If the governments budget is a deficit of $1 trillion, what are the real interest rate and

Question:

If the government’s budget is a deficit of $1 trillion, what are the real interest rate and investment?

Does any crowding out occur?

Problem 8

The table sets out the data for an economy when the government’s budget is balanced. image text in transcribed

a. Calculate the equilibrium real interest rate, investment, and private saving.

b. If planned saving increases by $0.5 trillion at each real interest rate, explain the change in the real interest rate.

c. If planned investment increases by $1 trillion at each real interest rate, explain the change in saving and the real interest rate.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

Economics

ISBN: 9781292433639

14th Global Edition

Authors: Michael Parkin

See More Books

Question Posted: Jan 27, 2024 10:02 PM

See More Questions

In Exercises 36, the letters A, B, and C are marked on the horizontal axis. Describe the shape of the data. Then determine which is the mean, which is the median, and which is the mode. Justify your...
In one of his experiments, Millikan observed that the following measured charges, among others, appeared at different times on a single drop: What value for the elementary charge e can be deduced...
If the government budget remains balanced, what are the real interest rate, investment, and private saving? Does any crowding out occur? Use the loanable funds data in Problem 8 and the following...
ARTICLE: Reference Resolve Asset Management's Yes, You Can Eat Sharpe Ratios. 1- The author spoke to two ways for the foundation to meet its target return of 5%. Identify what the two ways presented...
(a) If we start from 0o latitude and proceed in a westerly direction, we can let T(x) denote the temperature at the point at any given time. Assuming that T is a continuous function of , show that at...
What are the fairness issues involved in using personality tests for selection of new employees?
In general how have interest rates changed since the late 1980s according to Figure 11.1? FIGURE 11.1 Interest and Inflation Rates, 1988-2010 10p Rate (%) 8 6 10-Year Treasury Bonds 4 2 AAA Corporate...
From historical data, Harry's Car Wash estimates that dirty cars arrive at the rate of 10 per hour all day Saturday. With a crew working the wash line, Harry figures that cars can be cleaned at the...
What will be the output of the following code snippet? (5 Puan) interface MyInterface3 { } public void myMethod (); abstract class MyAbstractClass3 { }) public abstract void myMethod (); class...
On January 1, 2022, Terrys Towing Service owned 4 tow trucks valued at $300,000. During 2022, Terrys bought 2 new trucks for a total of $180,000. At the end of 2022, the market value of all of the...
If the Ricardo-Barro effect occurs, what are the real interest rate and investment? Use the data in Problem 8 along with news that the government now has a budget deficit of $1 trillion to work...
What is relevant accounting information? Identify and define the ingredients of relevant accounting information.
Ken, who is not a real estate broker, sells Global Associates some land. Which of the following statements by Ken, with the accompanying circumstance, would be a fraudulent misrepresentation in that...
When the rights under a contract are assigned, what happens to the rights of the assignor?
What duties cannot be delegated?
Which of the following constitutes a writing that satisfies the Statute of Frauds? a. A signed sales slip. b. A blank invoice. c. An empty envelope. d. All of the above.
To induce Sam to buy a lot in Mels development, Mel tells Sam that he intends to add a golf course. The terrain is suitable, and there is enough land, but Mel has no intention of adding a golf...
Why isnt accounting net income used in the net present value and internal rate of return methods of making capital budgeting decisions?
A new car sold for $31,000. If the vehicle loses 15% of its value each year, how much will it be worth after 10 years?
The United Nations Human Development Index (HDI) is based on real GDP per person, life expectancy at birth, and indicators of the quality and quantity of education. a. Explain why the HDI might be...
Oxford analysts report that living standards in Britain are set to rise above those in America for the first time since the nineteenth century. Real GDP per person in Britain will be 23,500 this...
a. Why might Chinas recent GDP growth rates overstate the actual increase in the level of production taking place in China? b. Explain the complications involved with attempting to compare the...
8x+9 K The function f(x) = x7, is one-to-one. X-7 1 Find an equation for f (x), the inverse function.
A 10.0 g bullet travelling horizontally at 175 m/s strikes and passes through a 10.0 cm thick wood beam. The wood beam exerts an average resistive force of 750 N on the bullet. a. How much work does...
natural language processing Consider the following very simple CNF, annotated with respect to phrasal coverage of the symbols on the right-hand side of each rule, Grammar rules S Noun VP // [1]...

If the governments budget is a deficit of $1 trillion, what are the real interest rate and

Question:

Real interest rate (percent per year) 4567899 10 Loanable funds demanded Loanable funds supplied (trillions of 2012 dollars) 5.5 6.0 6.5 7.0 7.5 8.0 8.5 8.5 8.0 7.5 7.0 6.5 6.0 5.5

Step by Step Answer:

Economics

Students also viewed these Business questions