Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 8, Problem 6QR
To determine
The Government deficit and its impact on the interest rate, Investment and economic
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- What must take place for the government to run deficits without any crowding out?arrow_forwardDuring the most recent recession, some economists argued that the change in the interest rates that comes about due to deficit spending implied in the demand and supply of financial capital graph would not occur. A simple reason was that the government was stepping in to invest when private firms were not. Using a graph, explain how the use by government in investment offsets the deficit demand.arrow_forwardDescribe how a plan for reducing the government deficit might affect a college student, a young professional, and a middle-income family.arrow_forward
- A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of 400 million. In year two, the government runs a deficit of 1 billion. In year three, the government runs a surplus of 200 million. What is the total debt of the government at the end of year three?arrow_forwardSketch a diagram of how sustained budget deficits cause low economic growth.arrow_forwardBased on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?arrow_forward
- Is Medicaid (federal government aid to low-income families and individuals) an automatic stabilizer?arrow_forwardThe U.S. government has shut down a number of times In recent history Explain how a government shutdown will affect the variables In the national Investment and savings identity Could the shutdown affect the government budget deficit?arrow_forwardIn a booming economy, is the federal government more likely to run surpluses or deficits? What are the various factors at play?arrow_forward
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