The macroeconomic effects of federal investment can decrease if : a.State and local governments tax investment spending towards other non-investment areas. b.State and local governments complement federal policy by also increasing investment. c.State and local governments keep local investment spending unchanged. d.State and local governments substitute investment spending towards other non-investment areas.

1. Consumption = 13,309 Exports = 2,316 Government purchases = 3,331 Saving = 6,607 Government budget deficit = 4,000 Imports = 2.883 %3D a. What is gross domestic product? GDP = b. What is investment? c. What is disposable income? Yd =. d. What is the level of government transfers minus taxes?

24.

Suppose GDP is Rs.15 trillion, taxes are Rs.5.5 trillion, private saving is Rs.2 trillion, and public saving is Rs. 2.5 trillion. Assuming this economy is closed, Calculate a) Government purchases b) National saving c) Consumption d) If the government increases taxes to 6.5 trillion, calculate private Saving

Using a correctly labeled loanable funds graph, show the effect of the contractionary fiscal policy decreasing government spending on real interest rates.   Given the change in the real interest rate. What is the impact on each of the following? a. investment b. Economic growth rate. Explain. c. The international value of the dollar. Explain. Now assume instead that the government takes no policy action to fix the problem of the economy that is operating above full employment. In the long run, will the short-run aggregate supply increase, decrease, or remain unchanged? Explain.

28. Which of the following policies might provide a remedy when the equilibrium output in an economy is above the potential level of output? a. Increase government spending. b. Decrease the federal funds rate. c. Increase transfer payments. d. Raise taxes. e. Buy more government securities.

.  In the long-run framework, budget surpluses: Select correct and explain why its correct should be run whenever output dips below potential output. should never be run since they crowd out investment in the short run. are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment. should be run on a permanent basis since they boost saving and investment and stimulate economic growth.

4. Consider the following demand and supply schedules of loanable funds. All figures are in billion dollars. Assume zero budget deficits and a closed economy. a. Interest Rate 12% 10% 8% 6% 4% 2% Quantity of Funds Demanded $200 $300 $400 $500 $600 $700 Determine the following equilibrium outcomes: (1) The interest rate. (ii) Private savings. (iii) Government (public) savings. (iv) Private business investment. Quantity of Funds Supplied $1000 $900 $800 $700 $600 $500

If, Autonomous Private Final Consumption Expenditure = $ 13,500, Exports = $ 5000 Government Final Consumption Expenditure = $ 6800 Government Investment Expenditure = $ 8900 Marginal Propensity to Import = 0.1, Marginal Propensity to Save = 0.25, Tax rate = 20% If Government increases its Investment Expenditure by $ 12,000, what is Marginal Propensity to Consume?

if investment spending at each level of output increases by $120 billion, what will equilibrium output and income be?