The diagram below show the market for financial capital assuming that national income is constant at potential GDP, Y*.Real Interest RateFIGURE 2NSOI* 11 12 13NS111IDQuantity ofInvestmentand Saving ($)Refer to Figure 2. Suppose national saving is reflectedWhat is the effect in the market for financial capital?NS, and investment demand is reflected by loº. Now suppose the vernment implements a policy that increases investment tax credit.Select one:O a. Investment demand shifts to 1₁P and the quantity of national saving supplied rises to 1₁.O b.National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁.O c.National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂.O d.There is no effect on NS or IP and the quantity of national saving supplied remains at I*.O e. Investment demand shifts to I₁P, national saving shifts to NS₁, and the quantity of national saving rises to 13.

Refer to Figure 2. Suppose national saving is reflected by NS, and investment demand is reflected by loº. Now suppose the government implements a policy that increases investment tax credit. What is the effect in the market for financial capital? Celect one: O a. Investment demand shifts to 1₁D and the quantity of national saving supplied rises to 1₁. O b. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁. National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂. Oc. Od. There is no effect on NS or ID and the quantity of national saving supplied remains at I*. O e. Investment demand shifts to 1₁D, national saving shifts to NS₁, and the quantity of national saving rises to 13.

Refer to Figure 2. Suppose national saving is reflected by NS, and investment demand is reflected by loº. Now suppose the government implements a policy that increases investment tax credit. What is the effect in the market for financial capital? Celect one: O a. Investment demand shifts to 1₁D and the quantity of national saving supplied rises to 1₁. O b. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁. National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂. Oc. Od. There is no effect on NS or ID and the quantity of national saving supplied remains at I*. O e. Investment demand shifts to 1₁D, national saving shifts to NS₁, and the quantity of national saving rises to 13.

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

Moving to another ques Quèstion 20 All figures in the table below are in billions. Assume that investment, Ia, is not affected by the income GDP level. GDP Consumption + Exports Imports Investment $ 500 $ 525 $ 15 $ 10 550 560 15 10 600 595 15 10 650 630 15 10 700 665 15 10 750 700 15 10 The multiplier for this private open economy is O A. 2.50. O B. 2.00. OC. 1.25. O D. 3.33. hp
The city of Joslyn has three sources of revenue: borrowing, proprietary income from running the local electric power utility, and taxes. Last year, its total revenue was $150 million. If it received $10 million from running the electric power utility and borrowed $40 million, how much did it collect in taxes? Assume Joslyn's total revenue is $150 million. O $100 million O $110 million O $140 million O Nothing
The economy of Kiwiland can be characterized by Equation below C=1,000+ 0.5Yd T=200 G=400 I= 500 Refer to Equation If government spending in Kiwiland increases by 400, equilibrium output increases by Select one: O a. 400 O b. 2,000 c. 800 O d. 1,600
Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is 4. If household wealth falls by 6 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift?
9. Problems and Applications Q9 Investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit. True or False: It is possible to implement both of these policies at the same time because reducing taxes on private spending has the effect of decreasing the government budget deficit. O True False What would you need to know in order to judge which of these two policies would be more effective way to raise investment? Check all that apply. ✓ The elasticity of private saving with respect to the after-tax real interest rate The responsiveness of private saving to increases in investment ✔The response of private saving to changes in the government budget deficit
Fill in the missing portion of the following table and answer the following questions: (Billions) (Negative figures are surpluses) Year 2007 2008 2009 2010 2011 Potential Nominal GDP O248 billion O262 billion O 413 billion O 348 billion 14,449 14,981 15,310 15,647 16.134 Actual Nominal GDP 14,478 14,719 14,419 14,964 15,518 Shortfall in Output -29 262 892 682 616 Tax Rate 25% 25% 25% 25% 25% What was the structural budget deficit in 2008? Actual Budget Deficit (Minus Automatic Stabilizors) 183 413 1,063 877 891 Cyclical Budget Deficit S 66 154 Structural Budget Deficit 190 707 Actual Budgot Deficit % of GDP 1.26% 5.86% 5.74%
Which group is most likely to demand funds from the financial (loanable funds) market? O financial institutions who lend funds to people. O the government when they run a budget surplus. O firms who want to borrow to pay for new capital. O people who have extra income they want to save. « Previous Next ASUS 16 5 6 7 R
Question 7 I need an explanation
I need help on this question
2. L Give Up! Suppose the Japanese economy has been experiencing slow growth. As a result, the Prime Minister, who thinks John Maynard Keynes was the greatest economist ever, has decided to increase government spending. The Prime Minister asks the head of the economic council to determine the increase in government spending necessary to bring the economy to full employment. Assume there is a GDP gap of 1 trillion yen and the marginal propensity to consume (MPC) is 0.60. What advice should the head of the economic council give the Prime Minister? O The recessionary gap is equal to 400 billion yen. O The inflationary gap is equal to 400 billion yen. O The recessionary gap is equal to 625 billion yen. O The inflationary gap is equal to 625 billion yen.