Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)
5th Edition
ISBN: 9780134734200
Author: Frederic S. Mishkin
Publisher: PEARSON
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Chapter 22, Problem 2DAP
a.
To determine
To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding on vertical axis.
a.
Expert Solution
Explanation of Solution
Table showing calculation of change in public bond holdings, Federal Reserve bond holding and changes in debt held by public and federal reserve is as follows:
| Period | Budget Deficit | debt held by public | debt held by federal reserve | change in debt held by public | change in debt held by federal reserve | changes in debt held by public and federal reserve |
| 1980-01-01 | 73830 | 699384 | 120800.0 | - | - | - |
| 1981-01-01 | 78968 | 790060 | 123575.0 | 90676 | 2775.0 | 93450.5 |
| 1982-01-01 | 127977 | 910039 | 131825.0 | 119979 | 8250.0 | 128228.8 |
| 1983-01-01 | 207802 | 1111561 | 146425.0 | 201522 | 14600.0 | 216122.3 |
| 1984-01-01 | 185367 | 1290387 | 154900.0 | 178826 | 8475.0 | 187301.0 |
| 1985-01-01 | 212308 | 1494839 | 170275.0 | 204453 | 15375.0 | 219827.5 |
| 1986-01-01 | 221227 | 1718347 | 192700.0 | 223508 | 22425.0 | 245932.5 |
| 1987-01-01 | 149730 | 1889399 | 210800.0 | 171052 | 18100.0 | 189152.3 |
| 1988-01-01 | 155178 | 2039260 | 228175.0 | 149861 | 17375.0 | 167235.8 |
| 1989-01-01 | 152639 | 2175360 | 227075.0 | 136100 | -1100.0 | 134999.8 |
| 1990-01-01 | 221036 | 2418033 | 229700.0 | 242674 | 2625.0 | 245298.5 |
| 1991-01-01 | 269238 | 2704994 | 253400.0 | 286961 | 23700.0 | 310661.3 |
| 1992-01-01 | 290321 | 3018001 | 279350.0 | 313007 | 25950.0 | 338956.5 |
| 1993-01-01 | 255051 | 3279209 | 315750.0 | 261208 | 36400.0 | 297607.8 |
| 1994-01-01 | 203186 | 3474962 | 350600.0 | 195753 | 34850.0 | 230603.0 |
| 1995-01-01 | 163952 | 3645419 | 370550.0 | 170457 | 19950.0 | 190407.3 |
| 1996-01-01 | 107431 | 3776614 | 383950.0 | 131195 | 13400.0 | 144594.8 |
| 1997-01-01 | 21884 | 3835440 | 412125.0 | 58827 | 28175.0 | 87001.8 |
| 1998-01-01 | 69270 | 3803038 | 442775.0 | -32403 | 30650.0 | -1752.5 |
| 1999-01-01 | 125610 | 3715711 | 479400.0 | -87327 | 36625.0 | -50701.8 |
| 2000-01-01 | 236241 | 3508911 | 507425.0 | -206800 | 28025.0 | -178775.0 |
| 2001-01-01 | 128236 | 3360257 | 536200.0 | -148654 | 28775.0 | -119879.3 |
| 2002-01-01 | 157758 | 3526798 | 599925.0 | 166541 | 63725.0 | 230266.0 |
| 2003-01-01 | 377585 | 3873789 | 654100.0 | 346992 | 54175.0 | 401166.5 |
| 2004-01-01 | 412727 | 4276280 | 694900.0 | 402491 | 40800.0 | 443290.5 |
| 2005-01-01 | 318346 | 4604003 | 730650.0 | 327723 | 35750.0 | 363473.3 |
| 2006-01-01 | 248181 | 4853668 | 768175.0 | 249665 | 37525.0 | 287189.5 |
| 2007-01-01 | 160701 | 5045710 | 772900.0 | 192043 | 4725.0 | 196767.8 |
| 2008-01-01 | 458553 | 5701491 | 505625.0 | 655781 | -267275.0 | 388505.8 |
| 2009-01-01 | 1412688 | 7345425 | 673650.0 | 1643934 | 168025.0 | 1811958.5 |
| 2010-01-01 | 1294373 | 8839123 | 846725.0 | 1493699 | 173075.0 | 1666773.8 |
| 2011-01-01 | 1299599 | 9996999 | 1572000.0 | 1157875 | 725275.0 | 1883150.3 |
| 2012-01-01 | 1086955 | 11196392 | 1658100.0 | 1199393 | 86100.0 | 1285493.3 |
| 2013-01-01 | 679542 | 12041300 | 2003425.0 | 844908 | 345325.0 | 1190233.0 |
| 2014-01-01 | 484600 | 12755962 | 2720300.0 | 714663 | 716875.0 | 1431537.5 |
| 2015-01-01 | 438496 | 13247211 | 2802050.0 | 491249 | 81750.0 | 572998.5 |
| 2016-01-01 | 584651 | 14121037 | 2827050.0 | 873826 | 25000.0 | 898826.0 |
| 2017-01-01 | 665372 | 14562572 | 2862225.0 | 441535 | 35175.0 | 476710.3 |
Table (1)
Scatter diagram showing public bond holding on the vertical axis and deficit on horizontal axis is as follows:
Fig.1
The steep fitted line in Fig. 1 shows the strong relation between the change in debt held by public and deficit from 1980-2017
Economics Concept Introduction
Introduction:
When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit.
b.
To determine
To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding by Federal Reserve on vertical axis from 1980-2017.
b.
Expert Solution
Explanation of Solution
Diagram showing Federal Reserve bond holdings on the vertical axis and deficit on horizontal axis since 1980 to 2017, is as follows:
Fig.2
The steeper fitted line shows the positive relationship between bond holdings by the Federal Reserve and deficit but with less prognostic power.
Economics Concept Introduction
Introduction:
When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit
c.
To determine
To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding by Federal Reserve on vertical axis from 1980-2007.
c.
Expert Solution
Explanation of Solution
Diagram showing Federal Reserve bond holdings on the vertical axis and deficit on horizontal axis since 1980 to 2007, is as follows:
Fig.3
As the fitted line in Fig.1 suggests there was a positive relationship between bond holdings by the Federal Reserve and deficit from1980-2007.
Economics Concept Introduction
Introduction:
When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit.
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Chapter 22 Solutions
Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)
Ch. 22 - Prob. 1LOCh. 22 - Prob. 2LOCh. 22 - Prob. 3LOCh. 22 - Prob. 4LOCh. 22 - Prob. 5LOCh. 22 - Prob. 1QCh. 22 - Prob. 2QCh. 22 - Prob. 3QCh. 22 - Prob. 4QCh. 22 - Prob. 5Q
Ch. 22 - Prob. 6QCh. 22 - Prob. 7QCh. 22 - Prob. 8QCh. 22 - Prob. 9QCh. 22 - Prob. 10QCh. 22 - Prob. 11QCh. 22 - Prob. 12QCh. 22 - Prob. 13QCh. 22 - Prob. 14QCh. 22 - Prob. 15QCh. 22 - Prob. 16QCh. 22 - Prob. 17QCh. 22 - Prob. 18QCh. 22 - Prob. 19QCh. 22 - Prob. 20QCh. 22 - Prob. 21APCh. 22 - Prob. 22APCh. 22 - Prob. 23APCh. 22 - Prob. 24APCh. 22 - Prob. 25APCh. 22 - Prob. 1DAPCh. 22 - Prob. 2DAPCh. 22 - Prob. 1WECh. 22 - Prob. 2WE
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