The role of Council of Economic Advisers (CEA).
Explanation of Solution
The CEA is a body of officers, who are responsible for advising the president on domestic as well as international
1. Assist and advise the president in the fiscal matters, which is the prime most duty of the CEA by being in the executive office of the president.
2. To compile and submit the studies relating to the developments in the economy to the president by collecting the timely and authoritative data from the economy.
3. To appraise the various economic activities of the government; after a detailed analysis, the required recommendations are laid down to the president.
4. Develop and recommend national economic policies to the president.
5. To prepare the required reports about various aspects of the economy, on president's request.
The members of the Council of Economic Advisers and their university affiliations are as follows:
Jason Furman (28th chairman) holds PhD in Economics from Harvard University.
Sandra Black received B.A from University of California, PhD in Economics from Harvard University.
Jay Shambaugh received B.A from Yale, M.A.L.D from Tufts University and PhD from University of California.
Concept introduction:
Council of Economic Advisers: It is the agency which advises the president on economic matters. The office is included within the executive office of the president.
Want to see more full solutions like this?
Chapter 33 Solutions
Economics (Irwin Economics)
- Suppose that the investment demand curve in a certain economy is such that investment declines by $110 billion for every 1 percentage point increase in the real interest rate. Also, suppose that the investment demand curve shifts rightward by $170 billion at each real interest rate for every 1 percentage point increase in the expected rate of return from investment. If stimulus spending (an expansionary fiscal policy) by government increases the real interest rate by 2 percentage points, but also raises the expected rate of return on investment by 1 percentage point, how much investment, if any, will be crowded out? 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.arrow_forwardMany would argue that the federal government’s response to the financial crisis of 2008 favored powerfully connected financial firms at the expense of the average citizen. Would you agree or disagree with this statement? Why? 2. Schattschneider argues that powerful groups and individuals can keep issues off of the policy agenda. Brainstorm some policy ideas that might have been kept off the agenda due to group or individual pressure. What policy issues do you believe have been kept off the agenda and what groups might have kept such policies off the agenda and why? Finally, do you believe that Schattschneider’s view ultimately has meritarrow_forward5. Suppose the interest rate on a taxable corporate bond is 7 percent while a municipal, tax exempt bond has an interest rate of 5 percent, and they are similar in every other way.a. Assuming the income tax rate is 30 percent, calculate the after tax interest rate on the corporate bond. Is it higher or lower than the after tax return on the municipal bond?b. What is the income tax rate that equalizes the after tax return between the corporate bond and the municipal bond.arrow_forward
- Now suppose that the gross national debt initially is equal to $2.5 trillion and the federal government then runs a deficit of $100 billion. What is the new level of gross national debt? If 100 percent of this deficit is financed by the sale of securities to the public, what happens to the level of debt held by the public? What happens to the level of gross debt? 3. If GDP increases by 6 percent in the same year as the deficit is run, what happens to the gross debt as a percentage of GDP? What happens to the level of debt held by the public as a percentage of GDP?arrow_forward15. Consider a government bond with a face value of $10 000, and a present value of $9500. If this bond is offered for sale at $9600, then the lack of demand for this bond will drive the price down until it reaches its equilibrium market price of $9500. individuals will purchase the bond at the offer price which will drive the market rate of interest down. the equilibrium market price of this bond has been achieved. the excess demand for the bond at $9600 will drive the price up to the face value of the bond. individuals will purchase the bond at the offer price which will drive the market rate of interest uparrow_forward9) Suppose that the government starts with a debt of $10 billion. Then in year 1 there is a deficit of $50 billion, in year 2 there is a deficit of $70 billion, in year 3 there is a surplus of $40 billion, and in year 4 there is a deficit of $20 billion. What is the government debt at the end of year 4?arrow_forward
- 3)Show and explain how an expansionary fiscal policy can cause crowding-out effect by using aggregateexpenditure and aggregate output curves.2)What action could the TCMB take to reduce the crowding-out effect of an expansionary fiscal policy?1)By using graphs, show and explain the effects of an expansionary fiscal policy on the goods market by taking thelink between two markets into accountarrow_forwardAssume that the newly independent government of Tanzania employed you in 1964. Now free from British rule, the Tanzanian parliament has decided that it will spend 10 million shillings on schools, roads, and healthcare for the year. You estimate that the net taxes for the year are eight million shillings. The government will finance the difference by selling 10-year government bonds at 12% interest per year. Parliament must add the interest on outstanding bonds to government expenditure each year. Assume that Parliament places additional taxes to finance this increase in government expenditure so the gap between government spending is always two million. If the school, road, and healthcare budget are unchanged, compute the value of the accumulated debt in 10 years.arrow_forwardSuppose an economy has a GDP of $40 billion and a national debt of $20 billion, and the average interest rate on this debt is currently 3%. Calculate the annual interest payments on the debt. What percentage of this economy’s GDP is spent on interest payments on its debt? Suppose that next year, one of two events occurs: (1) GDP and interest rates stay the same, but the economy adds $4 billion to its national debt, or (2) GDP and the national debt stay the same, but the average interest rate on the debt increases to 4%. Which of the two events will result in a larger portion of the economy’s GDP going toward interest payments on the national debt?arrow_forward
- This problem gets at the question of whether a government can run a budget deficit forever. For a government to avoid defaulting on its debt, it has to ensure its Debt/GDP ratio doesn’t get too big. Assume that ratio is not too big in the US right now, even though it’s about 100%.a) US nominal GDP has been rising by about 4% in recent years. Assume that continues. How much can US government debt rise each year in percent and keep the Debt/GDP ratio constant? b) If US government debt equaled $23 trillion at the start of this year, how big of a budget deficit could the US government run in dollars this year and still keep its Debt/GDP ratio constant?arrow_forwardQ.1.5 Which one of the following statements regarding fiscal policy and the budget is correct?(a) When the government plans to stimulate economic activity, it can increase spending or reduce taxes;(b) Revenue from tax is always greater than government spending in SouthAfrica;(c) Demand management only refers to fiscal policy;(d) A contractionary fiscal policy should be implemented to combatunemployment.arrow_forward9. The rise or fall of people's incomes, fluctuations in interest rates, the changes in fiscal policy of governments that results in increased or decreased government spending are all elements that come under the category of ...... trend. Select one: O a. D. sociocultural O b. A. regulatory O c. C. demographic O d. B. economicarrow_forward
- Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Macroeconomics (MindTap Course List)EconomicsISBN:9781285165912Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Macroeconomics (MindTap Course List)EconomicsISBN:9781305971509Author:N. Gregory MankiwPublisher:Cengage Learning
- Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax