If Congress instituted an investment tax credit, the interest rate would Select one: a.rise and saving would rise. b.fall and saving would fall. c.fall and saving would rise. d.rise and saving would fall.
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- Ifthe government collects more in tax revenue than it spends, and households consume more than they get in after-tax income,then a.private and public saving are both positive. b.private and public saving are both negative. c.privatesaving is positive,but public saving is negative. d.private saving is negative,but public saving is positive.Question 49 a. Identify three government policies that discourage saving. b. Why do many economists advocate a consumption tax rather than an income tax? c. Explain howa higher rate of return on saving could, at least in theory, lead to lower saving.6. When tax code changes increase saving incentives, the interest rate will _____ and investment will _____.
- Which of the following would likely increase private saving? a. both expansion of means testing and a consumption tax b. expansion of means testing, but not a consumption tax c. a consumption tax, but not expansion of means testing d. neither expansion of means testing nor a consumption taxIf the government collects more in tax revenue thanit spends, and households consume more than theyget in after-tax income, thena. private saving and public saving are both positive.b. private saving and public saving are bothnegative.c. private saving is positive, but public saving isnegative.d. private saving is negative, but public saving ispositive.15. The change in the Personal current taxes from 4th quarter of 2017 to the 4th quarter of 2019 is: ______ billions. 16. he change in the Net federal government saving (budget deficit), from 4th quarter of 2017 to the 4th quarter of 2019 is: ______ billions.
- Suppose the government borrows $20 billion more next year than this year,a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall?b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $20 billion of extra government borrowing.c. How does the elasticity of supply of loanable funds affect the size of these changes?d. How does the elasticity of demand for loanable funds affect the size of these changes?e. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the effects you discussed in parts (a) and (b)?What is the likely effect of a substantial increase in government borrowing on the private investment in an economy? A. Private investment will increase due to more government spending. B. Private investment will decrease due to the crowding-out effect. C. Private investment will remain unchanged as government borrowing does not affect private sectors. D. Private investment will first decrease, then increase as government spending stimulates the economy.Increases in investment spending cause interest rates to increase. As a result, a. Ohouseholds will voluntarily decrease their consumption spending b. Ofirm will receive greater profits from households who are consuming goods c. Othe investment curve will shift leftward d. Oa. households will demand more loanable funds. e. Ohouseholds will save a smaller fraction of their incomest
- Suppose the government borrows $20 million more next year than this year.a. Draw and fully label a diagram to illustrate the market for loanable fund to analyze this policy. b. Does the rate of interest rise or fall?Suppose the GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. assuming this economy is closed, calculate consumption, government purchases national saving, and investment. b. imagine that government start with a balanced budget and then, because of an increase in taxes, start running a budget surplus. graphically analyze the effects of the budget surplus on interest rate, saving and investment if loanable funds means the flow of resources available from private savingRefer to the figure below to answer the following questions. Real interest rate (percent per year) 4 3 2 1 O Private saving is $ PSLF 15 20 25 Loanable funds (billions of 2007 dollars) Investment is $ In the situation above the government has a budget SLF saving is $25 billion. DLF billion. billion and national