The budget deficit function BD for a country is given as: BD(Y)=G+iD-T(Y) where G is government expenditures (purchases of goods and services), i is the interest rate, D is the given stock of government debt and T(Y)=tY is the tax revenue function (net of program transfers). The potential output or real income Y in this country is attained when Y = Y*. The budget deficit diagram below, with a given net tax rate, will help you to keep track of your answers. BD Yo 76) A positive structural deficit is represented by: A) BD (Y₁). B) BD (Yo) 77) For a given debt level, the move represents a A) BD (Y) to BD(Y); expansionary. B) BD₁(Y) to BD(Y); neutral. C) BD (Y) to BD(Y); contractionary. D) BD(Y) to BD₁(Y); contractionary. E) BD (Y) to BD,(Y); neutral. 78) The stance of fiscal policy changes with: A) the real income Y. B) the govemment debt. C) the interest rate. D) the primary deficit. E) the debt service. C) BD (Y*). fiscal policy. D) BD₁(Y*) Y E) BD₁(Yo).

The budget deficit function BD for a country is given as: BD(Y)=G+iD-T(Y) where G is government expenditures (purchases of goods and services), i is the interest rate, D is the given stock of government debt and T(Y)=tY is the tax revenue function (net of program transfers). The potential output or real income Y in this country is attained when Y = Y. The budget deficit diagram below, with a given net tax rate, will help you to keep track of your answers. BD Yo 76) A positive structural deficit is represented by: A) BD (Y₁). B) BD (Yo) 77) For a given debt level, the move represents a A) BD (Y) to BD(Y); expansionary. B) BD₁(Y) to BD(Y); neutral. C) BD (Y) to BD(Y); contractionary. D) BD(Y) to BD₁(Y); contractionary. E) BD (Y) to BD,(Y); neutral. 78) The stance of fiscal policy changes with: A) the real income Y. B) the govemment debt. C) the interest rate. D) the primary deficit. E) the debt service. C) BD (Y). fiscal policy. D) BD₁(Y*) Y E) BD₁(Yo).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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