Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 18, Problem 8PA
Subpart (a):
To determine
The impact of increased borrowings by the government.
Subpart (b):
To determine
The impact of increased borrowings by the government.
Subpart (c):
To determine
The impact of increased borrowings by the government.
Subpart (d):
To determine
The impact of increased borrowings by the government.
Subpart (e):
To determine
The impact of increased borrowings by the government.
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Suppose the government borrows $20 billion more next year than this year,a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall?b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing.c. How does the elasticity of supply of loanable funds affect the size of these changes?d. How does the elasticity of demand for loanable funds affect the size of these changes?e. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects you discussed in parts (a) and (b)?
Suppose the government borrows $20 billion more next year than this year.
a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall?
b. What happens to investments?To private savings?To public savings?To national savings? Compare the size of the changes to the $20 billion of extra government borrowing.
c.How does the elasticity of supply of loanable funds affect the size of these changes?
d. How does the elasticity of demand of loanable funds affect the size of these changes?
Suppose the government borrows $50 billion more next year
than this year.
a. Use a supply-and-demand diagram to analyze this policy.
Does the interest rate rise or fall?
b. What happens to investment? To private saving? To public
saving? To national saving? Compare the size of the
changes to the $50 billion of extra government borrowing,
C, see the attached picture.
Chapter 18 Solutions
Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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