If net taxes exceed government expenditures, the government sector has a budget ________ and government saving is ________. A) surplus; positive B) surplus; negative C) deficit; positive D) deficit; negative

Crowding out can be observed in the national saving and investment identity formula S+(M-X) = 1 + (G-T) If the national savings (S) and the trade balance (M-X) do not change, then increased budget deficits could have all of the following effects EXCEPT: a. private investment will fall b. investments could be made in public projects which are less productive than private investments C. investments could be reduced or delayed in important physical plant and equipment d. interest rates will fall hurting financial institutions who earn higher profits with higher interest rates

Based on our understanding of the model presented in Ch3, a 5% tax cut in a country with balanced budget will cause an increase in equilibrium output? TRUE OR FALSE

Determine the state of the budget (in deficit, in balance, in surplus), if: Government spending on the economy is 5000 monetary units, while rate of taxes incomes is 7000 monetary units. Public transfers are purchased in the amount of 1100 monetary units. The national debt is 9000 monetary units, so the State spends 10% per annum to pay this loan off.