The effects of a larger budget deficit on the level of GDP in the United States.

Question

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Answer 1

Question

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

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Students have asked these similar questions

Please answer questions D-H, I have already answered A , B,C but it may help you to still solve them yourself. Thank you!

2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.

3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?

Answer 2

Question

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

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Answer 3

Question

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

Answer 6

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

Answer 7

Chapter 27, Problem 1DQ

a)

To determine

The effects of a larger budget deficit on the level of GDP in the United States.

Answer 8

a)

Expert Solution

Explanation of Solution

Suppose the government increases its spending and keeps the same tax, then it will lead to a large budget deficit. On the other hand, an increase in public spending without changing the tax rate would increase the level of GDP in the United States.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

Answer 13

b)

To determine

The effect of a higher government spending that leads to less spending elsewhere.

Answer 14

b)

Expert Solution

Explanation of Solution

If government spending is switched from some purchases toward other purchases, then the total government spending will not change. If there is no change in government spending, then the GDP will not be affected.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

c)

To determine

The effect of a higher government spending that lead

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.

Answer 19

c)

To determine

The effect of a higher government spending that lead

Answer 20

c)

Expert Solution

Explanation of Solution

A continuous increase in public spending without increasing taxes would lead to a larger budget deficit. As a result, GDP would increase, and even if taxes are increased that equal the increase in government spending by an amount less than that the increase in taxes and spending, GDP will rise anyway.