In a closed economy,Y = $15 billionC = $12.0 billion| = $1.5 billionTR = $3.0 billionT = $2.0 billionCalculate each of the following (round each answer to one decimal place).Private savings = $ billionPublic savings = $ billionTotal savings in this economy = $|billionThe government's budget deficit or surplus = $ billion(enter a negative number for a deficit, positive number for surplus).

A budget deficit refers to when the revenue earned by the government is exceeded by its…

In à člosed economy, Y = $15 billion C = $12.0 billion | = $1.5 billion TR = $3.0 billion T = $2.0 billion Calculate each of the following (round each answer to one decimal place). Private savings = $O billion Public savings = $ billion Total savings in this economy = $ The government's budget deficit or surplus = $ (enter a negative number for a deficit, positive number for surplus). billion $ billion

In à člosed economy, Y = $15 billion C = $12.0 billion | = $1.5 billion TR = $3.0 billion T = $2.0 billion Calculate each of the following (round each answer to one decimal place). Private savings = $O billion Public savings = $ billion Total savings in this economy = $ The government's budget deficit or surplus = $ (enter a negative number for a deficit, positive number for surplus). billion $ billion

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 8PA

See similar textbooks

Similar questions

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…
A- Suppose potential GDP is $20 trillion. If the economy produces at potential, then the government budget deficit is $1 trillion. If actual GDP is $19 trillion, the government deficit is $1.25 trillion. The cyclically adjusted budget deficit is ___ trillion (do not enter a ‘$’ sign Assume an interest rate of 5%. What is the maximum amount an individual would be willing to give up today in exchange for $1, paid 30 years in the future? Suppose the government has promised to pay $100 billion dollars in benefits 10 years from now. Assuming an interest rate of 4%, what is the present discounted value (PDV) of the obligation? Answer in billions of dollars, rounded to two decimal places.
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?
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government spending in 2020 as result of Covid 19. Because of this, the government borrowing in 2021 increases by the same amount. a) Compare the size of equilibrium changes in 1) investment, 2) public saving, 3) private saving and 4) national saving (public saving + private saving) with $50 billion increase in borrowing. Compare the changes (increase/decrease) in these variables indicating same, less or more than the $50 billion. b) Will the equilibrium quantity of national savings change by more or less than the initial change in public saving? Explain your answer
• Analyze the effects of a government budget deficit. • Examine how the interest rate is determined in a variety of scenarios. • Synthesize knowledge of saving, investment, and the financial system. Government budget and national saving: 1. Suppose that GDP equals $10 trillion, consumption equals $6.5 trillion, and the government spends $2 trillion and has a budget deficit of $300 billion. Please find public saving, taxes, private saving, national saving, and investment.
The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budgetdeficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases tooffset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?
The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budget deficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases to offset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?
Government budget and national saving: 1. Suppose that GDP equals $10 trillion, consumption equals $6.5 trillion, and the government spends $2 trillion and has a budget deficit of $300 billion. Please find public saving, taxes, private saving, national saving, and investment.
Explain how government borrowing affect interest rate in the market. What impact such change in interest rate could have on the economy?
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government spending in 2020 as result of Covid 19. Because of this, the government borrowing in 2021 increases by the same amount. Compare the size of equilibrium changes in 1) investment, 2) public saving, 3) private saving and 4) national saving (public saving + private saving) with $50 billion increase in borrowing. Compare the changes (increase/decrease) in these variables indicating same, less or more than the $50 billion.
Suppose that in 2018 the federal government spent $3.4 trillion and collected $2.8 trillion in taxes. In 2019, government spending rose to $3.8 trillion and government revenue rose to $3.0 trillion. If the government debt was $20.0 trillion at the beginning of 2018, what will it be at the end of 2019? Select one: a. $21.4 trillion b. $20.8 trillion c. $20.6 trillion d. $19.8 trillion e. $18.6 trillion
3. Effects of a government budget deficit Suppose a hypothetical open economy uses the U.S. dollar as currency. The table below presents data describing the relationship between different real interest rates and this economy’s levels of national saving, domestic investment, and net capital outflow. Assume that the economy is currently operating under a balanced government budget.