The accompanying diagram shows two budget deficit functions for a hypothetical economy. Suppose the economy is at point A, the budget deficit function is Bo, and the level of potential output is $200 million. The structural budget deficit would be A. $14 million. B. $0. O C. $4 million. D. -$10 million. (...) Budget Surplus/Deficit (millions of dollars) 18 16- 12- चं 2 Ņ A 50 100 150 200 250 B₁ Real GDP (millions of dollars) 300 Bo

The accompanying diagram shows two budget deficit functions for a hypothetical economy. Suppose the economy is at point A, the budget deficit function is Bo, and the level of potential output is $200 million. The structural budget deficit would be A. $14 million. B. $0. O C. $4 million. D. -$10 million. (...) Budget Surplus/Deficit (millions of dollars) 18 16- 12- चं 2 Ņ A 50 100 150 200 250 B₁ Real GDP (millions of dollars) 300 Bo

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Use the graph below to answer the following questions: BB, (Go. to) BB, (G,. t,) D. 5300 5000 Real Income (Y) 4700 a. In the figure above, if the budget line is BBo and the natural real GDP is $5300, what is the structural surplus or deficit? b. In the figure above, if the budget line is BBo and the natural real GDP is $5300, what is the cyclical surplus or deficit? c. In the figure above, if the budget line BB1, the natural real GDP is $5300, and actual real GDP is $5000, what is the cyclical budget surplus or deficit? d. In the figure above, if the budget line BB1, the natural real GDP is $5300, and actual real GDP is $5000, what is the structural budget surplus or deficit?
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Suppose the government's present value of current and projected future outlays is 75 percent of GDP and its present value of current and projected future revenues is 50 percent of GDP. What gap does this describe, and what is the size of the gap? This information describes the _______. A. fiscal gap, which is 25 percent of GDP B. generational gap, which is 25 percent of GDP C. fiscal gap, which is 125 percent of GDP D. fiscal gap, which is – 25 percent of GDP
6. Use the following table to answer these questions: Y C I G X $ 500 $ 500 $ 10 $ 20 $ 60 $ 600 $ 590 $ 10 $ 20 $ 40 $ 700 $ 680 $ 10 $ 20 $ 20 $ 800 $ 770 $ 10 $ 20 $ 0 $ 900 $ 860 $ 10 $ 20 - $ 20 $ 1,000 $ 950 $ 10 $ 20 - $ 40 a.What is the Marginal Propensity to Import? b.What is the Marginal Propensity to Invetst? c.What the difference between both of…
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12. The national debt in the current year is equal to the national debt at the beginning of the year minus the annual budget deficit. a. b. equal to the national debt at the end of the year plus the annual budget deficit. equal to the national debt at the beginning of the year plus the annual budget deficit. C. d. none of the above. H. I
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d. The federal budget is brought into balance by reducing grants to provincial governments. 4. High and rising health care expenditures are one important element that has contributed to provincial government deficits. New, or additional, payroll taxes may be one way to finance the higher health care costs. If adopted, how would the higher payroll taxes affect the size of the provincial budgets? How would this affect the role of government in the economy? 5. Proponents argue that the government guarantees on loans to students do not result in an increase in government snending since only "loanc" aro involvod
4. Study Questions and Problems #4 Evaluate the following statement. True or False: The most unlikely problem of the national debt is that the government will go bankrupt. True, because the government surplus is always growing. True, because the U.S. Treasury can roll over the debt by issuing new securities. False, because when government securities mature, the U.S. Treasury will default on its obligations. O False, because the government deficit is always growing.