Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
8th Edition
ISBN: 9781337378710
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 26, Problem 2CQQ
To determine
The Private savings and Government savings.
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Ifthe government collects more in tax revenue than it spends, and households consume more than they get in after-tax income,then
a.private and public saving are both positive.
b.private and public saving are both negative.
c.privatesaving is positive,but public saving is negative.
d.private saving is negative,but public saving is positive.
If the government collects more in tax revenue thanit spends, and households consume more than theyget in after-tax income, thena. private saving and public saving are both positive.b. private saving and public saving are bothnegative.c. private saving is positive, but public saving isnegative.d. private saving is negative, but public saving ispositive.
If Congress instituted an investment tax credit, the interest rate would
Select one:
a.rise and saving would rise.
b.fall and saving would fall.
c.fall and saving would rise.
d.rise and saving would fall.
Chapter 26 Solutions
Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
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- What is the likely effect of a substantial increase in government borrowing on the private investment in an economy? A. Private investment will increase due to more government spending. B. Private investment will decrease due to the crowding-out effect. C. Private investment will remain unchanged as government borrowing does not affect private sectors. D. Private investment will first decrease, then increase as government spending stimulates the economy.arrow_forwardA consumption tax that replaces an income tax a. only taxes a household on the money it spends. b. ultimately taxes income twice-once when the household pays income tax and once when the household makes a purchase. c. discourages saving. d. would likely result in a lower level of saving than an income tax.arrow_forwardIf national saving equals $100,000, net taxes equal $100,000 and government expenditure equals $25,000, what is private saving? Select one: a.zero b.$175,000 c.$25,000 d.-$25,000 e.$225,000arrow_forward
- 4. What is a government budget deficit? How does it affect interest rate, investment, and economic growth 5. Draw a graph when government run a change in the tax that might increase private saving. How would it affect the market for loanable funds?arrow_forward1. Suppose GDP equals $7 trillion, consumption equals $1.5 trillion, the government spends $4 trillion and has a budget deficit of $1 Trillion Find public saving, taxes, private saving, national saving, and investmentarrow_forwardQ. Suppose GDP equals $10 trillion, consumption equals $6.5 trillion the government spends $2 trillion and has a deficit of $300 billion. Find Public Saving, taxes, Private Saving, national saving and Investment.arrow_forward
- In a closed economy, the gross domestic product is $45,000, consumption is $17,300 and taxes are $8,200. If the national saving is 9,000, then this government will be running: Select one: a. A budget surplus of $10,500 b. None of the answers are correct c. A budget deficit of $10,500 d. A budget surplus of $18,700 e. A budget deficit of $18,700arrow_forward2. Suppose GDP equals $09 trillion, consumption equals $3 trillion, the government spends $2.5 trillion and has a budget deficit of $450 billion. Try to find public saving, taxes, private saving, national saving, and investment.arrow_forward3. In a economy, consumption is 40, public sector spending is 22, investment is 15, net exports are -3. The treasury is running a $6 budget deficit. Which fraction of their disposable income are households saving? Enter your answer in decimals, not percents. 3a .What was the private saving equal to? 3b. How much of the savings was spend to finance the public sector? 3c. What was the external saving, that is, how much did the people's claims on foreign assets grow?arrow_forward
- The table sets out data for an economy when the government's budget is balanced. Real interest rate (percent per year) 4. Loanable funds demanded (billions of 2007 dollars) Loanable funds supplied (billions of 2007 dollars) 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.5 6.0 6.5 7.0 7.5 8.0 8.5 6. 7. 8 9. 10 a) Calculate the equilibrium real interest rate, investment, and private saving. b) If planned saving increases by $0.5 billion at each real interest rate, explain the change in the real interest rate. c) If planned investment increases by $1 billion at each real interest rate, explain the change in the real interest rate. d) If the government's budget becomes a deficit of $1 billion, what are the real interest rate and investment? Does crowding out occur? e) If the government's budget becomes a deficit of $1 billion and the Ricardo-Barro effect occurs, what are the real interest rate and the investment?arrow_forwardWhat is the equilibrium quantity of investment and the equilibrium quantity of private saving? The equilibrium quantity of investment is $ ____ billion, and the equilibrium quantity of private saving is $ ____ billion.arrow_forwardFor an imaginary closed economy, T = $5,000; S = $11,000; C = $50,000; and the government is running a budget deficit of $1,000. Then Select one: a. Private saving = $10,000 and GDP = $54,000. b. Private saving = $12,000 and GDP = $72,000. c. Private saving = $10,000 and GDP = $58,000. d. Private saving = $12,000 and GDP = $67,000.arrow_forward
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