Debt financing of ever-increasing government spending combined with constant government revenue and a positive real interest rate is not viable if the economy is not growing. True or false? Explain.

Q: Collaboration with Congress during the Clinton Administration allowed for an aggressive…

A: In economics, the quantity of a commodity that producers want to sell at various prices and the…

Q: Why would lenders want to see that a business already has some level of capitalization before giving…

A: The banks are the financial institutions who are involved in the process of lending money to the…

Q: Will Increase in government spending financed by borrowing help promote a strong recovery from a…

A: A recession is a period of an economic downturn that is caused due to the depletion of aggregate…

Q: Which of the following was an underlying cause of the economic crisis of 2008? a. The imposition of…

A: Conventional lending standards had started to erode since the 1990s.

Q: if there is continuous increase in savings what will happen to loanable funds market and becase of…

A: Answer - Need to find- what will happen to loanable funds market. effect of decrease in deficit on…

Q: According to Milton Friedman, when the public holds more cash balances than it desires at any level…

A: Thus, Friedman offers quantity theory as a theory of money demand, with money demand supposed to be…

Q: Explain why negative real interest rates cannot exist in an economy that is properly functioning

A: When interest is given to borrowers rather than lenders, it is referred to as having a negative…

Q: when the inflation rate is expected to increase, the real cost of borrowing ______ at any given…

A: High inflation can also result in higher borrowing costs for businesses and folks needing loans and…

Q: The interest rate for a bond is always equal to its yield to maturity

A: The interest rate can be defined as the amount of interest which is measured as a percentage of the…

Q: True/False and Explain When nominal interest rates are zero, the central bank can still lower them…

A: There are mainly two different types of interest rates in the economy and they are the nominal…

Q: Answer the next question on the basis of the following information for a bond having no expiration…

A: The equilibrium price and quantity of bonds traded in the market are determined by the bonds market…

Q: A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the…

A: A real interest rate is one that has been adjusted for inflation, reflecting the real cost of funds…

Q: A country reduces its government budget deficit and also makes political reforms that lead people to…

A: If a country is having a lower deficit then its demand for funds falls to cover the deficit. This…

Q: Which is TRUE about inflation and interest rates? * a. None of the choices. b. The inflation…

A: Which is TRUE about inflation and interest rates? *

Q: would bonds still be a good option for investment if interest rates are negative?

A: Negative-yielding bonds are monetary instruments that cause buyers to lose cash.  They are typically…

Q: Suppose we have a financial market where Qd = −1r + 26 Qs = 1.5r + 1 a. What is the equilibrium…

A: The equilibrium interest rate can be calculated by equating demand and supply functions as follows:…

Q: If I had a federal budget that was typically balanced where new taxes causes $100 billion surplus.…

A: The federal budget is an itemized plan for the United States' yearly public spending. It is used to…

Q: How do people typically respond to higher real interest rates? by saving less by paying more taxes…

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

Q: When inflation is expected to increase, at the current market interest rate, the real interest…

A: Inflation is a situation of general price rise of all the goods and services in the economy. It is…

Q: If the supply of financial capital increases   Interest rates will remain unchanged.   Interest…

A: Interest rate is determined by the demand and supply of financial capital.

Q: (true/false and explanation)  When nominal interest rates are zero, the central bank can still…

A: The nominal interest is the interest rate in the economy which does not take inflation into account…

Q: When the expected profit investment demand and the demand for loanable funds curve shifts A. rises;…

A: Profit: It means gain after subtracting all the expenses from the total amount received.

Q: Explain what effect a large federal deficit might have on interest rates?

A: The deficit in the budget arises when the government faces higher government spending with lesser…

Q: If there is a weakening in time preferences among U.S. consumers and foreign entities that channel…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: A well-functioning financial system does all of these EXCEPT: a. foster economic growth by…

A: The objective of the financial system is to manage the availability of funds in the market. This not…

Q: The following graphs depict the market for loanable funds and the relationship between the real…

A: The equilibrium situation in the foreign exchange market is determined where the foreign exchange…

Q: 39 Are the following statements true or not true? 1. Because of the crowding out effect in the…

A: Option A - both statements are true Fiscal expansion shifts IS curve to the right which increases…

Q: A country reduces its government budget deficit and also makes political reforms that lead people to…

A: With the reduction in the government budget deficit, the interest rate would also go down.…

Q: Trace the impact of selling more bonds by government on bond prices, interest rates, investment,…

A: Impact of selling bonds on various factors cam be shown as follows:   Bond prices: When the supply…

Q: One of these four answers increases the demand for financial capital. Which one?  Group of answer…

A: When talking about financial capital, it is the requirement of the funds by the firms to deal with…

Q: Suppose that the federal government ran a sizable budget surplus during the next decade. Compared to…

A: Traditional view: According to the traditional view, if the government runs a budget surplus, it…

Q: You would expect a bond of the U.S. government and a bond of an Eastern European government to pay…

A: A bond is a fixed-income security that reflects a loan from an investor to a borrower (usually a…

Q: Explain government crowding out and how it occurs. How do government surpluses affect real interest…

A: The answer and explanation for both these questions is as follows:-

Q: If signs of an economic slowdown abroad and domestically do materialize, what would be your…

A: Economic Slowdown: It is a regular phase of a economic cycle where the economic growth of a country…

Q: Suppose the government borrows $20 million more next year than this year. a. Draw and fully label a…

A: All A,B, & C part solved below

Q: When nominal interest rates are zero, the central bank can still lower them by printing money and…

A: The nominal interest rate refers to rate that measure the changes in dollar amount. It does not take…

Q: According to the table, in which year did buyers of six-month Treasury bills receive the highest…

A: According to the Fisher equation: Real interest rate = Nominal interest rate - inflation rate The…

Q: Which of the following would both make the interest rate on a bond higher than otherwise?   a.…

A: Bonds are defined as long term debt which is exclusively been provided by the company to generate…

Q: Suppose that there is a credit market imperfection due to asymmetric information. In the economy, a…

A: Given information fraction of b are lenders with endowment Y in the current period and 0 in the…

Q: The presence of a well developed financial market and a wide array of financial instruments is…

A: Financial instruments may be regarded of as capital bundles that can be traded or as assets that can…

Q: Is it possible to assume there is crowding out as well with a formula? If there was crowding out of…

A: