Write the government deficit as a function of the nominal interest rate.
Write the government deficit as a function of the nominal interest rate.
Question 10 (1 point) If the government runs a deficit too big, the interest rate might increase. Investment is negatively related to the interest rate. However, Keynesian economists believe that I isn't very sensitive to the interest while Classical ones believe it is. Why does it explain (partially) why classical economists are more against the government spending money to stimulate the economy? (Note: difficult question as well] The less sensitive the investment is (to the interest rate), the more the...
Because ________ in the government budget deficit increase the real interest rate, budget deficits can ________ firm investment. decreases; increase increases; decrease decreases; decrease increases; increase When banks gain ________, they can ________ their loans; and the money supply ________. withdrawals; decrease; expands reserves; increase; expands withdrawals; increase; expands reserves; increase; contracts
Consider the following data about government debt and deficit in a given year: - real interest rate on government bonds = 2% - growth rate of real GDP = 3% - current debt-to-GDP ratio = 50% - primary budget deficit = 0 Over this one-year period the debt-to-GDP ratio will have: A) remained unchanged. B) risen by 50%. C) fallen by 0.5 percentage points. D) risen by 0.5 percentage points. E) fallen by 50%.
PLEASE JUSTIFY THE ANSWER CLEARLY THANKS A LOT Is an increase of the government budget deficit most likely to result in an increase in which ones of the following indicators (at least one)? [3p] 3. i. The marginal propensity to consume ii. Imports ii. The nominal interest rate iv. The money supply v. The fiscal multiplier Explain your choice.
Suppose the existing stock of government debt is $600 billion. The interest rate is 10%. Government purchases are $50 billion, and government transfers another $40 billion. Tax revenue is $100 billion. Which of the following is true? a) The budget is balanced b) There is a budget deficit of $50 billion c) There is a budget deficit of $60 billion d) There is a budget surplus of $10 billion
1. i) Write down the relationship between real interest rate, nominal interest rate, and expected inflation. ii) Using the relationship from i), fill in the following table. iii) What does the Fed hope when it engages in monetary expansion to get the economy out of recession? iv) Which situation(s) in the filled-in table corresponds to Zero Lower Bound? v). Use two rows of the completed table to explain why with Zero Lower Bound is it necessary to have positive expected...
In which situation is the real interest rate highest? A) The nominal interest rate is 25% and the inflation rate is 30% B) The nominal interest rate is 2% and the inflation rate is 1% C) The nominal interest rate is 8% and the inflation rate 5% D) The nominal interest rate is 11% and the inflation rate 9% Please provide explanation thanks
The nominal interest rate is the: same as the real interest rate. rate of interest that investors pay to borrow money. rate of inflation minus the real rate of interest. real rate of interest minus the rate of inflation.
Nominal Interest Rate (%)
The real interest rate A. is equal to the nominal interest rate minus the inflation rate. B. is the interest rate that adjusts GDP for changes in prices. C. is equal to the inflation rate minus the nominal interest rate. D. is the interest rate that is quoted on a financial debt and a firm's assets.