Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics)
bartleby

Concept explainers

Question
Book Icon
Chapter 22, Problem 2DAP

a.

To determine

To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding on vertical axis.

a.

Expert Solution
Check Mark

Explanation of Solution

Table showing calculation of change in public bond holdings, Federal Reserve bond holding and changes in debt held by public and federal reserve is as follows:

    PeriodBudget Deficitdebt held by publicdebt held by federal reservechange in debt held by publicchange in debt held by federal reservechanges in debt held by public and federal reserve
    1980-01-0173830699384120800.0---
    1981-01-0178968790060123575.0906762775.093450.5
    1982-01-01127977910039131825.01199798250.0128228.8
    1983-01-012078021111561146425.020152214600.0216122.3
    1984-01-011853671290387154900.01788268475.0187301.0
    1985-01-012123081494839170275.020445315375.0219827.5
    1986-01-012212271718347192700.022350822425.0245932.5
    1987-01-011497301889399210800.017105218100.0189152.3
    1988-01-011551782039260228175.014986117375.0167235.8
    1989-01-011526392175360227075.0136100-1100.0134999.8
    1990-01-012210362418033229700.02426742625.0245298.5
    1991-01-012692382704994253400.028696123700.0310661.3
    1992-01-012903213018001279350.031300725950.0338956.5
    1993-01-012550513279209315750.026120836400.0297607.8
    1994-01-012031863474962350600.019575334850.0230603.0
    1995-01-011639523645419370550.017045719950.0190407.3
    1996-01-011074313776614383950.013119513400.0144594.8
    1997-01-01218843835440412125.05882728175.087001.8
    1998-01-01692703803038442775.0-3240330650.0-1752.5
    1999-01-011256103715711479400.0-8732736625.0-50701.8
    2000-01-012362413508911507425.0-20680028025.0-178775.0
    2001-01-011282363360257536200.0-14865428775.0-119879.3
    2002-01-011577583526798599925.016654163725.0230266.0
    2003-01-013775853873789654100.034699254175.0401166.5
    2004-01-014127274276280694900.040249140800.0443290.5
    2005-01-013183464604003730650.032772335750.0363473.3
    2006-01-012481814853668768175.024966537525.0287189.5
    2007-01-011607015045710772900.01920434725.0196767.8
    2008-01-014585535701491505625.0655781-267275.0388505.8
    2009-01-0114126887345425673650.01643934168025.01811958.5
    2010-01-0112943738839123846725.01493699173075.01666773.8
    2011-01-01129959999969991572000.01157875725275.01883150.3
    2012-01-011086955111963921658100.0119939386100.01285493.3
    2013-01-01679542120413002003425.0844908345325.01190233.0
    2014-01-01484600127559622720300.0714663716875.01431537.5
    2015-01-01438496132472112802050.049124981750.0572998.5
    2016-01-01584651141210372827050.087382625000.0898826.0
    2017-01-01665372145625722862225.044153535175.0476710.3

Table (1)

Scatter diagram showing public bond holding on the vertical axis and deficit on horizontal axis is as follows:

Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics), Chapter 22, Problem 2DAP , additional homework tip  1

Fig.1

The steep fitted line in Fig. 1 shows the strong relation between the change in debt held by public and deficit from 1980-2017

Economics Concept Introduction

Introduction:

When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit.

b.

To determine

To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding by Federal Reserve on vertical axis from 1980-2017.

b.

Expert Solution
Check Mark

Explanation of Solution

Diagram showing Federal Reserve bond holdings on the vertical axis and deficit on horizontal axis since 1980 to 2017, is as follows:

Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics), Chapter 22, Problem 2DAP , additional homework tip  2

Fig.2

The steeper fitted line shows the positive relationship between bond holdings by the Federal Reserve and deficit but with less prognostic power.

Economics Concept Introduction

Introduction:

When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit

c.

To determine

To create: A scatter plot showing the deficit on horizontal axis and changes in and bond holding by Federal Reserve on vertical axis from 1980-2007.

c.

Expert Solution
Check Mark

Explanation of Solution

Diagram showing Federal Reserve bond holdings on the vertical axis and deficit on horizontal axis since 1980 to 2007, is as follows:

Economics of Money, Banking and Financial Markets, The, Business School Edition (5th Edition) (What's New in Economics), Chapter 22, Problem 2DAP , additional homework tip  3

Fig.3

As the fitted line in Fig.1 suggests there was a positive relationship between bond holdings by the Federal Reserve and deficit from1980-2007.

Economics Concept Introduction

Introduction:

When the planned expenditure of government exceeds the amount of revenue available to pay for it, it is known as budget deficit.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Background pattern image
Economics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education