Q: True or False Assume a closed economy in which C = 60 + 0.5(Y - T), G = 40, I = 40 T = 0, where C…
A: Y = C+I+G Y = 60+0.5(Y)+40+40 Y = 140+0.5Y 0.5Y = 140 Y = 280 Now, Private Sector Saving = S = Y -…
Q: Explain how, for a country with a high debt ratio, if the financial markets fear that the country…
A: Economics as a subject deals with the allocation of scarce resources among humans with unlimited…
Q: Which of the following statements accurately describes the crowding out effect? a. For a given…
A: Crowding out effect is a term used to indicate the ill effects of excessive government borrowing.
Q: The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic…
A: Monopoly is a market structure characterized by a single firm selling all the quantities of a good.…
Q: You have the following annual figures for the New Zealand economy. Investment…
A: Increase of investment is includes the increment of plants in equipment's in the economy and…
Q: The table below shows data on U.S. exports and imports of goods and services for five years. For…
A: The difference between the exports and the imports would result in the net exports. The net exports…
Q: 1) In a closed economy, investment cannot be equal to private savings. A) True B) False 2) A…
A: A closed economy is one which does not engage in trading activities, i,e. there is no import or…
Q: During the year, Japan had a current-account surplus of 98 billion. What is the gap between Japan’s…
A: Gross Domestic Product (GDP) is a measure that quantifies the total value of all goods and services…
Q: 1. If an economy has a budget surplus of 400, private savings of 1,200, and investment of 1,600,…
A: Given:Budget surplus = 400Private Savings = 1200Investment = 1600Meaning of Balance of Trade: The…
Q: In the late 1970s, several countries in Latin America, notably Mexico, Brazil, and Argentina, had…
A: Monetary policy refers to the actions and measures implemented by a central bank or monetary…
Q: data on the relationship between
A:
Q: only correct answer or dowvote Which of the following statements about budget deficits and surpluses…
A: A budget deficit arises when the government expenditures exceed revenue. A country’s national…
Q: After the budget deficit occurs, suppose the new equilibrium real interest rate is 7%. The following…
A: Real Interest Rate: The new equilibrium real interest rate is 7%. This is the nominal interest rate…
Q: Conventional ways to reduce the deficit and the related problems
A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…
Q: If the U.S. has no access to international savings, through what mechanism will crowding out of…
A: The international savings would result in foreign investment which includes foreign direct…
Q: After the budget deficit occurs, suppose the new equilibrium real interest rate is 7%. The following…
A: National saving is the supply of loanable funds and homegrown speculation is the demand for loanable…
Q: Explain how current account and budget deficit (twin deficit) are related so that changes in one are…
A: The current account is the record of a country's imports (M) and exports of goods and services,…
Q: Crowding out can be observed in the national saving and investment identity formula S+(M-X) = 1 +…
A: When a government's spending exceeds its revenue in a particular fiscal year, a budget deficit…
Q: Of the four major economies , US, China, Japan, and Germany, which ones have also been running…
A: Budget Deficit:A budget deficit occurs when a government's expenditures exceed its revenues during a…
Q: Consider two large open economies - U.S. and Europe. If expansionary fiscal policy is adopted in…
A: since you have asked multiple questions and according to our policy we can only solve the first…
Q: Answer the following questions: As you know, the US government has been running budget deficits for…
A: Budget shortfalls in the USA have varied across periods. Significant contributors to deficits…
Q: when it comes to the application of how the federal budget deficit affects economic variables, what…
A: Budget deficit occurs when the government expenditure is more than the government revenues. To…
Q: Assume a government decides to implement a new tax policy, resulting in a smaller budget deficit.…
A: *Answer:
Q: Summarize the effects of a budget deficit by filling in the following table. Real Interest Rate Real…
A: Answer: Budget deficit: budget deficit refers to the excess of government expenditure over its…
Q: The flow of funds into and out of the different sectors of the economy results to a particular…
A: When talking about flow of funds, it explains the movement of funds or goods and services from one…
Q: The exchange rate between the United States dollar and the Japanese yen is determined in a flexible…
A: A. Expansionary fiscal policy is considered to be most appropriate while an economy is facing a…
please answer these:
STATEMENT 1: a rise in risk premium will cause
STATEMENT 2: if the govt is running a budget deficit and private saving is less than investment, the country must be running a
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- What is Sovereign debt? Why do countries issue sovereign debt in foreign currency? Can you look up the current share of Argentina’s total external debt that’s denominated in foreign currency? What does it mean for a country to default on its sovereign debt? (i.e. explain what default means) How do countries usually get out of a sovereign debt crisis? After a country goes through a sovereign debt crisis, does it gets excluded from international capital markets? (i.e. no one would buy sovereign debts issued by that country anymore) If it does not, what is the consequence that the country suffer as a result of the sovereign debt crisis?only correct answer or dowvote Which of the following statements about budget deficits and surpluses is true? Select the correct answer below: If the budget deficit falls, private savings also fall. If the budget surplus increases, the trade deficit increases. If the budget deficit falls, domestic private savings fall. If the budget surplus rises, the trade surplus falls.when it comes to the application of how the federal budget deficit affects economic variables, what is the impact of a federal budget deficit on interest rates and the trade balance?
