Which of the following events could explain a decrease in interest rates together with an increase in investm OA. The government went from surplus to deficit. B. The government instituted an investment tax credit (tax incentive for business investment). . OC. The government reduced the tax rate on savings. D. None of the above is correct.
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- Give written answer with explanation and conclusion A government policy that would reduce the saving rate is ? a) giving tax breaks to increase the real return that savers receive b) eliminating the social security system c) increasing the government budget surplus by cutting government spending d) switching the tax system to tax consumption instead of incomeConsider an economy in which GDP is $30 billion. Tax revenue is $7 billion, consumption is $15 billion, and the government has a budget surplus of $2 billion. Show your work in each of the following questions.(c) What is national saving?(d) What is the level of investment?Consider an economy in which GDP is $30 billion. Tax revenue is $7 billion, consumption is $15 billion, and the government has a budget surplus of $2 billion. Show your work in each of the following questions. (a) What is the level of government spending?(b) What is private saving?
- A circular flow diagram: A. is shows the link between government spending and investment B. it shows how government and firms are connected through factor and government markets C. show how firms and households are connected through product and factor markets D. it shows foreign exchange marketsThe 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?onsider the following data (in billion $) for a country in a particular year: (assume this country has Zero Transfer Payment Personal consumption expenditure (C) 200 Exports (x) 10 Government Purchases of goods and services (G) 120 Imports (m) 15 Gross Domestic Product (Y) 1800 Taxes 20 d. What is the value of gross investment? e. What is the value of net export? f. Is the country lending to or borrowing from rest of the world? g. Dose the government has deficit, balance or surplus budget? h. What is the amount of investment financed by national saving? i. What is the amount of investment financed by borrowing from rest of the world? J. What is the meaning of transfer payment
- What is a bond? a. When the government sells part of itself to companies. b. When you buy part of a company and own a share. c. When the government borrows money from the people and pays back with interest. d. James Bond.For a closed economy, T = $5,000; S = $11,000; C = $50,000; and the government is running a budget deficit of $1,000. Then Private saving = $12,000 and GDP = $67,000. Select one: a. True b. FalseUsing a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if: a reduction in military spending moves the government’s budget from deficit into surplus.
- If the economy is in recession and government increases money supply do you think it will affect product market? How it will affect i. the price level and value of money, ii. Loanable fund market: expected inflation and real GDP? Use the relevant diagrams.Calculate the value of savings when it's given that:- National income = $1000 million MPS = 0.25 Autonomous consumption expenditure = $200 millionOther things the same, an increase in the budget deficit A. shifts the supply of loanable funds left, so the interest rate rises. B. shifts the demand for loanable funds right, so the interest rate rises. C. shifts the demand for loanable funds left, so the interest rate falls. D. shifts the supply of loanable funds right, so the interest rate falls.