### Quiz Question on Federal Budget and Trade Deficits**Question:**When there are large federal budget deficits, the trade deficit tends to shrink.- a. True- b. False

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Answered: When there are large federal budget…

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Economics

When there are large federal budget deficits, the trade deficit tends to shrink. a. True O b. False

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 2QR

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Similar questions

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What determines the size of a countrys trade deficit?
1. How could a greater fiscal deficit create a greater trade deficit? 2. What would you do to reduce the deficit? 3. What is the opportunity cost of government spending on servicing the interest on the debt. 4. If the federal government wished to reduce the deficit to any significant degree without raising taxes, where would the reduced spending likely to have to come from? 5. Assume the federal government replaces the federal income tax with a sales tax placed on consumption expenditures. Analyze the impact of this tax change on taxation efficiency and equity.
4. Analyzing the effects of a trade deficit You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. agricultural industry is concerned about the level of fruit and vegetable imports to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. Supply IN Demand QUANTITY OF DOLLARS REAL EXCHANGE RATE (Units of foreign currency per dollar) Demand Supply ?
4. Analyzing the effects of a trade deficit You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. agricultural industry is concerned about the level of fruit and vegetable imports to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. REAL EXCHANGE RATE (Units of foreign currency per dollar) QUANTITY OF DOLLARS Given this change, the dollar Supply Change due to a tariff Demand Fill in the following table with the effect of a tariff on the following items: Demand Supply (?) Demand for Loanable Funds Real Interest Rate National Saving Net…
4. Analyzing the effects of a trade deficit Suppose the U.S. government has just hired you to analyze the following scenario. Assume the U.S. agricultural industry grows concerned about the amount of fresh fruit imports to the United States, a practice that harms domestic producers. Industry experts claim that implementing a tariff on imports would reduce the size of the trade deficit. Complete the following exercise in order to help you analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. REAL EXCHANGE RATE (Units of foreign currency per dollar) Supply QUANTITY OF DOLLARS Demand Demand Supply ?
4. Analyzing the effects of a trade deficit Suppose the U.S. government has just hired you to analyze the following scenario. Assume the U.S. agricultural industry grows concerned about the amount of fresh fruit imports to the United States, a practice that harms domestic producers. Industry experts claim that implementing a tariff on imports would reduce the size of the trade deficit. Complete the following exercise in order to help you analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. REAL EXCHANGE RATE (Units of foreign currency per dollar) Supply QUANTITY OF DOLLARS Demand Demand -0- Supply Ⓡ
4. Analyzing the effects of a trade deficit Suppose the U.S. government has just hired you to analyze the following scenario. Assume the U.S. automobile industry grows concerned about foreign manufacturers exporting fuel-efficient vehicles to the United States, a practice that harms domestic producers. Industry experts claim that implementing a quota on imports would reduce the size of the trade deficit. Complete the following exercise in order to help you analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the quota. REAL EXCHANGE RATE (Units of foreign currency per dollar) Supply QUANTITY OF DOLLARS Given this change, the dollar appreciates Change due to a quota D2 D1 Demand Supply Fill in the following table with the effect of a quota on the following items: Supply of Loanable Funds Real…
Question 5 What is meant by "a tariff on imports?" Summarize the domestic effect of a tariff on the price of imported goods? Question 6 What is meant by discretionary fiscal policy? Give an example of how the government can use fiscal policy to stimulate consumer spending. (You must use the terms disposable income and demand). Question 7 What is meant by economic growth and why is it one of the most important goals macroeconomists seek to achieve? In your explanation, show the relationship between production, consumption, and investment in periods of economic growth? Question 8 What is meant by the "National Debt?" Explain why the "National Debt" has been both a"benefit and a burden". Give one example showing a benefit and one example that shows the "National Debt" is a burden.
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