Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 2E
To determine
The interpretation of intertemporal budget constraint.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
(b) Malaysia's fiscal deficit to rise to level seen during global financial crisis
KUALA LUMPUR - Malaysia's fiscal deficit for 2021 should hit a level similar to
that seen during the global financial crisis more than a decade ago, according to
the government's first-ever pre-budget statement.
Released on Tuesday (Aug 31), the country's Independence Day, the pre-budget
statement showed the fiscal deficit reaching between 6.5 per cent and 7 per cent for
2021, higher than the 5.4 per cent initially estimated. The deficit reached 6.7 per
cent during the 2008-2009 global financial crisis.
Malaysia's economy has been battered since a budget projection was first made
late last year, with the country beset by surging Covid-19 infections and repeated
lockdowns for much of the year.
Analyze the impact of the government budget deficit on Malaysia's open
economy. Include a three-panel diagram, the market for loanable funds, net
capital outflow and the market for foreign currency exchange to…
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.
Describe and explain the current macroeconomic policies or conditions of public debt and fiscal policy of the Philippines.
Knowledge Booster
Similar questions
- The government budget is in DEFICIT when T - G - Transfers (TR) - Interest on the Debt (INT) < 0 Government expenditures (G) - Investment expenditures (I) < 0 Taxes (T) - G > 0 G - Consumption expenditures (C ) - I > 0arrow_forwardAnalyse the various policy measures that a government might have to undertake to deal with and finance a growing fiscal deficit.arrow_forwardDiscuss the public budget decision making process from the preparation phase and its products to final adoption. (1) What information is contained in the budget? (2) What are the respective roles of line agencies, the central budget office, the chief executive and the legislative body?arrow_forward
- Which one of the following statements regarding fiscal policy and the budget is correct?(a) When the government plans to stimulate economic activity, it can increasespending or reduce taxes;(b) Revenue from tax is always greater than government spending in SouthAfrica;(c) Demand management only refers to fiscal policy;(d) A contractionary fiscal policy should be implemented to combatunemployment.arrow_forwardSuppose the national debt of a country is currently $400 billion dollar and the national nominal deficit for the country is $50 billion. Inflation rate has been 5%. What is the real deficit? Suppose that part of the $50 billion deficit came from the government buying $ 10 billion of natural resources to store for future use. What would the nominal deficit be under capital budgeting? 8) a) b)arrow_forwardThe following describes some key variables regarding public debt in the UK. Debt to output is 95%, the growth rate of output is 1.2%, and the interest rate on debt is 1.5%. a) What is the primary surplus the government has to run as a percentage of output to ensure a stable debt to output ratio if there is no seigniorage from printing money? (20%)arrow_forward
- What is the relationship between budget deficit and debt ratio to Gross Domestic Product (GDP)arrow_forward16) Contractionary fiscal policy, other things being equal, will tend to: A) increase transfer payments B) increase government purchases C) increase consumption taxes D) increase interest ratesarrow_forward2) Transfer payments are the ________ in the government's budget. A) smallest expenditure source B) largest expenditure source C) smallest revenue source D) largest revenue source 3) Personal taxes are the ________ in the government's budget. A) smallest expenditure source B) largest expenditure source C) smallest revenue source D) largest revenue source 4) A government's debt is increased when it A) balances is budget. B) buys more bonds. C) runs a deficit. D) runs a surplus. 5) When a government runs a surplus A) its debt increases. B) it must raise taxes. C) its debt decreases. D) it must cut spending. 6) The amount the government owes to the public is the federal debt. 7) If tax receipts are greater than government expenditures the government is running a surplus. 8) If the government runs a surplus, then the government debt increases. 9) Transfer payments are the largest part of the U.S.…arrow_forward
- 103. Current expenses exceed the amount of income collected via normal operations in circumstances where a budget deficit is discovered. A country that want to reduce its budget deficit may need to reduce particular spending, expand revenue-generating activities, or do both. A budget surplus is the polar opposite of a budget deficit. When revenue exceeds current expenses, a surplus occurs, resulting in funds that can be allocated as desired. A balanced budget is one in which the inflows and outflows are equal. Few industrialised countries had major fiscal deficits in the early twentieth century; nevertheless, deficits rose during the First World War as governments borrowed heavily and exhausted financial reserves to finance the war and their growth. These wartime and growth deficits persisted into the 1960s and 1970s, when global growth rates began to slow. Question explain the effect of the budget deficit, primary budget deficit, the factors affecting the size of the budget deficit.arrow_forward18. An increased federal budget deficit during an expansion serves as an automatic economic stabilizer for all of the following reasons except: reduced transfer payments from welfare programs partly offset the overall increase in household income. higher personal income translates into a higher tax load and so consumption spending is slightly curbed. higher corporate profits translate into higher tax load and so investment spending is slightly curbed. the positive government saving stimulates consumption spending.arrow_forwardDescribe how a budget deficit arises and explain the corresponding action typically taken by a government in this type of circumstance. Discuss the major categories that the U.S. government spends its tax revenue on and indicate what percentage of tax revenue is spent on these categories on an annual basis. please answer shortlyarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage LearningEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Survey of Economics (MindTap Course List)
Economics
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co