Consider the following data for Country A and Country B. Country A 2.9% 140% 5% Primary Budget Surplus GDP Sovereign Debt/GDP Nominal GDP Growth Rate Nominal Interest Rate on Debt 7% Country B 2.2% 90% 4% 6% In this scenario (Click to select) is likely to see fiscal stabilization. How will monetary policy likely change in the country that will not see stabilization? O The central bank will decrease interest rates. O No new government debt will be issued. O The central bank will keep interest rates stable, but increase the money supply. O Congress will decrease spending.

Consider the following data for Country A and Country B. Country A 2.9% 140% 5% Primary Budget Surplus GDP Sovereign Debt/GDP Nominal GDP Growth Rate Nominal Interest Rate on Debt 7% Country B 2.2% 90% 4% 6% In this scenario (Click to select) is likely to see fiscal stabilization. How will monetary policy likely change in the country that will not see stabilization? O The central bank will decrease interest rates. O No new government debt will be issued. O The central bank will keep interest rates stable, but increase the money supply. O Congress will decrease spending.

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

3. The Keynesian view of fiscal policy Assuming a constant money supply, government expenditures can be financed by which of the following? Check all that apply. Таxes Interest rate Borrowing Money supply True or False: Keynesian economists argue that the government can fight inflation by implementing expansionary fiscal policy. True False Keynesian theory stresses the importance of countercyclical policy ▼ to offset fluctuations in aggregate demand
The Canadian government spending in recent years has resulted in persistent deficits. This has made it so that they have had to increase borrowing. They must be careful since this will lead to Select one: O a Crowding out O b. Transfer payments Oc. Implicit liabilities Od Automatic stabilizers Examples of automatic stabilizers set up in the economy would be everything listed EXCEPT for: Select one: O a. Child daycare benefits b. The prices of goods O c. Income Taxes O d. Unemployment payments Clear my choice
Which of the following is carried out in an expansionary fiscal policy? O a. Higher taxes and lower government expenditure O b. Lower taxes and higher government expenditure O c. Higher taxes and higher government expenditure O d. Lower taxes and lower government expenditure.
no handwritten notes!
3. Argentina's priority before the COVID-10 crisis should have been to fight inflation and cut its primary deficit by two percentage points by 2018-2020, said the International Monetary Fund (IMF) in a report. The IMF believes that "fiscal rebalancing would need to be based on further reductions in the generous and ill- targeted energy subsidies and on a rationalization of spending in many other areas, including public wages, goods and services, and discretionary transfers to the private sector". The inflation rate fluctuates around 24%. Use the I-S (loanable funds market), the money market to propose some macroeconomic measures that could help to stimulate the economy and fight the high inflation rate.
4
Suppose that the investment demand curve in a certain economy is such that investment declines by $110 billion for every 1 percentage point increase in the real interest rate. Also, suppose that the investment demand curve shifts rightward by $190 billion at each real interest rate for every 1 percentage point increase in the expected rate of return from investment. If stimulus spending (an expansionary fiscal policy) by government increases the real interest rate by 2 percentage points, but also raises the expected rate of return on investment by 1 percentage point, how much investment, if any, will be crowded out? Instructions: Enter your answer as a whole number. billion %24
This problem gets at the question of whether a government can run a budget deficit forever. For a government to avoid defaulting on its debt, it has to ensure its Debt/GDP ratio doesn’t get too big. Assume that ratio is not too big in the US right now, even though it’s about 100%.a) US nominal GDP has been rising by about 4% in recent years. Assume that continues. How much can US government debt rise each year in percent and keep the Debt/GDP ratio constant? b) If US government debt equaled $23 trillion at the start of this year, how big of a budget deficit could the US government run in dollars this year and still keep its Debt/GDP ratio constant?
3. Assume the following information for Nation XYZ: * National debt in 2005 was $150... in 2015 national debt was $375 GDP in 1990 was $125... in 2000 the GDP was $300 A. What was the average increase in debt for Nation XYZ between the years 2005 and 2015 B. What was the average annual budget deficit for Nation XYZ between the years 2005 and 2015 C. Compute the debt-to-GDP ration to Nation XYZ for both 2005 and 2015
5.
Suppose that in 2011, Mexico's total government outlays were 657 billion pesos and total government revenue was 550 billion pesos. Calculate Mexico's budget surplus or deficit. Be sure to include a negative sign if appropriate. billion pesos Select the answer that best describes the impact that the surplus or deficit you calculated will have on Mexico's debt. Mexico's debt will rise by an amount equal to the size of the deficit O Mexico's debt will not change. OMexico's debt will fall by an amount equal to the size of the surplus
Suppose real GDP is constant. If the government's fiscal policy objective is to reduce the outstanding public debt, the government must: Have a structural primary budget surplus that is larger than its interest payments on the public debt O b. None of the answers is correct Oc Have a structural budget surplus equal to the outstanding public debt O d. Sell new bonds in the open market