- In the late 1970s, several countries in Latin America, notably Mexico, Brazil, and Argentina, had accumulated large external debt burdens. A significant share of this debt was denominated in U.S. dollars. The United States pursued contractionary monetary policy from 1979 to 1982, raising dollar interest rates. a.How would this affect the value of the Latin American currencies relative to the U.S. dollar? b. How would this affect their external debt in local currency terms? c. If these countries had wanted to prevent a change in their external debt, what would have been the appropriate policy response, and what would be the drawbacks?During the Great Recession there was a large drop in the US trade deficit. There was also a large increase in the US government budget deficit. Are these two facts related? What else must be going on to have a falling trade deficit and a growing government budget deficit at the same time?Explain how, for a country with a high debt ratio, if the financial markets fear that the country will default on its debt this fear may be self-fulfilling
- 1) The government's budget deficit increases, and at the same time the trade deficit grows. This will lead to a(n) _____ in the demand and a(n) _____ in the supply of loanable funds in domestic markets. increase; increase decrease; increase decrease; decrease 2) A temporary decrease in government purchases would cause: a rightward shift in the saving curve and a leftward shift in the investment curve. a rightward shift in the saving curve and a rightward shift in the investment curve. no shift in the saving curve, but a leftward shift in the investment curve.You have the following annual figures for the New Zealand economy. Investment expenditure $42.5 billion Government savings -$1.7 billion Many politicians and commentators would like to see continued increases in investment and current account surpluses rather than deficits. If these events are to occur, what else must be happening in the economy? 1. The Government must raise the retirement age. 2. Government spending must fall 3. National savings (private and government) must rise 4. New Zealand must restrict foreign ownership of land and other assetsThe figure below shows national saving (NS) and investment demand (1D ) for the hypothetical country of Slovappa. Real GDP is equal to potential GDP. The numbers are in billions of dollars. Assume the economy's national saving is NSo and investment is IDo- NSo NS Quantity of Investment and Saving (S) Suppose that at this level of national saving, the government of Slovappa has a budget deficit of $100. If the country's level of national saving is $200, then private saving must be $ a) 300 b) 100 c) 200 Real Interest Rate
- Effects of a government budget deficit Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate National Saving Domestic Investment Net Capital Outflow (Percent) (Billions of dollars) (Billions of dollars) (Billions of dollars) 7 50 30 -20 6 45 40 -15 5 40 50 -10 4 35 60 -5 3 30 70 0 2 25 80 5 Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. Market for Loanable…The table below shows data on U.S. exports and imports of goods and services for five years. For each of these years, indicate whether the United States was running a trade surplus or deficit, and dollar amount of the surplus or deficit, and calculate the ratio as a percent of the surplus deficit to U.S. exports. Instructions: In the event a deficit, do NOT include a negative sign (-) for either the dollar amount or the ratio (.% of exports). Enter your responses rounded to one decimal place. U.S. Exports (billions of dollars) U.S. Imports (billions of dollars) Year Surplus or deficit Amount of surplus/deficit (billions of dollars) Surplus/ deficit as a percent of exports 1 457.1 642.0 Deficit 2 531.2 667.2 Deficit % 3 592.7 696.6 Deficit 4 745.0 721.5 Surplus % 687.6 720.4 Deficit %For the goods market of an open economy to be in equilibrium, the interest rate must be at 2% when GDP equals 120. We also know the following about consumption (C), investment (1), fiscal policy (taxes T and government expenditures G), imports (M) and exports (X) of the country: C = 20 + b*Y_{D} I = 44 T = 60 G = 22 M = 16 X = 32 where b is the marginal propensity to consume and Yo is net disposable income. What is the value of total consumption? Select one: a. 18 b. 20 C. 38 d. 120