Homework Answers
The relationship depends on the stability of each countries economy. If the countries deficit is too high then the government has no other way to finance other than issuing bonds.
When this situation arises the public may fear about the state of the economy and that the government may default on the bonds. In such a state to compensate for the high risk, the public will demand higher yields.
Add Answer to:
27. Explain how higher federal budget deficits may contribute to higher bond yields using the supply...
Question 34 (1 point) The Congressional Budget Office reported that federal budget deficits in the United...
Question 34 (1 point) The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and income would be lower than would be the case if the debt was smaller." This higher budget deficit would be represented graphically by A) a movement to the right along the supply curve for loanable funds. a movement...
Commentators often refer to government budget deficits and trade deficits as ‘twin deficits’. Using appropriate diagram/s...
Commentators often refer to government budget deficits and trade deficits as ‘twin deficits’. Using appropriate diagram/s for the loanable funds market, the net foreign investment and the market for foreign currency exchange, explain how and why a government budget deficit leads to a trade deficit. (10 marks)
26. Explain how excessive money supply growth by the central bank may lead to higher bond...
26. Explain how excessive money supply growth by the central bank may lead to higher bond yields in the market.
Explain the Federal Open Market Committee’s choice to lower the Federal Funds Rate and how it...
Explain the Federal Open Market Committee’s choice to lower the Federal Funds Rate and how it impacts the economy. Describe how this action impacts bank reserves, how this changes the loanable funds market (be sure to mention interest rate and lending levels and use a supply and demand model if its helpful), and business and consumer borrowing and spending. You can assume that leakages are minimal.
Are federal budget deficits related to trade deficits? A. Yes, but only if the quality of U.S. goods and services is deteriorating B. No. The budget deficit is entirely a domestic matter, while the...
Are federal budget deficits related to trade deficits? A. Yes, but only if the quality of U.S. goods and services is deteriorating B. No. The budget deficit is entirely a domestic matter, while the trade deficit only affects U.S. citizens who travel abroad. C. Yes. Higher deficit spending goes up results in more government borrowing, and foreign residents who lend funds to the U.S. government have fewer resources to spend U.S. export goods. D. Yes. If U.S. consumers buy too...
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax...
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax Regressive tax Deficit Dove Deficit Hawk Automatic Stabilizers Laffer curve 1. Use the loanable funds model to explain why classicals argue that government deficits crowd out private spending. Explain why Keynesians argue that government deficits crowd in private spending. 2. Explain the logic behind "trickle down economics" (i.e the supply-side argument in favor of cutting taxes on the wealthy). Explain why Keynesians don't believe...
Question 2 (a) (i) Explain how each of the following events affect the supply of loanable...
Question 2 (a) (i) Explain how each of the following events affect the supply of loanable funds curve: The economy is in a recession so people's disposable income is lower. (ii) The stock market is booming so the people's wealth is higher. (iii) Fewer college graduates are finding jobs so expected future income is lower. (iv) The real interest rate increases. (b) In the figure below, the initial supply of loanable funds curve is SLFO and the initial demand for...
Explain how each of the following may contribute to the effectiveness of monetary policy: establishing news...
Explain how each of the following may contribute to the effectiveness of monetary policy: establishing news conferences following some FOMC meetings; announcing that the FOMC has an inflation goal of 2 percent in the medium term; and projecting the future path for the federal funds rate.
, CBO expects higher long-term deficits The Congressional Budget Office (CBO) says the national debt is...
,
CBO expects higher long-term deficits The Congressional Budget Office (CBO) says the national debt is on an upward path and will hit 122 percent of GD f the govemment decided to slow the growth of debl by cutting transter payments and raising taxes by the same an Cutting transfer payments and raising taxes by the same amount- A. increases the budget deficit increases aggregate demand, and increases real GDP O B. decreases the budget defict, decreases aggregate demand, and...
