Summarize the effects of a budget deficit by filling in the following table. Real Interest Rate Real Exchange Rate Trade Balance Effects of a Budget Deficit

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Summarize the effects of a budget deficit by filling in the following table.
Real Interest Rate
Real Exchange Rate
Trade Balance
Effects of a Budget Deficit  

Use the green line (triangle symbol) to show the supply curve in this market before the budget deficit. T
show the supply curve after the budget deficit.
Market for Foreign-Currency Exchange
10
Initial Supply
8.
Supply with Deficit
2
Demand
-20
-15
-10
10
15
20
QUANTITY OF DOLLARS (Billions)
Summarize the effects of a budget deficit by filling in the following table.
Real Interest Rate
Effects of a Budget Deficit
Real Exchange Rate
Trade Balance
RE AL EXCHANGE RATE
Transcribed Image Text:Use the green line (triangle symbol) to show the supply curve in this market before the budget deficit. T show the supply curve after the budget deficit. Market for Foreign-Currency Exchange 10 Initial Supply 8. Supply with Deficit 2 Demand -20 -15 -10 10 15 20 QUANTITY OF DOLLARS (Billions) Summarize the effects of a budget deficit by filling in the following table. Real Interest Rate Effects of a Budget Deficit Real Exchange Rate Trade Balance RE AL EXCHANGE RATE
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 aurrently
experiencing a balanced government budget.
Real Interest Rate
National Saving
Net Capital Outflow
(Billions of dollars)
Domestic Investment
(Percent)
(Billions of dollars)
(Billions of dollars)
7.
65
30
-10
6
60
35
-5
55
40
4
50
45
3
45
50
10
40
55
15
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 Funds
Demand
Transcribed Image Text: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 aurrently experiencing a balanced government budget. Real Interest Rate National Saving Net Capital Outflow (Billions of dollars) Domestic Investment (Percent) (Billions of dollars) (Billions of dollars) 7. 65 30 -10 6 60 35 -5 55 40 4 50 45 3 45 50 10 40 55 15 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 Funds Demand
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