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What happens to the following variables during an expansion?
a. government budget deficits (surplus)
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- The Focus box “Can a Budget Deficit Reduction Lead to an Output Expansion? Ireland in the 1980s” provides an example of fiscal consolidation. Ireland had a large budget deficit in 1981 and 1982. What does a deficit reduction imply for the medium run and the long run? What are the advantages of reducing the deficit?In which of the following cases does the size of the government’s debt and deficit indicate potential problems for the economy? Explain your answer. a) The government’s debt is relatively low, but the government is running a large budget deficit as it builds a high-speed rail system to connect the major cities of the nation. b) The government’s debt is relatively high due to a recently ended deficit-financed war, but the government is now running only a small budget deficit. c) The government’s debt is relatively low, but the government is running a budget deficit to finance the interest payments on the debt. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Assume the following to answer the following questions: C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports = 0.1(Y-T) Government spending = 200 Investment = 300 Exports = 600 Potential Output = $8000 By how much must government spending increase or decrease to close this gap and bring the economy to Potential Output? Show your work
- Suppose there is an increase in budget deficit, what happens to intrest rates and national savings ?The following transactions took place in Ecoland in 2018: Trillions of 2014 dollars Government purchases 400 Taxes 360 Firms’ profits 300 Investment 400 Consumption expenditure 1000 Wages paid to labor 1400 Exports 300 Government transfer payments 150 Imports 350 (a). Calculate Ecoland’s real GDP in 2018, i.e., GDP measured in 2014 $. (b) How much do households save in Ecoland? Is it enough to finance domestic investment? (c) Does the government have a balanced budget? If not, what is the surplus or deficit? (d) If Ecoland’s nominal GDP in 2018 is $1900 trillion, how much inflation has Ecoland experienced since 2014?If tax cuts don't cause enough economic growth, we might also need to reduce expenditures to reduce the deficit. Explain?
- Consider the following data referring to any economy that has no foreign relations:GDPmp = 6000Disposable Income of the private sector (DIs.priv.)= 5100Budget Deficit = 200Private consumption = 100 Calculate the amount of:a) Public spending.b) Private savings (Spriv).c) Investment.What is considered "too much" debt or "too large" a deficit? Are you able to provide any guidelines for deficit or debt ceilings?From the data given below calculate the revenue deficit?
- When an annual deficit occurs, how is it financed? 1. The federal government buys US Treasury Securities from domestic and foreign investors to raise cash. The future obligations of these securities result in publicly held assets. 2. The federal government sells US Treasury Securities to domestic and foreign investors to raise cash. The future obligations of these securities result in publicly held deficits. 3. The federal government buys US Treasury Securities from domestic and foreign investors to raise cash. The future obligations of these securities result in publicly held investments. 4. The federal government sells US Treasury Securities to domestic and foreign investors to raise cash. The future obligations of these securities result in publicly held debt.What is a surplus unit? What is a deficit unit?Between 1998 and 2000, the U.S. government had higher revenue than spending. Which of the following most likely happened because of this? A) The U.S. budget deficit increased B) The U.S. budget deficit decreased C) U.S. national debt decreased D) U.S. national debt increased