If a government initially has a balanced budget but then cuts taxes, it is running a deficit
Question:
If a government initially has a balanced budget but then cuts taxes, it is running a deficit that it must somehow finance. Suppose people think the government will finance its deficit by printing the extra money it now needs to cover its expenditures. Would you still expect the tax cut to cause a currency appreciation?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 80% (15 reviews)
A temporary tax cut shifts the DD curve to the right and i...View the full answer
Answered By
William Otieno
I am a professional tutor and a writer with excellent skills that are important in serving the bloggers and other specialties that requires a great writer. The important aspects of being the best are that I have served so many clients with excellence
With excellent skills, I have acquired very many recommendations which have made it possible for me to survive as an excellent and cherished writer. Being an excellent content writer am also a reputable IT writer with essential skills that can make one turn papers into excellent result.
4.70+
83+ Reviews
354+ Question Solved
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
Question Posted:
Students also viewed these Economics questions
-
Suppose that the government has a budget deficit of $1 trillion. What are the real interest rate, the quantity of investment, and the quantity of private saving? Is there any crowding out in this...
-
Suppose that the government has a budget deficit of $1 trillion and the Ricardo-Barro effect occurs, what are the real interest rate and the quantity of investment? The table shows an economys demand...
-
Suppose that the government initially has a balanced budget. Government spending then increases, without an accompanying increase in taxes. a. Use a graph to show the effects on real interest rates...
-
Zephre Company reported net income for the year of $56,000. Depreciation expense for the year was $12,000. During the year, accounts receivable increased by $4,000, inventory decreased by $6,000,...
-
Let T1: P1 P2 be the linear transformation defined by T1(c0 + c1x) = 2c0 - 3c1x and let T2: P2 P3 be the linear transformation defined by T2(c0 + c1x + c2x2) = 3c0x + 3c1x2 + 3c2x3 Let B = (1, x),...
-
Bath s Bank offers you a $ 7 1 , 0 0 0 , eight - year term loan at 1 0 . 1 0 percent annual interest. Required: What will your annual loan payment be ?
-
Gorav Dental Group started 2010 with Accounts Receivable of $120,000 and an Allowance for Uncollectible Accounts balance of $6,000. The following information relates to Gorav Dentals 2010 operations:...
-
At the beginning of a fiscal year, Alexander Company buys a machine for $ 48,000. The machine has an estimated life of five years and an estimated salvage value of $ 4,000. Required Using the...
-
QUESTION 3 (30 MARKS) On 30 June 2019 Vector Ltd disposed of a vehicle that cost R200 000 for R20 000. The accounting records on 31 December 2018 showed the following: Accumulated depreciation: R90...
-
Which of the graphs in Fig. Q25.12 best illustrates the current I in a real resistor as a function of the potential difference V across it? Explain. Figure Q25.12 (a) (b) (c) (d)
-
Why does a temporary increase in government spending cause the current account to fall by a smaller amount than does a permanent increase in government spending?
-
You observe that a countrys currency depreciates while its current account worsens. What data might you look at to decide whether you are witnessing a J-curve effect? What other macroeconomic change...
-
Pam Corporation paid $190,000 for 40 percent of Sun Corporation's outstanding voting common stock on July 1, 2016. Sun's stockholders' equity on January 1, 2016, was $250,000, consisting of $150,000...
-
Jerry Jay is the CEO of Jerry's Jackets (JJ). In June, Jerry expects to produce and sell 3100 jackets, and he expects his June utilities cost to be $8,000 plus $0.80 per jacket. After the month...
-
The marketing manager is involved in the long-term sale of a product through effective advertising, but what about short term growth through sales promotions? How are advertising and sales promotion...
-
Suppose there is a consultancy that is trying to help many VCs. To keep things simple, it classifies start-ups according to whether or not they show promise to eventually yield an operating profit....
-
Assume a healthcare department's budget was created using the flexible budgeting methodology and the actual output is lower than forecasted. What effect will this have on revenues, variable expenses,...
-
CDI's & BDI's Problem Set 2 You are the Marketing Director for Perrier Sparking Water and have budgeted $10 million to be spent on advertising. You can choose one of four cities where sales are...
-
What residence-related matter did the Housing Assistance Tax Act of 2008 address?
-
Cobb Manufacturing Company uses a process cost system and average costing. The following production data is for the month of June 2011. Production Costs Work in process, beginning of the month:...
-
Write a program HollePrinter that switches the letters "e" and "o" in a string. Use the replace method repeatedly. Demonstrate that the string "Hello, World!" turns into "Holle, Werld!"
-
Redraw Figure, but this time identifies a different set of points along the frontier. Starting at point F (5,000 tanks, zero production of wheat), have each point you select show equal increments in...
-
How would a technological innovation in lifesavingsay, the discovery of a cure for canceraffect the PPF inFigure? A decrease in transportation Price cos shifts the supply curve per for maple syrup...
-
Suppose the Internet enables more production of other goods and helps to save lives (for simplicity, assume proportional increases). Show how the PPF in Figure would beaffected. A decrease in...
-
Conflict can be a barrier to creating change; therefore, it is important to consider how to overcome the roadblocks that conflict can create. How do Fullan's (2014) five components of leadership...
-
Mary Lykins has two children which she claims along with herself totaling 3 exemptions. She earns $ 5 5 0 a week. What amount will be withheld for federal income tax?
-
Christine O'Brien, who is self - employed, wants to invest $ 8 0 , 0 0 0 in a pension plan. One investment offers 7 % compounded quarterly Another offers 6 . 7 5 % compounded continuously a . Which...
Study smarter with the SolutionInn App