Question

Assignment

In a closed economy, when the government has a fiscal expansion, interest rates will _____ and some private investment will be ______.


0 0
Add a comment Improve this question Transcribed image text
Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
Assignment
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
  • 7. If at some interest rate desired investment is $400 billion, desired private saving is $600...

    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...

  • 6. Suppose there is a surplus in the market for loanable funds. Is the interest rate...

    6. Suppose there is a surplus in the market for loanable funds. Is the interest rate above or below its equilibrium level? How do saving and investment at this interest rate be compared? Which one is greater? 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...

  • 1. A country’s government should ________ when inflation begins to climb to unacceptable levels in the...

    1. A country’s government should ________ when inflation begins to climb to unacceptable levels in the economy. A. shift aggregate demand to the right by using contractionary fiscal policy B. shift aggregate demand to the right by using expansionary fiscal policy C. shift aggregate demand to the left by using expansionary fiscal policy D. shift aggregate demand to the left by using contractionary fiscal policy 2. If the economy is producing less than its potential GDP, ________ will show a...

  • Chapter 25 In Class Exercise 1. For each of the following situations, explain with words and...

    Chapter 25 In Class Exercise 1. For each of the following situations, explain with words and a savings-investment diagram (also known as the supply and demand of loanable funds diagram) what would happen to the equilibrium interest rate, the amount of private investment in the economy, and the long run growth rate. (3 marks each) a) The government, having misjudged the level of output, pursues a policy of fiscal expansion by increasing the level of government purchases. b) The government...

  • When government borrowing leads to higher interest rates, which can in turn reduce private investment, this...

    When government borrowing leads to higher interest rates, which can in turn reduce private investment, this is referred to as the indirect crowding-out the direct crowding-out open economy effect none of the above

  • 1. The primary economic function of the financial system is to a. keep interest rates low....

    1. The primary economic function of the financial system is to a. keep interest rates low. b. provide expert advice to savers and investors. c. match one person's consumption expenditures with another person's capital expenditures. d. match one person's saving with another person's investment. 2. A mutual fund a. is a financial institution that stands between savers and borrowers, b. is a financial intermediary, c. allows people with small amounts of money to diversify their holdings. d. All of the...

  • While increasing government spending stimulates the economy, it also leads to higher interest rates and reduced...

    While increasing government spending stimulates the economy, it also leads to higher interest rates and reduced private investment. True False

  • Assume we have a closed economy, the following information for the third quarter of 2020 (assume export = import = net export = 0):

    Assume we have a closed economy, the following information for the third quarter of 2020 (assume export = import = net export = 0): • National income (excluding net export) = 517,536,000,000 SAR.• Consumption equal 222,526,000,000 SAR.• Government expenditures equal 140,199,000,000 SAR.Assume that the consumption tax rate is 15% (Value Added Tax) and 20% for capital (investment). Solve for the following if it is considered a closed economy:a- Tax revenue. there are two types of tax; sales tax (VAT) and capital...

  • This Question: 1 pt Compared to a balanced budget, when the government runs a budget deficit,...

    This Question: 1 pt Compared to a balanced budget, when the government runs a budget deficit, O A. interest rates rise, and firms' private investment increases. OB. interest rates fall, and firms' private investment decreases. OC. Interest rates rise, and firms' private investment decreases. OD. Interest rates fall, and firms' private investment increases. Click to select your answer.

  • In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue....

    In a closed economy, private saving is smaller than investment if government spending exceeds tax revenue. Select one: True False If there is a surplus of loanable funds, then neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. Select one: True False An increase in the budget deficit would cause a shortage of loanable funds at the original interest rate, which would lead to falling interest...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT