Consider an economy located near the Indian Ocean where the main industries are agriculture and tourism. Policymakers and economic advisors have determined that consumers' spending behavior is described by the equation: C = 255 + 0.75DI while the domestic investment spending behavior by firms is fixed at $250 billion. Currently, the population is 250 million, the labor force participation rate is 68 percent, and the unemployment rate is 4 percent. The policymakers and economic advisors have also determined that the short run aggregate supply of goods and services in the economy is described by the equation Y = Ypot +75(P - Pe), while the potential level of real GDP is $2075 billion and the expected price level at full employment, Pe, is 115. Net taxes is described by the equation: T = 120 + 0.2Y while the government spending is fixed at $500 billion. Trading occurs mostly with neighboring economies and currently total imports is $300 billion while total exports is $200 billion. (Question 4 of 9) What is the government's current budget balance (billions of dollars)? (report your answer at 2 decimal places)

Consider an economy located near the Indian Ocean where the main industries are agriculture and tourism. Policymakers and economic advisors have determined that consumers' spending behavior is described by the equation: C = 255 + 0.75DI while the domestic investment spending behavior by firms is fixed at $250 billion. Currently, the population is 250 million, the labor force participation rate is 68 percent, and the unemployment rate is 4 percent. The policymakers and economic advisors have also determined that the short run aggregate supply of goods and services in the economy is described by the equation Y = Ypot +75(P - Pe), while the potential level of real GDP is $2075 billion and the expected price level at full employment, Pe, is 115. Net taxes is described by the equation: T = 120 + 0.2Y while the government spending is fixed at $500 billion. Trading occurs mostly with neighboring economies and currently total imports is $300 billion while total exports is $200 billion. (Question 4 of 9) What is the government's current budget balance (billions of dollars)? (report your answer at 2 decimal places)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

V3 After many years of budget surpluses, why did the government drastically increase spending in 2009?
1. Why do we need fiscal policy?
Give your opinion about Malaysia's budget 2022?
What is a budget deficit? How does it affect interest rates, investments and economic growth?
What the difinition of fiscal policy?
What are the positive and negative impacts of fiscal policy on businesses within an economy?
As long as tax rates are not very high, a decrease in tax rates will tend to a. increase the budget deficit b. decrease the budget deficit c. leave the budget deficit unchanged d. cause the budget deficit to first decrease then increase
The Federal Budget is divided into Mandatory and Discretionary spending. Decide which statement is correct. 1. Social Security is mandatory and interest on national debt is mandatory 2. Military spending is mandatory and interest on national debt is mandatory 3.Interest on national debt is discretionary and Medicare is discretionary 4.Medicare is mandatory and military spending is discretionary.
Changing Budget Priorities) What spending category claimed the largest share of federal outlays during the 1960s? How about during the most recent decade?
Problems with the federal government budget process include: a. budgeting that increases the flexibility of discretionary fiscal policy. b. most of the expenditures being for entitlement programs. c. budgeting that allows the President too much discretion in spending decisions. d. a budget outline that needs to be approved with at least a two-thirds majority vote. e. a brief budgeting that does not allow Congress to study whether the budget is an appropriate tool for fiscal policy.
15. What is unemployment? Explain various types of unemployment. 16. Explain the budget deficit and surplus. How the government financed the deficit?
how could our government help solve the budget crisis? What changes could/should be made to spending and what changes could/should be made to taxes? How would these changes impact our economy? How would these changes impact people?