________a) None of the above.b) I only.c) II only.d) Both I and II.
- Now suppose that the gross national debt initially is equal to $2.5 trillion and the federal government then runs a deficit of $100 billion. What is the new level of gross national debt? If 100 percent of this deficit is financed by the sale of securities to the public, what happens to the level of debt held by the public? What happens to the level of gross debt? 3. If GDP increases by 6 percent in the same year as the deficit is run, what happens to the gross debt as a percentage of GDP? What happens to the level of debt held by the public as a percentage of GDP?Complete the table below by stating whether the direction of discretionary fiscal policy was contractionary (C), expansionary (E), or neither (N), given the hypothetical budget data for an 1 2 3 4 Year Actual budget deficit (–) or surplus (+) Standardized budget deficit (–) or surplus (+) Direction of fiscal policy 1 3.9 2.1 2 – 4.5 – 2.6 3 – 4.7 – 3.0 4 – 3.9 – 2.6 5 – 2.9 – 2.0 6 – 2.2 – 1.91. Austria runs a gov budget surplus, and it has a small debt to GDP ratio. This year, however, Austria is running a government budget deficit, and it is financing that deficit by selling government bonds.This year's government budget deficit is causing interest rates to (increase / decrease/ remain the same /change ambiguously) and the debt to (increase/ decrease /remain the same/ change ambiguously).2. Austria is predicted to return to a surplus position next year. If it is successful, interest rates will (increase / decrease/ remain the same /change ambiguously) and the debt will (increase /decrease/ remain the same/ change ambiguously).