CONNECT CODE FOR FOCUS ON PER FIN
19th Edition
ISBN: 9781260773354
Author: Kapoor
Publisher: McGraw-Hill Publishing Co.
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Chapter 9, Problem 10P
Summary Introduction
To determine: The per capita spending in 8 years.
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The current market rate of interest is 8 percent. At that rate of interest, businesses borrow $500 billion per year for investment and consumers borrow $100 billion per year to finance purchases. The government is currently borrowing $100 billion per year to cover its budget deficit.
a. Derive the market demand for loanable funds, and show how investors and consumers will be affected if the budget deficit increases to $200 billion per year.
b. Show the impact on the market rate of interest, assuming that taxpayers do not anticipate any future tax increases.
c. How would your conclusion differ if taxpayers fully anticipate future tax increases?
The government received a loan of 7 million monetary units at 10% per year (expenditure). These funds will be used to finance the project, which will annually bring a GDP increase of 1.4 million monetary units (revenue).
How many years will it take the country to pay the debt? Take in consideration, that in system of national accounts expenditure and revenue must be equal. Find solution using the equation where x – quantity of years.
(I need to write an equation and use it to calculate the number of years)
1. The current market rate of interest is 8 percent. At that rate of interest, businesses borrow $500 billion per year for investment and consumers borrow $100 billion per year to finance purchases. The government is currently borrowing $100 billion per year to cover its budget deficit.
a. Derive the market demand for loanable funds, and show how investors and consumers will be affected if the budget deficit increases to $200 billion per year.b. Show the impact on the market rate of interest, assuming that taxpayers do not anticipate any future tax increases.c. How would your conclusion differ if taxpayers fully anticipate future tax increases?
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CONNECT CODE FOR FOCUS ON PER FIN
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