Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is spent on foreign goods). If interest is paid to the foreign sector, only 10% is spent here (the remainder is spent in foreign countries). Every dollar collected in axes to pay the interest cause domestic spending to fall 90 cents. The spending multiplier is 2. d) What is the net impact on GDP if all interest is paid domestically?
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Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be spent domestically (the remainder is spent on foreign goods). If interest is paid to the foreign sector, only 10% is spent here (the remainder is spent in foreign countries). Every dollar collected in axes to pay the interest cause domestic spending to fall 90 cents. The spending multiplier is 2.
- d) What is the net impact on
GDP if all interest is paid domestically?
Given:
The total debt of the country is given as $700 billion
100% interest is paid domestically
Spending multiplier = 2
Step by step
Solved in 2 steps
- Assume an economy where spending for each sector is: Household: C = 800 + 0.95Q Business: I = 3000 Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q Foreign: X = 1700, Im = 200 + 0.165Q Solve for Consumption Expenditure, Household Savings, Imports https://www.bartleby.com/questions-and-answers/assume-an-economy-where-spending-for-each-sector-is-household-c-800-0.95q-business-i-3000-public-g-4/849c5d9a-4bb7-48c4-8b89-ccc576cdc909When a U.S. consumer buys Canadian maple syrup at the grocery store, this purchase is:A) an importB) an exportC) gross domestic productD) a transfer payment. Below is economic data for Germany for 2016 (measured in billions of current euros). What was total spending? Consumption 1,649.79 Investment 636.42 Government spending 620.01 Exports 1,442.41 Imports 1,211.64 A) 2,675B) 4,348C) 2,906D) 3,137 Please ans both questions and you will get thumbs up.4) Calculate the values for government purchases (G), private domestic saving (S), and private domestic investment (I) from the following information (all variables are in billions of dollars). National income Y = 5,200 Disposable income Consumption Budget Deficit Net Exports YD = 4,400 C = 4,100 BD = 150 NX = 110
- If consumption expenditures are $1800 million, gross investment is $450 million, imports are $350 million, exports are $180 million, government expenditure on goods and services is $120 million, and government transfer payments are $180 million and net taxes are $250 million; a) Calculate the GDP. b) Is there budget deficit or surplus? Calculate. c) How much is the private (household) saving? d) How much is the disposable income? e) Calculate the national savings.People sometimes argue that imports should be limited by government policy. Suppose a government quota on the quantity of imports causes net exports to rise. Using the circular flow diagram as a guide, explain why total expenditures and national output may rise after the quota in imposed. Who is likely to benefit from the quota? Who will be hurt?One last time, please consider a closed economy with the following information: • Economic investment = $4500 • Private savings = $3000 Output (income) = $16,000 Consumption = $11,000 This economy has no transfer payments; in other words, total taxes and "net taxes" are the same thing. Carefully following all numeric instructions, calculate this economy's taxes (T). Note that there are no transfer payments.
- Consider the following hypothetical data for the U.S. economy in 2018 (all amounts are in trillions of dollars; see pages 179–182).Consumption 11.0 Indirect business taxes .8 Depreciation 1.3 Government spending 3.8 Imports 2.7 Gross private domestic investment 4.0 Exports 2.5e. Based on the data, what is GDP? NDP? NI?f. Suppose that in 2019, exports fall to $2.3 trillion, imports rise to $2.85 trillion, and gross private domestic investment falls to $3.25 trillion. What will GDP be in 2019, assuming that other values do not change between 2018 and 2019?The following equations describe an economy: Y = C + I + G + X – M [where X=exports, M=imports] C = 150 + 0.7*(Y - T) T = 30 I = 300 G = 60 X = 140 M = 100 + 0.2*(Y - T) Which of the following statement is true? The value of the government spending multiplier is 3.33. If exports increase by 10, equilibrium Y will increase by 20. If government spending increases by 40, equilibrium Y will increase by 333. Without any changes, the equilibrium level of Y is 2167.If government spending as a percent of potential GDP had just risen from 18% to 20%, what does the spending allocation model predict would be happening in our economy to consumption, investment, and net exports? Sketch out the spending allocation diagram and show any changes that might have occurred.
- The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,540 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (GG) Taxes minus Transfer Payments (TT) 455 Consumption (CC) 700 Investment (II) 490 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S)National Saving (S) = = (y-t-g, g-t, y-c, y-c-g) = = (C,G,Y,I) $ ______millionWrite the Total Spend equivalence in an open and governmental economy. (Variables will be written with their names, not abbreviations)Assume an economy where spending for each sector is: Household: C = 800 + 0.95Q Business: I = 3000 Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q Foreign: X = 1700, Im = 200 + 0.165Q https://www.bartleby.com/questions-and-answers/assume-an-economy-where-spending-for-each-sector-is-household-c-800-0.95q-business-i-3000-public-g-4/849c5d9a-4bb7-48c4-8b89-ccc576cdc909 https://www.bartleby.com/questions-and-answers/assume-an-economy-where-spending-for-each-sector-is-household-c-800-0.95q-business-i-3000-public-g-4/044236d2-77e3-4fd5-af05-6b44169c63c0 a) Solve for Net Exports, Government Expenditure, Budget Deficit b) Continuing with the previous problem, what happens to the values in parts Autonomous Spending, Spending Multiplier, Disposable Income, Consumption Expenditure, Household Savings, Imports, Net Exports, Government Expenditure, Budget Deficit if we increase Government Purchases by 1500? Look at the link for the solutions for previous problem c) Continuing with part…