Essay 3 .The result of government deficits is that less savings are available to firms for investment. Explain why and what it means for the economy.
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- 4. Consider the following demand and supply schedules of loanable funds. All figures are in billion dollars. Assume zero budget deficits and a closed economy. a. Interest Rate 12% 10% 8% 6% 4% 2% Quantity of Funds Demanded $200 $300 $400 $500 $600 $700 Determine the following equilibrium outcomes: (1) The interest rate. (ii) Private savings. (iii) Government (public) savings. (iv) Private business investment. Quantity of Funds Supplied $1000 $900 $800 $700 $600 $500Economics: Public Economics Question: 1 Over long periods of time, the present discounted value of tax revenue must be greater than or equal to the present discounted value of government expenditures. This statement illustrates the concept of a. income equality b. capital markets c. intergenerational equity d. intertemporal budget constraints Question: 2 Why do some budget modelers criticize the use of static scoring?a. The impact of government policy on the economy is not perfectly understood. b. It is unreasonable to assume that government policy does not affect the size of the economy. c. most policy does not result in individuals changing behavior.d. government policy only changes distribution of resources, not their availability. Question: 3 If the economy is in recession, the government budget deficit is ___ the cyclically- adjusted deficit. a. the same asb. unrelated toc. smaller than (in absolute value) d. greater than (in absolute value) Question: 4 According to…2. Which of the following would not reduce the budget deficit or would notincrease the budget surplus?a. Raising income taxesb. Switching from direct expenditures to tax expendituresc. Selling the Parliamentary buildingsd. Cutting social security payments
- Consider the following budget scenario in an economy for the year. Budget Estimates Tax Revenue (net to Centre) 215650 Recoveries of Loans 20900 Non-tax revenue 84350 Borrowings and other Liabilities 179100 Total Receipts 500000 Expenditure on Revenue Account 345000 Of which Interest payments 20000 Total expenditure On Capital Account 135000 Total Expenditure 500000 Calculate : 1. Revenue Deficit 2. Fiscal Deficit 3. Primary deficit b. Explain in brief the impact of the following: The government of India decides to finance the widening fiscal deficit by raising more debt from the private institutions/individuals . What is this impact known as ? Explain.1. Give three examples of governments that are adept in the use of fiscal policy. 2. Give three examples of governments whose use of fiscal policy leaves a lot to be desired? Explain your thinking. 3. What is potential GDP? What role does it play in fiscal and monetary policies?Read the following premise carefully and answer the questions specifically and in detail, you must answer the request with the correct information, showing that you understand and can properly apply the concepts. Try to address all the elements of each question and always express the answers in your own words. "In the face of unstable economic growth due to a recession or accelerating inflation, potential problems with large public debt include higher income inequality, reduced economic incentives, and crowding out of private investment". 4. Using the premise presented as a basis, argues about the intervention of fiscal policy as an instrument to promote growth, sustainability and economic stability in a country. (Provide a detailed example).
- 1. During the late 1980s and early 1990s, most of the budget deficits were accounted for by a. the decline of foreign investment in the United States. b. the downturn in the economy. c. deliberate fiscal policy changes. d. All of the above are correct. 2.Debt is to deficit as a. money is to income. b. rent is to dividend. c. flow is to stock. d. property is to wealth. 3. A chart of the ratio of national debt to GDP from 1915 to 2014 would show a. significant decreases from 2003 to 2010. b. significant increases from 1983 to 1994. c. sharp increases from 1945 to 1975. d. a continuous decline. 4. A chart of the ratio of national debt to GDP from 1915 to 2014 would show a. significant increases during World Wars I and II. b. significant increases from 1945 to 1975. c. significant increases from 1995 to 2003. d. a larger value in 1975 compared to 1945. 5. In 2009, the…From the 1960s to 2020, transfer payments A. have declined by half as a percentage of total federal government expenditures. B. have grown very slowly as a percentage of total federal government expenditures. C. remained the same percentage of total federal government expenditures. D. have risen from 25 percent to just over 50 percent percent of federal government expenditures.d. The federal budget is brought into balance by reducing grants to provincial governments. 4. High and rising health care expenditures are one important element that has contributed to provincial government deficits. New, or additional, payroll taxes may be one way to finance the higher health care costs. If adopted, how would the higher payroll taxes affect the size of the provincial budgets? How would this affect the role of government in the economy? 5. Proponents argue that the government guarantees on loans to students do not result in an increase in government snending since only "loanc" aro involvod
