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What will be the effect of “contractionary fiscal policy of home” on net export, saving and interest rate? Show your answer with the help of graph and also properly explain
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- Only typed answer and please don't use chatgpt Suppose one economist believes the target rate of unemployment is 4 percent while another believes it is 4.9 percent. Using Okun’s rule of thumb, by how much would you expect their estimates of potential GDP to differ in a $9 trillion economy?Question 41 The following equations describe the economy: C= 150 + 0.9Yd | = 150 G = 250 X 200 IM = 0.06Y T= 0.1Y At the equilibrium level of GDP, net exports are equal to a).-180 O b) - -20 Oc) 200 O d) 20 Next Page Previous Page Question 40 The following equations describe the economy: C = 150 + 0.9Y | = 150 G = 250 X 200 IM = 0.06Y T= 0.1Y In equilibrium GDP is equal to a) 3,000 b) 750 Oc) 3,750 O d) 7,500We can think of an increase in government transfer payments as a- a decrease in G b- an increase in G c- an increase in T d- a decrease in T
- Price (GDP price indes, 2013100) 140 130 120 110 X The figure above shows an economy aggregate demand curve and aggregate supply curves. Oiv only Oi only 22 Suppose the shift from ADQ to AD1 and from ASo to AS1 is the result of fiscal policy. Which of the policies below could lead to these shifts? i. An increase in government expenditure ii. A tax cut iii. A decrease in government expenditure iv. A tax hike ili and iv Real GDP prof2012) Oi and iv O i and il2. Describe the circular flow of income and expenditures. Explain.Suppose the government borrows $50 billion more next year than this year. a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall? b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $50 billion of extra government borrowing, C, see the attached picture.
- Problem 3 à 152 msllov For each of the following scenarios, use the supply and demand graph to demonstrate the resulting changes in the equilibrium real interest rate, national saving and investment. a. The government raises its tax on corporate profits. Other tax changes are also made, such that the government's deficit remains unchanged. Chil b. Concerns about job security raise precautionary saving. c. New environmental regulations increase firms' costs of operating capital. d. The government reduces its overall spending, lowering the government budget deficit. Imsidor96. Graphical treatment of taxes and fiscal policy The main difference between variable taxes and fixed taxes is that unlike fixed taxes, variable taxes do not vary with GDP The following graph shows the consumption schedule for an economy with a given level of taxes. Suppose the government implements a tax increase through a fixed tax. Use two green points (triangle symbol) to connect the two black points (plus symbols) representing the consumption schedule after the change in taxes. Hint: The new consumption schedule must pass through one point on the left and one point on the right. Hint: The new consumption schedule must pass through one point on the left and one point on the right. 50 Consumption with Tax Increase through a Fixed Tax Consumption with Tax Increase through a Variable Tax + 20 40 60 80 100 REAL GDP (Billions of dollars) The blue line on the next graph represents the original total expenditure line for this economy before the change in tax structure. Use the new…Some politicians have suggested that the United States enact a constitutional amendment requiring that the Federal government balance its budget annually. Such an amendment, f strictly enforced, would force the government to enact a contractionary fiscal policy whenever the economy experienced a severe recession. This is because when the economy enters a recession, 0000 net tax revenue falls and transfer payments rise. Balancing the budget would require raising transfer payments and raising taxes. net tax revenue rises and transfer payments fall. Balancing the budget would require raising transfer payments and lowering taxes. net tax revenue falls and transfer payments rise. Balancing the budget would require lowering transfer payments and raising taxes net tax revenue rises and transfer payments fall. Balancing the budget would require lowering transfer payments and lowering taxes
- INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Supply Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Demand Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending to Shift the appropriate curve on the graph to reflect this change. The implementation of the new tax credit causes the interest rate to Supply Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government implements a new investment tax credit. This change in spending causes the government to run a budget Shift the…7. Marginal propensity to import and net exports The following graph shows net exports for a hypothetical country. U 50 50 40 20 20 NET EXPORTS (Billions of dollars) 10 10 -10 20 -20 300 400 ⑦? 500 600 700 REAL GDP (Billions of dollars) 0 100 200 13 and According to the graph, when the country is producing a real GDP of $400 billion, exports are function is equal to the than imports. The slope of the net exports and thus tells you that for every $1 increase in real GDP, do not change (because they are assumed to be autonomous with respect to real GDP). byPlease no written by hand solutions Currently, the U.S. has a total consumption of $21,300,000, savings of $9,700,000, government spending of $8,800,000, and investment of $6,800,000. Calculate the size of this government's budget deficit assuming net exports = net imports. $ Provide your answer as a whole number. Typed numeric answer will be automatically saved.