The accompanying diagram shows two budget deficit functions for a hypotheticaleconomy.Suppose the economy is at point A, the budget deficit function is Bo, and the levelof potential output is $500 million. The structural budget deficit would beA. $2 million.B. $7 million.C. - $5 million.○ D. $0.C№ 0068-ABudget Surplus/Deficit (millions of dollars)طر+မှာB125 2503750☑500 625 750 875-3-B₁Real GDP (millions of dollars)BВо Consider the following data about government debt and deficit in a given year:― real interest rate on government bonds = 2%- growth rate of real GDP = 2%- current debt-to-GDP ratio = 28%- primary budget deficit as a percentage of GDP = 6%Over this one-year period the debt-to-GDP ratio will haveA. fallen by 6 percentage points.B. risen by 0.6 percentage points.C. remained unchanged.D. risen by 6 percentage points.E. fallen by 0.6 percentage points.

1. When government spending continuously exceeds income, even during times of economic growth and…

Answered: The accompanying diagram shows two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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14. Suppose that Korea has been in recession and many economists have concerns about the long-term recession. Therefore, the Bank of Korea and the government are preparing stimulus packages for the economy. (1) Using both AA and DD curves, describe the effect of the government’s temporarily expansionary fiscal policy on the change of equilibrium of national output and foreign exchange rate. (2) The Korean government decides to annually spend an extra budget on constructing and maintaining social infrastructure forever. Using both AA and DD curves, describe the impact of the government’s policy on the change of equilibrium of national output and foreign exchange rate.
1. A college wants to produce an effigy for the student carnival. Preliminary studiesmade it possible to establish that the production of these effigies requires fixed costs of $2,008and variable costs (materials, labor, energy) of $0.90 per effigy. One of therequirements of the college being not to make a deficit, he had a market study carried out.It appears from this study that by selling these effigies for $3.75 we can hope to sell them1,000, whereas by setting the price at $2.50, the potential sales are 3,000.a) Express the demand in terms of the selling price and representgraphically this function.b) Express the cost of production as a function of the selling price.c) Express the income in terms of the selling price and determine the price that thecollege should fix to maximize the income from this sale of effigies.d) Represent the income function and the cost function on the same system of axesand determine the prices corresponding to the break-even thresholds and numbereffigies…
2. Compared to a balanced budget or a budget surplus, what is the effect of a government budget deficit on national saving in the economy? A. National saving is unchanged. OB. National saving decreases. OC. National saving increases. D. National saving could increase or decrease. 3. What is the effect of a budget deficit created by an increase in government
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.
.
Aggregate Spending 0 A B GDP D O decrease spending and increase taxes. O decrease spending and decrease taxes. O increase spending and increase taxes. O increase spending and decrease taxes. -C₂+1+X+G C+I+X₁ Refer to the diagram. If the full-employment level of GDP is A, then it would be appropriate fiscal policy for government to
3
Answer the questions below for the economy of Motak using the graph below. The Economy of Motak Government spending / net taxes 400 350 300 250 200 150 100 50 200 400 600 800 1000 1200 1400 1600 Real GDP NTR G1 Tools a. If GDP is $800 and government spending is G₁, the size of Motak's budget deficit is $ b. If government spending is decreased by the size of the deficit in part (a), draw the new curve labelled G₂ in the graphing area above. c. Suppose the multiplier has a value of 2, the new level of equilibrium GDP is $ d. Motak's deficit at this new level of equilibrium GDP is $ billion. billion. billion.
2. (1) Valeria is a closed economy, where consumption totals $3 billion, tax payments are $300 million, governmen spending is $1 billion, and GDP is $5 billion. Private saving amounts to A B C D $1.7 billion and Valeria's government runs a budget deficit. $1.7 billion and Valeria's government runs a budget surplus. $1 billion and Valeria's government runs a budget deficit. $1 billion and Valeria's government runs a budget surplus

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