The table sets out the data for an economy when the government's budget isbalanced.RealLoanable fundsLoanable fundsinterest rateIf the government's budget becomes a deficit of $1.0 billion, what are the realdemandedsupplied(percentper year)interest rate and investment?(billions of 2007 dollars)47.54.5Does crowding out occur?7.05.06.55.5.....If the government's budget becomes a deficit of $1.0 billion, the real interest rate is76.06.0percent a year and the quantity of investment is $>>> Answer to 1 decimal place.billion.85.56.59.5.07.0104.57.5

Crowding out manifests a situation where the investment by private sector gets hurt due to an…

The table sets out the data for an economy when the government's budget is balanced. Real Loanable funds Loanable funds interest rate demanded supplied If the government's budget becomes a deficit of $1.0 billion, what are the real interest rate and investment? (percent per year) (billions of 2007 dollars) 4 7.5 4.5 Does crowding out occur? 7.0 5.0 6 6.5 5.5 ..... If the government's budget becomes a deficit of $1.0 billion, the real interest rate is percent a year and the quantity of investment is $ 7 6.0 6.0 billion. 8 5.5 6.5 >>> Answer to 1 decimal place. 9 5.0 7.0 10 4.5 7.5 ....-

The table sets out the data for an economy when the government's budget is balanced. Real Loanable funds Loanable funds interest rate demanded supplied If the government's budget becomes a deficit of $1.0 billion, what are the real interest rate and investment? (percent per year) (billions of 2007 dollars) 4 7.5 4.5 Does crowding out occur? 7.0 5.0 6 6.5 5.5 ..... If the government's budget becomes a deficit of $1.0 billion, the real interest rate is percent a year and the quantity of investment is $ 7 6.0 6.0 billion. 8 5.5 6.5 >>> Answer to 1 decimal place. 9 5.0 7.0 10 4.5 7.5 ....-

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter30: Government Budgets And Fiscal Policy

Section: Chapter Questions

Problem 51P: A government starts off with a total debt of $3.5 billion. In year one, the government runs a...

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Similar questions

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Suppose the government borrows $20 billion more next year than this year. a. Use a supply-and-demand diagram to analyse this policy. Does the interest rate rise or fall? b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing. c. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects that you discussed in parts (a) and (b)?