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- 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 answerAssume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 y= 1700 consumption = 1200 4) What is the level of private saving in equilibrium? 5) What is the level of public saving in equilibrium? 6) What is the level of aggregate saving in equilibrium? 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?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.
- 20. At what level of income are the leakages from the spending stream equal to the injections into the spending stream? a) 4 b) 12 c) 24 d) 8 e) zeroAssume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 1) Solve for equilibrium income (Y*). 2) Graph the economy. (Upload the graph in the next question.) 3) What is the level of consumption in equilibrium? 4) What is the level of private saving in equilibrium? 5) What is the level of public saving in equilibrium? 6) What is the level of aggregate saving in equilibrium? 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?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…
- 3. In a economy, consumption is 40, public sector spending is 22, investment is 15, net exports are -3. The treasury is running a $6 budget deficit. Which fraction of their disposable income are households saving? Enter your answer in decimals, not percents. 3a .What was the private saving equal to? 3b. How much of the savings was spend to finance the public sector? 3c. What was the external saving, that is, how much did the people's claims on foreign assets grow?The following equations describe an economy. (Think of C , I , G , etc., as being measured in Billions and I as a percentage; a 5 percent interest rate implies I = 5.) C= 0.8(1 - t )Y T=0.25 I=900-50i -G=800 L = 0.25Y-62.5i -M/-P= 500 a. What is the value of aG which corresponds to the simple multiplier (with taxes) ? b. By how much does an increase in government spending of ∆G increase the level of Income in this model, which includes the money market? c. By how much does a change in government spending of ∆G affect the equilibrium Interest rate? d. Explain the difference between your answers to parts a and b.Suppose that the following equations describe the 4-sector economyConsumption function C= 60 + 0.8 Yd,Investment function I= 100-5i,% interest rate i=6 (use 6 to compute for the investment),Government Expenditure G= 76,Lump sum Tax Tx= 15,Transfer payments TR=60,Exports X=70Imports M=20+0.2Y 5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit?5.2. Calculate the investment, government, tax, transfer payments and foreign trade multiplier.5.3. Suppose that government increases its education and health services by 65, what is the new level of income?5.4. If exports increase by 10, what is the new level of income? Is the economy operating with a trade deficit or surplus at this level of income?
- tions gwep17t.09.024 O O Which of the following are leakages from the circular flow of income? a. Savings, taxes, and imports b. Investment, government purchases, and exports c. Investment, taxes and bonds d. Imports, wages and taxes Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.Data is provided below for a small closed economy. Output/Income = 10,000 Consumption = 600 + 0.75(Y - T) Investment = 400 Taxes = 2,000 Government expenditure = 2,000 Assuming that fiscal policy has a multiplier effect and that investment and taxes remain unchanged, what will happen to output if government expenditure decreased by 500? Select one: It would increase by 500 It would decrease by 667 It would decrease by 500 It would increase by 2,000 It would decrease by 2,000 It would increase by 667Consider country D, which is a closed economy. Suppose that D’s investment is 100, disposable income is 500 and the consumption 550. Answer D’s public saving and if government spending G is more than, less than or equal to the tax T. You need to use I = S, S = Private saving + Public saving The definition of private saving Then, you can answer how much is the public saving. Regarding G, remember the definition of public saving. Public saving: G: