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),...
-
Consider this quote: The rate [of smoking] among 10th graders jumped 45 percent, to 18.3 percent, and the rate for 8th graders is up 44 percent, to 10.4 percent. Briefly explain the meaning of each...
-
For a bar element of length \(l\) with two nodes, the shape function corresponding to node 1 is given by a. \(\left(1-\frac{x}{l} ight)\) b. \(\frac{x}{l}\) c. \(\left(1+\frac{x}{l} ight)\)
-
Westwood Furniture Company is considering the purchase of two different items of equipment, as described below: Machine A A compacting machine has just come onto the market that would permit Westwood...
-
The most recent financial statements for Hailey Co. are shownhere: Income Statement Balance Sheet Sales $ 66,000 Current assets $ 30,000 Long-term debt $ 64,500 Costs 25,600 Fixed assets 125,000...
-
Sofia Lofts case, but under a new set of assumptions on page 11 of the case. First re-read the Sofia Lofts case, then click here to download the new page 11. Specifically, you are to write up a brief...
-
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...
-
Merchandise is sold on account to a customer for $18,000, terms FOB shipping point, 2/10, n/30. The seller paid the freight of $600. Determine the following: (a) Amount of the sale, (b) Amount...
-
Given the transfer function \[H(z)=\frac{z\left[z-\cos \left(\omega_{0} ight) ight]}{z^{2}-2 \cos \left(\omega_{0} ight) z+1}\] (a) Where are its poles located exactly on the unit circle? (b) Using...
-
Ivan, an industrial engineering student, is working on a homework problem for Engineering Economy. He needs to calculate the PW at 12 percent of a cash flow series with \(\$ 1,000\) at \(t=3, \$...
-
How is the BlackScholesMerton formula for valuing a European option on a non-dividend-paying stock adjusted to value a European option on an asset providing a known dividend yield?
-
An inline filter has an estimated life of 9 years. By adding a purifier to the filter, savings of \(\$ 300\) in annual operating costs can be obtained. Annual interest on capital is 8 percent....
-
With a state-space structure, prove that, by choosing \(a_{11}=a_{22}=\cos \left(\omega_{0} ight)\) and \(a_{21}=\) \(-a_{12}=-\sin \left(\omega_{0} ight)\), the resulting oscillations in states...
-
Another student wants to control a DC motor from the mbed and therefore builds the circuit of Fig. 3.17B), where VS is a DC supply of appropriate value. As a further indication that the motor is...
-
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...
-
Indicate the type of lease Cullumber Company has entered into and what accounting treatment is applicable. Choose your answer here Finance LeaseOperating Lease Prepare the journal entries on...
-
what are some ways to build a great organizational culture so that people are content and productive in their work? How would you define a great organizational culture?
-
On December 3 1 , 2 0 2 3 , Cheyenne Ltd . has $ 3 1 4 3 0 0 0 in short - term notes payable due on February 1 4 , 2 0 2 4 . On January 1 0 , 2 0 2 4 , Cheyenne arranged a line of credit with Caldi...
Study smarter with the SolutionInn App