If the government cuts spending then the saving will increase, the interest rate will fall, and investment will increase, the answer is "point B", "D".
Exhibit: Saving, Investment, and the Interest Rate 1 Saving. S Real interest rate, Desired investment S...
1. An economy has government purchases of 2000. Desired national saving and desired investment are given by sd = 200+ 5000r + 0.10Y-0.20G pd - 1000 - 4000r When the full-employment level of output equals 5000, then calculate the real interest rate at which the goods market is in equilibrium
7. If at some interest rate desired investment is $400 billion, desired private saving is $600 billion, and the budget deficit is $300 billion, is there a surplus or a shortage in the market for loanable funds? What does this imply would happen to interest rates? 8. In a closed economy, GDP is $1000, government purchases are $200, and consumption is $700. If the government has a budget surplus of $25, what are investment, taxes, private saving, public saving and...
help with part c please!!!
Suppose that real GDP is currently 51.47 trillion potential GDP is $1.53 trillion, the government purchases multiplier is 2, and the tax multiplier is -15 a. Holding other factors constant, government purchases will need to be increased by $ 0.03 trillion to bring the economy to equilibrium at potential GDP (Round fo four decimal places as needed.) b. Holding other factors constant, taxes have to be cut by $ 0.04 trillion to bring the economy...
What forces determine the level of interest rates? Be familiar with the National Saving/ Investment framework we used to model the determination of interest rates. What is crowding-out? What factors increase or decrease savings? What factors increase or decrease investment. Understand the arguments for and against Ricardian equivalence. Use the savings model we have developed to compare the effect on Demand and the real interest rate of deficit-financed tax cuts and government spending increases.
An economy has full-employment output of 9,000, and government purchases are 2,000. Desired consumption and desired investment are as follows: Real Interest Rate(%) Desired Consumption 6,100 6,000 5,900 5,800 5,700 Desired Investment 1,300 1,200 ou AWN 1,100 1,000 900 c. If the goods market is in equilibrium, what are the values of the real interest rate, desired national saving, and desired investment? r=%, sd = =
JOY Question 10 (1 point) National saving is composed of: O private saving and government spending. public saving and government transfers. private saving, government saving, and government spending. private saving and government saving. Save Question 9 (1 point) Calvin is borrowing money from Ethan. Calvin anticipates the inflation rate for the year will be 10%. Ethan expects it will be 7%. The actual inflation rate turns out to be 8% for the year. Which of the following statements is true?...
1: what would happen to national saving, investment, trade balance interest rate, and real exchange rate in responding to an increase in tariff on imported cars by the domestic government? graphically explain with the help of large open economy 2: what do you mean by trade policies? it's argued that protectionist trade policy benefits only local producers whereas society on the average suffers from it, do you agree with the statement? graphically explain considering a model of small open economy?
Suppose that real GDP is currently $13.88 trillion and potential real GDP is $14.0 trillion, or a gap of $1,000 billion. The government purchases multiplier is 3.3, and the tax multiplier is 2.3. Holding other factors constant, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP? Government spending will need to be increased by $___ billion. (Enter your response rounded to the nearest whole number.) Holding other factors constant, by...
Desired consumption, desired investment, and government spending in a closed economy are Cd = 260 - 100r + 0.2Y Id = 100 - 300r G = 220 What value of the real interest rate clears the goods market when Y = 600? (Please show your work)
Desired consumption, desired investment, and government spending in a closed economy are Cd = 260 - 100r + 0.2Y Id = 100 - 300r G = 220 What value of the real interest rate clears the goods market when Y = 600? (Please show your work)