General Accounting Suppose a country has no public debt in year 1 but experiences abudget deficit of $40 billion in year 2, a budget deficit of $30 billion inyear 3, a budget surplus of $10 billion in year 4, and a budget deficit of$2 billion in year 5.a. What is the absolute size of its public debt in year 5?b. If its real GDP in year 5 is $104 billion, what is this country's publicdebt as a percentage of real GDP in year 5?

b) If its real GDP in year 5 is $ 104 billion, then the country's public debt as a percentage of…

Answered: Suppose a country has no public debt in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If national income Y = 10,500, disposable income Yd = 8,500 , consumption is C = 8,000, transfer payments TR = 150 and the budget deficit is BD = 200, what is the level of private domestic investment, I ? (please insert the round number without the Euro symbol)
Table 2 shows the elements of national income accounts of a country. The economy is in equilibrium. Accounts Consumption (total) Investment Government Expenditures Imports Exports £bn 80 12 8 10 16 A) What is the current equilibrium value of national income? B) What are the levels of injections and withdrawls? C) Assume that the national income rises to £108 bn and the consumption of the domestically produced goods rises to £72 bn. What is the marginal propensity to consume (use 2 decimal places)? D) What is the multiplier for this economy? E) Comment on the results in part c) ad d).
Suppose that a country has a trade surplus of $50 billion, a balance on the capital account of $10 billion, and a balance on the current account of −$200 billion. The balance on the capital and financial account will be: a. $10 billion. b. $50 billion. c. $200 billion. d. −$200 billion.
Fill in the Table representing these data. Assume that the tax rate is 0.4 of national income; the MPC out of the after-tax income is 0.8; investment is $2,000; government spending is $1,000; exports are $2,000 and imports are 0.05 of after-tax income. What is the equilibrium level of output for this economy? National Income After-tax Consumption I+G+X Income Minus Imports Aggregate Expenditures
Assume the following to be a portion of the simplified balance of payments statement for a hypothetical country. The values are given in billions of dollars. Exports Imports Capital Outflows Capital Inflows $900 - $675 - $225 $135 If the central bank has not changed its holding of foreign-currency reserves during this period, then the capital-service account for this country should be equal to billion.
Answer
The chapter demonstrated that a firm borrowing in a foreign currency could potentially end up paying a very different effective rate of interest than what it expected. Using the same baseline values of a debt principal of SF1.5 million, a one year period, an initial spot rate of SF1.5000/$, a 5.000% cost of debt, and a 34% tax rate, what is the effective cost of debt for one year for a U.S. dollar-based company if the exchange rate at the end of the period was: a. SF1.5000/$ b. SF1.4400/$ c. SF1.3860/$ d. SF1.6240/%
Explanation
Suppose that the Federal Reserve System set the required reserve ratio equal to 0.1 and that the banking system holds $50 billion in excess reserves. If the amount of deposits is $1000 billion and the amount of currency holdings is $60 billion, then the currency ratio is. (Round your response to the nearest two decimal place.) Referring to part a, the excess reserve ratio is. (Round your response to the nearest two decimal place.)
Assume that over the past 88 years, U.S. Treasury bills had an average return of 3.5% as compared to 6.1% on long-term government bonds. What was the average risk premium on the long-term government bonds?
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