A. Explain the graph below using risk structure theory of interest rate. Corporate Bond Yields Typically...
A. Explain the graph below using risk structure theory of interest rate. Corporate Bond Yields Typically Rise During Times of Economic Stress Compared to U.S. Treasury Bonds (Risk Free) Difference in Percentage Points (Corporate Bond Yield less U.S. Treasury Bond Yield) Low-Grade Corporate Bond Risk Premium homwa Russian Ruble Crisis (1998) gh-Grade Corporate Bond Risk Premium 2001 Recession Apr-95 Apr-96 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Source: Moody's, Merrill Lynch, Federal Reserve Board
Question 34 (1 point) The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and income would be lower than would be the case if the debt was smaller." This higher budget deficit would be represented graphically by A) a movement to the right along the supply curve for loanable funds. a movement...
26. Explain how excessive money supply growth by the central bank may lead to higher bond yields in the market.
** LUIE detination Fiscal policy Budget deficit Budget surplus National Debt Marginal Tax Rate Progressive tax Regressive tax Deficit Dove Deficit Hawk Automatic Stabilizers Laffer curve 1. Use the loanable funds model to explain why classicals argue that government deficits crowd out private spending. Explain why Keynesians argue that government deficits crowd in private spending. 2. Explain the logic behind "trickle down economics" (i.e the supply-side argument in favor of cutting taxes on the wealthy). Explain why Keynesians don't believe...
Question 2 (a) (i) Explain how each of the following events affect the supply of loanable funds curve: The economy is in a recession so people's disposable income is lower. (ii) The stock market is booming so the people's wealth is higher. (iii) Fewer college graduates are finding jobs so expected future income is lower. (iv) The real interest rate increases. (b) In the figure below, the initial supply of loanable funds curve is SLFO and the initial demand for...
,
CBO expects higher long-term deficits The Congressional Budget Office (CBO) says the national debt is on an upward path and will hit 122 percent of GD f the govemment decided to slow the growth of debl by cutting transter payments and raising taxes by the same an Cutting transfer payments and raising taxes by the same amount- A. increases the budget deficit increases aggregate demand, and increases real GDP O B. decreases the budget defict, decreases aggregate demand, and...
A. Explain the graph below using risk structure theory of interest rate. Corporate Bond Yields Typically Rise During Times of Economic Stress Compared to U.S. Treasury Bonds (Risk Free) Difference in Percentage Points (Corporate Bond Yield less U.S. Treasury Bond Yield) Low-Grade Corporate Bond Risk Premium homwa Russian Ruble Crisis (1998) gh-Grade Corporate Bond Risk Premium 2001 Recession Apr-95 Apr-96 Apr-98 Apr-99 Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Source: Moody's, Merrill Lynch, Federal Reserve Board
Most questions answered within 3 hours.
-
For the data set shown below, complete parts (a) through (d)
below. x 3 4 5...
asked 27 seconds from now -
A university administrator working in student housing wants to
determine if the percentage of students residing...
asked 13 minutes ago -
3). Describe human population growth that has occurred in the
past 400 years. Use terms learned...
asked 10 minutes ago -
A
projectile is blue at a target. The distance from the point of
impact to the...
asked 35 minutes ago -
Given a 32 bit processor, with 2 MB of physical RAM split into 512
frames. What...
asked 25 minutes ago -
What were the main rulings in the Supreme Court cases which are
Morgan v. Virginia (1946)...
asked 24 minutes ago -
write a five paragraph essay on how setting,
specifically culture, influences the actions of
the characters...
asked 16 minutes ago -
JAVA
Provide a simple code sample of Merge sort
asked 27 minutes ago -
Discounting cash flows involves:
A. taking the cash discount offered on a trade merchandise
B. estimating...
asked 34 minutes ago -
A solid wood door 1.00 m wide and 2.00 m high is hinged along
one side...
asked 34 minutes ago -
Raleigh Company manufactures two joint products. At the
split-off point, they have sales values of:
Product...
asked 33 minutes ago -
1. Your grandmother has invested $4000 in a mutual fund each
year on your birthday (she...
asked 36 minutes ago