9. Problems and Applications Q9Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit.True or False: It is possible to implement both of these policies at the same time because reducing taxes on private spending has the effect ofdecreasing the government budget deficit.O TrueFalseWhat would you need to know in order to judge which of these two policies would be more effective way to raise investment? Check all that apply.✓ The elasticity of private saving with respect to the after-tax real interest rateThe responsiveness of private saving to increases in investment✔The response of private saving to changes in the government budget deficit

When a government spends more money than it brings in over a given time frame, usually a fiscal…

9. Problems and Applications Q9 Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit. True or False: It is possible to implement both of these policies at the same time because reducing taxes on private spending has the effect of decreasing the government budget deficit. True False What would you need to know in order to judge which of these two policies would be a more effective way to raise investment? Check all that apply. The elasticity of private saving with respect to the after-tax real interest rate The responsiveness of private saving to increases in investment The response of private saving to changes in the government budget deficit

9. Problems and Applications Q9 Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit. True or False: It is possible to implement both of these policies at the same time because reducing taxes on private spending has the effect of decreasing the government budget deficit. True False What would you need to know in order to judge which of these two policies would be a more effective way to raise investment? Check all that apply. The elasticity of private saving with respect to the after-tax real interest rate The responsiveness of private saving to increases in investment The response of private saving to changes in the government budget deficit

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 9PA

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In the late 1990s, the U.S. government moved from a budget deficit to a budget surplus and the trade deficit in the U.S. economy grew substantially. Using the national saving and investment identity, what can you say about the direction in which saving on/or investment must have changed in this economy?
Explain how decreased domestic investments that occur due to a budget deficit will affect future economic growth.
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1. Country X has following data: C = 20 + 0.8Y4, I = 30, G = 40, Tx = 20, T, = 15, X = 60, M = 20 + 0.04Y, incoming year growth target is 600, All figures is billion. Please calculate: a. National income equilibrium! b. Consumption and saving equilibrium! c. Government income from tax! d. How much change in government consumption if they want to achieve growth target?
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1. Use a saving-investment diagram to explain what hap- pens to saving, investment, and the real interest rate in each of the following scenarios in a closed economy. ek ja. Current output rises due to a temporary produc- tivity increase. V b. The tax code changes so that business firms face ehigher tax rates on their revenue (offset by other eb on lump-sum tax changes so there's no overall change in tax revenue).
7. Saving/Investment again--- Suppose the government borrows $20 billion more next year than this year. The following graph shows the market for loanable funds before the additional borrowing for next year. Use the orange line (square point) to graph the new supply of loanable funds as a result of this government policy to borrow $20 billion more next year than this year. Interest Rate (Percent) 10 Demand 9 7 X 3 8 bo ch 2 19 1 0 0 10 20 30 40 50 60 70 80 Loanable Funds (Billions of dollars) As a result of this policy, the equilibrium interest rate Supply The more elastic the supply of loanable funds, the 90 100 New Supply ? Which of the following statements accurately describe the effect of the increase in government borrowing? Check all that apply. National saving decreases by more than $20 billion. Private saving decreases by less than $20 billion. Investment decreases by less than $20 billion. Public saving decreases by exactly $20 billion. is the change in national saving as a…
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1. Consumption = 13,309 Exports = 2,316 Government purchases = 3,331 Saving = 6,607 Government budget deficit = 4,000 Imports = 2.883 %3D a. What is gross domestic product? GDP = b. What is investment? c. What is disposable income? Yd =. d. What is the level of government transfers minus taxes?
Write out the equation for desired national savings. What changesto desired national saving and desired national consumption happen whengovernment spending increases, funded by an increase in taxes? Why doesconsumption change by less than G?
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