If the federal government is running a surplus, the surplus becomes a source of funds for the economy private savings will decrease the current account must be negative taxes must fall
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If the federal government is running a surplus,
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the surplus becomes a source of funds for the economy |
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private savings will decrease |
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the current account must be negative |
|
taxes must fall |
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- If the federal government is running a surplus, Question 15 options: taxes must fall the surplus becomes a source of funds for the economy private savings will decrease the current account must be negativeGenerally, how does the standard of living in the United States today compare to the standard of living in other countries? To the standard of living in the United States a century ago?The Bureau of Economic Analysis, or BEA, is a government agency collecting various U.S. economy statistics. From the BEA’s website, find data for the most recent year available on U.S. exports and imports of goods and services. Is the United States running a trade surplus or deficit? Calculate the ratio of the surplus or deficit to U.S. exports.There are many people out there providing opinions on the economy. How can differences of opinion about economic policy recommendations be resolved?• A series of natural disasters occurs that causes the following changes in the U.S. economy: The real gross domestic product drops by 4 percent. The inflation rate rises from 5 percent to 10 percent. Unemployment increases from 6 percent to 10 percent. Suppose that the federal government, holding taxes constant, increases its spending and the Federal Reserve increases its purchases of bonds. Explain how exports and imports will be affected by the changes in output and prices resulting from the policies described.
- Assume an economy has a budget surplus of 1,000, private savings of 4,000, and investment of 5,000. Write out a national saving and investment identity for this economy. What will be the balance of trade in this economy? If the budget surplus changes to a budget deficit of 1000, with private saving and investment unchanged, what is the new balance of trade in this economy?“There has been a turnaround from the sizeable net outflows over the past two years when South African companies stepped up their efforts to internationalise their businesses. The shift in direct investment trends made a small contribution to improving the financial account of South Africa’s balance of payments, which showed a surplus of 3.5% for the third quarter, up from 1.3% the previous quarter. The Reserve Bank’s quarterly bulletin shows that capital inflows were more than adequate to finance the deficit on the current account deficit of the balance of payments, which widened to 4.1% from a revised 2.9% in the third quarter. Economists expect that the current account deficit, which tends to be a driver of the rand exchange rate, will narrow again in the fourth quarter as exports pick up again” (Joffe, 2016). In your opinion, can the government keep export demand stimulated such that the balance of payments remains dazzlingif a country's economy records a surplus, how will the X and M components be represented in its national savings and investment identity? (X-M); right side, (X-M); left side (M-X); demand side, (M-X); supply side
- What is a foreign trade deficit or surplus? How does this affectinterest rates?How could a greater budget deficit increase the trade deficit? What happens to the multiplier if there is an increase in the marginal propensity to consume? What would likely happen to the level of economic activity if the government took the necessary steps to reduce the deficit significantly in a relatively short period of time? When is the most appropriate time to reduce the deficit?The Figure below shows the trade in financial services between Britain and the EU. SB denotes the supply of financial services by British financial companies, and DB shows the domestic demand for financial services by British consumers. Under free trade British financial houses can trade at the world market PW. As a result of “hard Brexit”, British financial houses are banned from doing business in the EU and are confined to the domestic market only (ignore trade with third countries) Identify British production, consumption, trade volume and total social welfare (consumption and production surpluses) under free trade. Identify British production, consumption, trade volume and total social welfare (consumption and production surpluses) after trade is banned.
- 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…Suppose Americans suddenly develop a strong taste for Canadian whiskey. What happens to the demand for Canadian dollars in the foreign exchange market? What happens to the value of Canadian dollars in the foreign exchange market? What about U.S. dollars? What happens to the quantity of net exports in Canada, other than whiskey, as a result of your answer in part b? What about the U.S.?Some economists warn that the persistent trade deficits and a negative current account balance that the United States has run will be a problem in the long run. Do you agree or not? Explain your answer.