Suppose that the federal government ran a sizable budget surplus during the next decade. Compared to balancing the budget, how would this surplus affect interest rates, saving, and investment? Compare and contrast the traditional view and the new classical view.

Q: The table shows an economy's demand for loanable funds and supply of loanable funds schedules when…

A: Loanable funds are defined as the theory for determining the rate of interest in the market. The…

Q: Should fiscal policy encourage more consumption or more saving? Does it matter? I need a reason why.

A: The fiscal (F) and monetary (M) policies help to control and maintain economic fluctuations such as…

Q: Based on this model, the budget deficit leads to in the level of investment and in the interest…

A: The budget is an estimate for the coming year's expenses and revenue level. The budget is made by…

Q: Criticize the classical theory that higher government spending will necessarily crowd out private…

A: The concept of crowding out refers to a situation in economics where increased government spending…

Q: How an economist thinks that the economy works—is it self-regulating or not?—influences his opinion…

A: SELF REGULATING ECONOMY. Classical economists believe in self-regulating economy. Wage rate and…

Q: Which is regarded as an automatic stabilizer in the economy?

A: Introduction  Automatic stabilizers refer to government spending and taxes that automatically…

Q: How does tax cuts encourage saving and investment

A: Tax reduce the personal disposable income of an individual which leads to reductions in savings and…

Q: In the short-run framework, budget deficits should: Choose correct and explain why never be run…

A: A budget deficit refers to a condition when government expenses exceed government revenue.

Q: In general, the more the government borrows, interest rates should [rise, fall, remain unchanged].…

A: The government borrows the money to fill the gap of Fiscal Deficit. A fiscal Deficit is a difference…

Q: Hide student question Time Left : Determine whether each of the following is an example of a…

A: A direct expenditure offset to fiscal policy occurs when government spending directly offsets or…

Q: Does a balanced budget multiplier of one suggests that the government can stimulate economic growth…

A: The Government stimulates economic growth without changing the size of the budget deficit or surplus…

Q: Consider the economy of Canada. Its households spend 55% of increases in their income and saves 45…

A: The problem is to estimate the size of a tax cut necessary in the Canadian economy for the actual…

Q: Give two examples each of revenue eceipts and capital receipts in a financial pudget.

A: According to the given question Financial budget in economics is known as a budget which predicts…

Q: Should governments pay off their debts and not be allowed to borrow any more except under special…

A: money borrowed by the government generally to provide public services: The government intends to use…

Q: Which of the following best describes a fiscal policy tool? 1. Government spending II. Government…

A: This question asked us to identify the fiscal policy tools among the options provided.Various…