REAL INTEREST RATEThe following graph shows the market for loanable funds in Ouvert, a large open economy. The government of Ouvert has just instituted a tax cut,increasing the deficit.tudy ToolsOn the graph, shift either the demand curve or the supply curve to illustrate the change in fiscal policy.nsress Tipscess TipsFOR YOUDomestic SavingStudyHuy ToolsSupplyDemandfor Principles ofSupply··.e FeedbackDemandO Type here to search341 PM89 F AQI 1077/25/2021 REAL INTEREST RATE10Homework (Ch 12)SupplyDemandУ ТoolsSupplyTipsTipsDemandOUpols1020304050QUANTITY OF LOANABLE FUNDSinciples ofThe increase in deficit causes the interest rate in Ouvert toAs an open economy, this change in interest rate causes the net capitalinflow to Ouvert to.This change in net capital inflow causes Ouvert's currency towhich in turn causes Ouvert's netexports toackThe change in net exports caused by the tax cutthe impact on aggregate demand of the expansionary fiscal policy,

Fiscal Policy refers to changes in government spending or taxation in order to regulate the economy.…

REAL INTEREST RATE Supply Demand Supply Demand 10 20 30 40 50 QUANTITY OF LOANABLE FUNDS The increase in deficit causes the interest rate in Ouvert to . As an open economy, this change in interest rate causes the net capital inflow to Ouvert to .This change in net capital inflow causes Ouvert's currency to which in turn causes Ouvert's net exports to The change in net exports caused by the tax cut the impact on aggregate demand of the expansionary fiscal policy.

REAL INTEREST RATE Supply Demand Supply Demand 10 20 30 40 50 QUANTITY OF LOANABLE FUNDS The increase in deficit causes the interest rate in Ouvert to . As an open economy, this change in interest rate causes the net capital inflow to Ouvert to .This change in net capital inflow causes Ouvert's currency to which in turn causes Ouvert's net exports to The change in net exports caused by the tax cut the impact on aggregate demand of the expansionary fiscal policy.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 3P

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Similar questions

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when there is a budget deficit, wha happens to the S+KI curve?
a) Given the following values of consumption, investment, and government purchases (all in (in millions of $) at three point of Real GDP, calculate (in millions of $) and plot the Total Expenditures curve. Real GDP Consumption Investment Government Purchases Total Expenditure Q1 600 50 200 Q2 750 80 400 Q3 1000 100 600 b) Assume the economy is in recessionary gap. On the same diagram you in part a), show this case. If the government intervenes using fiscal policy, what sort of policy would they use? Which curve would they shift and why? Draw this shift on the same diagram.