Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
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Chapter 18, Problem 8PA

Subpart (a):

To determine

The impact of increased borrowings by the government.

Subpart (b):

To determine

The impact of increased borrowings by the government.

Subpart (c):

To determine

The impact of increased borrowings by the government.

Subpart (d):

To determine

The impact of increased borrowings by the government.

Subpart (e):

To determine

The impact of increased borrowings by the government.

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Students have asked these similar questions
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)?
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