Summarize the effects of a budget deficit by filling in the following table.Real Interest RateReal Exchange RateTrade BalanceEffects of a Budget Deficit Use the green line (triangle symbol) to show the supply curve in this market before the budget deficit. Tshow the supply curve after the budget deficit.Market for Foreign-Currency Exchange10Initial Supply8.Supply with Deficit2Demand-20-15-10101520QUANTITY OF DOLLARS (Billions)Summarize the effects of a budget deficit by filling in the following table.Real Interest RateEffects of a Budget DeficitReal Exchange RateTrade BalanceRE AL EXCHANGE RATE Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving,domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is aurrentlyexperiencing a balanced government budget.Real Interest RateNational SavingNet Capital Outflow(Billions of dollars)Domestic Investment(Percent)(Billions of dollars)(Billions of dollars)7.6530-1066035-55540450453455010405515Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points(square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market.Market for Loanable FundsDemand

Answer: Budget deficit: budget deficit refers to the excess of government expenditure over its…

Answered: Summarize the effects of a budget…

Summarize the effects of a budget deficit by filling in the following table. Real Interest Rate Real Exchange Rate Trade Balance Effects of a Budget Deficit

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 2SCQ: Assume an economy has a budget surplus of 1,000, private savings of 4,000, and investment of 5,000....

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