E4 11.In the long run, if an economy's consumption spending is $5 trillion, its planned investmentis $2 trillion, government spending is $1 trillion, net tax revenue is $1 trillion, andhousehold savings are $2 trillion, total output should bea. O$7 trillionb. O$8 trillionc. O$11 trilliond. O$3 trillione. O$5 trillion12.The government budget deficit isa. Ois created by government injectionsb. Othe difference between government purchases and government revenues from bonds and taxesc. Ocaused by leakages in the economyd. Ocreated when the government expenditures exceed net taxese. Ocaused by a lack of business sector investment i13.What is the price of funds in the loanable funds market?a. OThe GDP price indexb. OThe interest ratec. OThe Consumer Price Index.d. OThe profit ratee. OThe real wage rate14.In the classical model, investment spending isa. Onegatively related to the interest rateb. Opositively related to the interest rate.c. Opositively related to the level of incomed. Ounrelated to the interest rate:e. Onegatively related to the price level

Budget deficit is the difference between income and expenditure of government.

the long run, if an economy's consumption spending is $5 trillion, its planned investment = $2 trillion, government spending is $1 trillion, net tax revenue is $1 trillion, and ousehold savings are $2 trillion, total output should be a. O$7 trillion b. O$8 trillion c. O$11 trillion d. O$3 trillion e. O$5 trillion

the long run, if an economy's consumption spending is $5 trillion, its planned investment = $2 trillion, government spending is $1 trillion, net tax revenue is $1 trillion, and ousehold savings are $2 trillion, total output should be a. O$7 trillion b. O$8 trillion c. O$11 trillion d. O$3 trillion e. O$5 trillion

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 6PA

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Similar questions

13. Which fiscal policy would make a budget surplus larger or a budget deficit smaller? O lower taxes O increase in government purchases of goods and services O lower government transfers O higher interest rates
Assume the government makes no fiscal policy changes when the economy experiences a downturn. Which outcome would be expected? O Government expenditure to be higher and tax revenues to be lower, probably leading to a budget deficit. Government expenditure to be lower and tax revenues to be lower, probably leading to a budget surplus. O Government expenditure to be higher and tax revenues to remain the same, probably leading to a budget deficit. Government expenditure to be higher and tax revenues to be lower, probably leading to a budget surplus. O Government expenditure to remain the same and tax revenues to be lower, probably leading to a budget deficit.
Which of the following is carried out in an expansionary fiscal policy? O a. Higher taxes and lower government expenditure O b. Lower taxes and higher government expenditure O c. Higher taxes and higher government expenditure O d. Lower taxes and lower government expenditure.
To minimize GDP fluctuations, the government should run a budget in times of recession and a budget in times of boom. O a. Surplus; surplus O b. Deficit; deficit Oc Surplus; deficit O d. Deficit; surplus
Suppose a given hypothetical economy has the following values. GDP-520 Billion, Consumption =$13 Billion; Govermment Purchase-$4 Billion; and Budget Surplus = $1 Billion How much is the public saving? OA S5 Bilion OB $4 Blion OC.52 Billion OD-$1 Billion OE S1 Billion OF $3 Billion
The crowding-out effect is the tendency for a government budget deficit to raise the and investment. O A. price level; increase O B. real interest rate; decrease O C. quantity of output; increase O D. real wage rate; decrease Click to select your answer. 888 :二。 F7 F6
Quèstion 9 T2 G B GDP Refer to the diagram. Discretionary fiscal policy designed to expand GDP is illustrated by O A. the shift of curve T1 to T2. O B. a movement from a to c along curve T2. Oca movement from d to b along curve T1. O D. the shift of curve T2 to T1. Government Purchases and Tax Revenues
To minimize GDP fluctuations, the government should run a budgetin times of recession and a budget in times of boom. O a. Deficit; deficit O b. Deficit; surplus O c. Surplus; surplus O d. Surplus; deficit
6. Does government borrowing crowd out private spending? Suppose a hypothetical economy is operating at an output level that is well below full employment. In an attempt to increase aggregate demand, the government borrows money in order to increase spending. According to Keynesian economists, how are each of the following items affected by the increase in government spending and borrowing? Increases Decreases Consumer and Business Optimism O O Consumption O Business Investment O
Quèstion 14 Which of the following fiscal policy changes would be the most contractionary? O A. a $10 billion increase in taxes and a $30 billion cut in government spending. O B. a $40 billion increase in taxes. O C, a $30 billion increase in taxes and a $10 billion cut in government spending. Opa $20 billion increase in taxes and a $20 billion cut in government spending.
If the government were to try to offset surplus years with deficit years over the business cycle, this would result in O A. a reduction in investment capital. O B. a higher debt-to-GDP ratio. OC. an annually balanced budget. O D. a structurally balanced budget. O E. a cyclically balanced budget.
The graph below depicts the full-employment level of output and the actual level of real GDP. Real GDP Business Cycle 01 2 3 4 5 Year 6 7 8 9 Y* (9,55) 10