Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 31, Problem 4SCQ
Imagine an economy in which Ricardian equivalence holds. This economy has a budget deficit of 50, a
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Question: Assume the
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Chapter 31 Solutions
Principles of Economics 2e
Ch. 31 - In a country, private savings equals 600, the...Ch. 31 - Assume an economy has a budget surplus of 1,000,...Ch. 31 - In the late 1990s, the U.S. government moved from...Ch. 31 - Imagine an economy in which Ricardian equivalence...Ch. 31 - Why have many education experts recently placed an...Ch. 31 - What are some steps the government can take to...Ch. 31 - Based on the national saving and investment...Ch. 31 - How would you expect larger budget deficits to...Ch. 31 - Under what conditions will a larger budget deficit...Ch. 31 - What is the theory of Ricardian equivalence?
Ch. 31 - What does the concept of rationality have to do...Ch. 31 - What are some of the ways fiscal policy might...Ch. 31 - What are some fiscal policies for improving a...Ch. 31 - What are some fiscal policies for improving the...Ch. 31 - Explain how cuts in funding for programs such as...Ch. 31 - Assume there is no discretionary increase in...Ch. 31 - Explain how decreased domestic investments that...Ch. 31 - The U.S. government has shut down a number of...Ch. 31 - Explain how a shift from a government budget...Ch. 31 - Describe how a plan for reducing the government...Ch. 31 - Explain whether or not you agree with the premise...Ch. 31 - Explain why the government might prefer to provide...Ch. 31 - Under what condition would crowding out not...Ch. 31 - What must take place for the government to run...Ch. 31 - Sketch a diagram of how a budget deficit causes a...Ch. 31 - Sketch a diagram of how sustained budget deficits...Ch. 31 - Assume that the newly independent government of...Ch. 31 - Illustrate the concept of Ricardian equivalence...Ch. 31 - During the most recent recession, some economists...
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- Given the numbers below, a. show that the country has a twin deficit?b. Find the output Y? c. Find the private saving, public saving, and national saving?d. Find the net exports?Tax: T= 500 dollars.Gov’t spending: G= 700 dollars.Disposable income Yd = 900 dollars.Consumption: C= 400 dollars.Investment: I= 500 dollarsarrow_forwardIf a country is experiencing a budget deficit and the government reduced spending, resulting in a balanced budget. How a country’s shift from budget deficit to balanced budget would affect its investments, economic growth, net capital outflow and currency exchange rate?arrow_forwardIn a small open economy if domestic private saving equals $50 billion, government saving equals-$20 billion, the trade balance is -$20 billion then Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Domestic investment equals $50 billion and we are in a trade deficit b C d Domestic investment equals $30 billion and we are in a trade deficit The government budget is in a surplus of $20 billion if the government budget deficit is lowered then domestic investment would decrease. X Your answerarrow_forward
- Suppose that the government deficit is 20, interest on the government debt is 15, taxes are 55, government expenditures are 50, consumption expenditures are 65, ne factor payments are 25, the current account surplus is - 10, and national saving is 40. Calculate the following (not necessarily in the order given): a. Private disposable income = b. Transfers from the government to the private sector = c. Gross national product d. Gross domestic product : e. The government surplus = f. Net exports %D g. Investment expenditures =arrow_forwardThe figure below shows national saving (NS) and investment demand (1D ) for the hypothetical country of Slovappa. Real GDP is equal to potential GDP. The numbers are in billions of dollars. Assume the economy's national saving is NSo and investment is IDo- NSo NS Quantity of Investment and Saving (S) Suppose that at this level of national saving, the government of Slovappa has a budget deficit of $100. If the country's level of national saving is $200, then private saving must be $ a) 300 b) 100 c) 200 Real Interest Ratearrow_forwardYou have the following annual figures for the New Zealand economy. Investment expenditure $42.5 billion Government savings -$1.7 billion Many politicians and commentators would like to see continued increases in investment and current account surpluses rather than deficits. If these events are to occur, what else must be happening in the economy? 1. The Government must raise the retirement age. 2. Government spending must fall 3. National savings (private and government) must rise 4. New Zealand must restrict foreign ownership of land and other assetsarrow_forward
- Assume that GDP is $6500, personal disposable income is $5600, and the government budget deficit is $400. Consumption is $3800, and the trade deficit is $100. Calculate the saving (S), investment (I), and government spending (G).arrow_forwardtransse National savings & investment identity 29. If the budget deficit in a country rises, all else equal, what must happen to: Its level of domestic private savings? Its level of domestic private investment? Its trade deficit? Its trade surplus?arrow_forwardIf a country is experiencing a budget deficit and the government reduced spending, resulting in a balanced budget. How a country’s shift from budget deficit to balanced budget would affect its investments, economic growth, net capital outflow and currency exchange rate? Use diagrams where necessary?arrow_forward
- Other things equal, when the government runs a large budget deficit, it _____ national saving and thereby _____ capital formation and productivity growth. a) increase;increase b)decreases;decreases c)increase;decreases d;decreases;increasesarrow_forwardAssume that in 2010, a country had a GDP of $500$500 billion, a budget deficit of $6$6 billion, and a trade deficit of $10$10 billion. In five years, the budget deficit became $4.0$4.0 billion, and the trade deficit as a percentage of GDP changed by 0.70.7 percentage point(s). GDP remained unchanged.Calculate the dollar value of the trade deficit in 2015.arrow_forwardExplain how current account and budget deficit (twin deficit) are related so that changes in one are reflected in changes in the other . thanks.arrow_forward
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