Equilibrium in the financial capital market occurs at an interest rate of 6 % GDP is $500 billion, and the budget deficit is $15.5 billion. GDP is expected to increase by $100 billion, so the budget deficit will be $37.2 billion. Assume that an increase in the budget deficit by 1 % of GDP will cause an increase in the long-term interest rate of 0.5 percentage points. Determine the long-term interest rate. Throughout your calculations, round to one decimal place if necessary, and enter your answer in the box below.

Equilibrium in the financial capital market occurs at an interest rate of 6 % GDP is $500 billion, and the budget deficit is $15.5 billion. GDP is expected to increase by $100 billion, so the budget deficit will be $37.2 billion. Assume that an increase in the budget deficit by 1 % of GDP will cause an increase in the long-term interest rate of 0.5 percentage points. Determine the long-term interest rate. Throughout your calculations, round to one decimal place if necessary, and enter your answer in the box below.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Which divisions of the business spent their money on products and services that were correctly budgeted for?
Find or write an example of a poorly written business communication and revise it. Focus on improving it for clarity, word choice, sentence structure, paragraph structure, audience need, and clarity and conciseness.
Why do some frozen pizzas cost more than others? Think generic versus name brand. Why would a customer opt to purchase a name brand pizza over a generic brand?
When would consumers and producers experience increased difficulty in coordinating their plans
e) What impact does social media have on businesses?f) What are the characteristics of a good radio script?
How would you differentiate among needs assessments, process evaluations, and outcome evaluations?
Evaluate the key marketing issues and their implications.
Hand written solutions are strictly prohibited
Process mapping is a tool that reduces processes to their component parts or activities and helps identify and then eliminate non-value-added activities, (waste) or delays within a process. Process mapping is valuable in purchasing, especially when attempting to streamline the flow of material or information between suppliers and a purchaser.
what are fundamental factors considered when making decisions to achieve various goals of a firm
What is not a means or medium of communication?
What is aresource? the result of choices made by business firms the result of scarcity in the economic system anything people use to make or obtain what they need or want a physical object that can be purchased