Homework Answers
When the federal government runs high budget deficits, it would use up a higher share of the available loanable funds through issuing government securities. This results in a decrease in the supply of loanable funds for private firms and individuals. Such a crunch in the supply of a loanable funds results in lowering of private investment in the economy. This effect is called crowding out effect
As the supply of loanable funds decreases in the market, the supply curve shifts to it's left
Ans: d. A shift in the supply curve for loanable funds to the left
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Question 34 (1 point) The Congressional Budget Office reported that federal budget deficits in the United...
27. Explain how higher federal budget deficits may contribute to higher bond yields using the supply...
27. Explain how higher federal budget deficits may contribute to higher bond yields using the supply and demand for loanable funds theory to make your argument. (Hint: crowding out)
Question 15 3 pts If the congressional budget office (CBO) comes out with news that they...
Question 15 3 pts If the congressional budget office (CBO) comes out with news that they believe future inflation will be higher than previously expected (and people believe them), what, according to the Fisher Effect, will happen to the market for loanable funds? O The supply for loanable funds will increase, decreasing the real interest rate. O Demand for loanable funds will drop, lowering the equilibrium real interest rate O The real interest rate is not affected by changes in...
, CBO expects higher long-term deficits The Congressional Budget Office (CBO) says the national debt is...
,
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2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease,...
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Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the governm...
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The current federal minimum wage is $7.25 per hour, but in his State of the Union address, President Obama proposed an increase to $10.10 per hour. The Congressional Budget Office (CBO) reported, "...
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this Question: 1 pt 38 of 79 (34 complete) Following below are four graphs and four market scenarios, each of...
this Question: 1 pt 38 of 79 (34 complete) Following below are four graphs and four market scenarios, each of which would cause either a movement along the supply curve for premium bottled water or a shift of the supply curve Match each scenario with the appropriate diagram a. A decrease in the supply of sports drinks 2 b. A drop in the average household income in the United States from $56,000 to 552.000 3 c. An Improvement in the...
Question 25 (2.5 points) Which of the following would cause a downward shift in the consumption...
Question 25 (2.5 points) Which of the following would cause a downward shift in the consumption function? a tax decrease an increase in wealth a stock market crash a decrease in the price level expectations of higher future income Question 26 (2.5 points) According to supply-side economists, the by curve will shift to the caused AD; right; more investment AD; left; more saving AS; right; more investment AS; left; more saving money supply; right; lower interest rates Question 28 (2.5...
27. Explain how higher federal budget deficits may contribute to higher bond yields using the supply and demand for loanable funds theory to make your argument. (Hint: crowding out)
Question 15 3 pts If the congressional budget office (CBO) comes out with news that they believe future inflation will be higher than previously expected (and people believe them), what, according to the Fisher Effect, will happen to the market for loanable funds? O The supply for loanable funds will increase, decreasing the real interest rate. O Demand for loanable funds will drop, lowering the equilibrium real interest rate O The real interest rate is not affected by changes in...
,
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...
5) The Great Recession beginning in 2007 was caused by a) The Federal Government reducing spending. b) The rapid increase and subsequent decline in housing prices. c) Foreign countries reducing their demand for American Goods. d) Baby Boomers retiring from the economy. 6) Suppose that the economy is experiencing a recessionary gap. If you believe in "small government", then the most appropriate policy would be to a) Raise income taxes. b) Lower income taxes. c) Raise government spending. d) Lower...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...
this Question: 1 pt 38 of 79 (34 complete) Following below are four graphs and four market scenarios, each of which would cause either a movement along the supply curve for premium bottled water or a shift of the supply curve Match each scenario with the appropriate diagram a. A decrease in the supply of sports drinks 2 b. A drop in the average household income in the United States from $56,000 to 552.000 3 c. An Improvement in the...
Question 25 (2.5 points) Which of the following would cause a downward shift in the consumption function? a tax decrease an increase in wealth a stock market crash a decrease in the price level expectations of higher future income Question 26 (2.5 points) According to supply-side economists, the by curve will shift to the caused AD; right; more investment AD; left; more saving AS; right; more investment AS; left; more saving money supply; right; lower interest rates Question 28 (2.5...
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