E3.......1 3. Effects of a government budget deficitConsider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving,domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currentlyexperiencing a balanced government budget.Real Interest Rate(Percent)7654REAL INTEREST RATE10322National Saving(Billions of dollars)60Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points(square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market.(?)555045403520Market for Loanable Funds.4060QUANTITY OF LOANABLE FUNDSDomestic Investment(Billions of dollars)25303540455080100-ODemand-0-SupplyNet Capital Outflow(Billions of dollars)-10-5051015+Equilibrium

Public reserve funds of the economy It is a savings account or highly liquid assets placed aside to…

3. Effects of a government budget deficit Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate (Percent) 7 6 5 4 3 2 National Saving (Billions of dollars) 60 55 50 45 40 35 Domestic Investment (Billions of dollars) 25 30 35 40 45 50 Net Capital Outflow (Billions of dollars) -10 -5 0 5 10 15 Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market.

3. Effects of a government budget deficit Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate (Percent) 7 6 5 4 3 2 National Saving (Billions of dollars) 60 55 50 45 40 35 Domestic Investment (Billions of dollars) 25 30 35 40 45 50 Net Capital Outflow (Billions of dollars) -10 -5 0 5 10 15 Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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