Answered: government spending

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

During his first term, President Obama has increased government spending and cut taxes.

For each variable state if it will INCREASE, DECREASE, or REMAIN UNCHANGED. In at least one complete sentence state WHY this change will occur. Be specific.

Private Saving (S_p):
Consumption: (C)
Government Saving (S_g)
Total Saving: (S)
Real Interest Rates: (r)
Investment: (I)

Expert Solution

Step 1

11. Private Saving: if the private saving of the people increases the consumer will able to spend less because they will save more money rather than spending it. This change will occur when the government increase its spending in the economy leads to increase the expenditure on public leads to more saving of the people.

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