Refer to the table to answer two questions. Changes in Real GDP Growth When the GDP growth rate decreases by one percentage point 1. Government spending (G) automatically increases for Unemployment insurance benefits Food stamps. Welfare benefits Social Security benefits. Medicaid 2. Government tax revenues (T) automatically decline for Individual income taxes. Corporate income taxes. Social Security payroll taxes. 3. The deficit increases by $67 billion. Changes in Inflation When the inflation rate increases by one percentage point 1. Government spending (G) automatically increases for Indexed retirement and Social Security benefits Higher interest payments 2. Government tax revenues (T) automatically increase for Corporate income taxes Social Security payroll taxes. 3. The deficit increases by $40 billion. 14 What would happen to the budget deficit if the Instructions: Enter your responses as a whole number. a. GDP growth rate jumped from 2 percent to 4 percent? The budget deficit would [(Click to select) by $1 b. inflation rate increased by two percentage points? The budget deficit would (Click to select) by $ billion. billion.

Refer to the table to answer two questions. Changes in Real GDP Growth When the GDP growth rate decreases by one percentage point 1. Government spending (G) automatically increases for Unemployment insurance benefits Food stamps. Welfare benefits Social Security benefits. Medicaid 2. Government tax revenues (T) automatically decline for Individual income taxes. Corporate income taxes. Social Security payroll taxes. 3. The deficit increases by $67 billion. Changes in Inflation When the inflation rate increases by one percentage point 1. Government spending (G) automatically increases for Indexed retirement and Social Security benefits Higher interest payments 2. Government tax revenues (T) automatically increase for Corporate income taxes Social Security payroll taxes. 3. The deficit increases by $40 billion. 14 What would happen to the budget deficit if the Instructions: Enter your responses as a whole number. a. GDP growth rate jumped from 2 percent to 4 percent? The budget deficit would [(Click to select) by $1 b. inflation rate increased by two percentage points? The budget deficit would (Click to select) by $ billion. billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Billions of Dollars 1970 Item a. Personal Consumption b. Capital Consumption Allow ance c. Personal Interest Payments d. Indirect Business Taxes e. Corporate Dividends f. Federal Purchases of Goods and Services g. Inventory Change h. Social Security Contributions i. Nonresidential Fixed Investment j. Exports k. Personal Taxes 1. After-tax Corporate Profits m. Government Transfer and Interest Payments n. Corporate Income Taxes o. Import p. State and Local Purchases of Goods and Services g. Residential Fixed Investment 360 60 260 80 300 40 220 240 300 400 180 440 90 280 340 140 Employing the data from the table above, what is the level of Gross Domestic Product? Note: you do NOT need to use all the figures in the table, but only those pertaining to the components of the GDP: C + I+G +NX.