Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 24, Problem 3.1P
To determine
Accumulated debt and size of budget.
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Lilliput is a country that has closed borders and does not import or export any goods or services; hence, they do not worry about trade with other countries.
Total spending for the federal government of Lilliput for the last fiscal year was $1.06$1.06 billion. The country collected $1.05$1.05 billion in taxes during this same fiscal year. Assume government transfers were zero.
Based on this information, what is Lilliput's budget balance?
Enter your answer to two decimal places.
budget balance: $ ______ billion
In the last fiscal year, Lilliput was running
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Please Read the Following Paragraph and Answer the Following Questions
Oman’s government will finance most of its budget shortfall in 2021 by borrowing to plug a fiscal gap battered by a decline in oil prices and the coronavirus pandemic.
The Persian Gulf state is looking into borrowing that will cover 73%, or 1.6 billion rials ($4.2 billion), of the country’s 2.2 billion-rial shortfall, with the remaining 600 million rials to be drawn from its reserves, according to a post on Twitter by the state-run Oman News Agency on Friday. The government based its 2021 budget plan on an oil price of $45 per barrel.
Other highlights from Oman’s 2021 budget:
• Expenditure is set to fall to 10.8 billion rials, a 14% drop from the previous year.
• 2021 revenue is set to fall to 8.6 billion rials, a 19% decline.
• Budget deficit at 8% of gross domestic product in 2021, 2.2 billion rials.
Oman has taken measures such as reduced spending and plans to impose a 5% value-added tax in 2021. It…
Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Yd) and spent the rest on consumption. In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G) which stood at GH¢8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH¢2,500.00. In addition, the country’s import (M) during the previous fiscal year comprises of GH¢1,000.00 which was independent of the country’s national income and 10% which was dependent of the country’s national income. Given these data on Ghana…
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Principles of Economics (12th Edition)
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- Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption. In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G) which stood at GHc8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH¢ 2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of GH$1,000.00 which was independent of the country's national income and 10% which was dependent of the country's national income. Given these data on Ghana…arrow_forwardAssume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption. In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G) which stood at GHe8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH€2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of GH¢1,000.00 which was independent of the country's national income and 10% which was dependent of the country's national income. Given these data on Ghana…arrow_forwardAssume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Ghana for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption. In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G) which stood at GHe8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at GH€2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of GH¢1,000.00 which was independent of the country's national income and 10% which was dependent of the country's national income. Given these data on Ghana…arrow_forward
- Assuming you are the Minister of Finance and Economic Planning for Nigeria, in charge of Fiscal Policy. The Research Director of the Ministry brought you the following data on Nigeria’s for the previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021, households in Nigeria saved 20% of their disposable income (Yd) and spent the rest on consumption. In addition, ₦5,000.00 was spent on Consumption expenditure (C), which is independent of income and Gross Private Investment (I) was ₦ 7,000.00. Total Government expenditure (G) which stood at ₦8,000.00 was supposed to be financed by a lump sum tax of ₦2,000.00 (independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood at ₦2,500.00. In addition, the country’s import (M) during the previous fiscal year comprises of ₦1,000.00 which was independent of the country’s national income and 10% which was dependent of the country’s national income. Given these data on…arrow_forwardIf the primary deficit of a government is given as $800 billion ,find the interest on payment when the fiscal deficit is $900 billion.arrow_forwardNigeria typically runs a gov budget surplus, and it has a small debt to GDP ratio (approximately 40%). This year, Nigeria is running a government budget deficit, and it is financing that deficit by selling government bonds.This year's government budget deficit is causing interest rates to (increase/decrease/remain the same/change ambiguously) and the debt to ( increase/decrease/remain the same/change ambiguously.) Nigeria is predicted to return to a surplus position next year. If it is successful, interest rates will (increase/decrease/remain the same/change ambiguously) and the debt will (increase/decrease/remain the same/change ambiguously.) In August 2019, Nigeria announced that it would increase its sale of government bonds from 55 billion nigerian currency to 85 billion nigerian currency. This resulted in (an increase, decrease, no change, an ambiguous change) in the price of government bonds and (an increase, decrease, no change, an ambiguous change) in the yield of government…arrow_forward
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