Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 24, Problem 27APA
To determine
Determine the changes in the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Explain the following graph. (use the relation between budget deficit and business cycle) explain in
details.
Budget deficit
(percent of GDP)
12%
10
www
8
6
7961
1970
1975
1980
1985
1990
5661
2000
2005
2010
2013
7. Agreement and disagreement among economists
Suppose that Paolo, an economist from a research institute in Alberta, and Sharon, an economist from a public television program, are arguing over
budget deficits. The following dialogue shows an excerpt from their debate:
Sharon: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best
course of action to remedy this situation.
Paolo: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits.
Sharon: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively.
The disagreement between these economists is most likely due to
Despite their differences, with which proposition are two economists chosen at random most likely to agree?
O Employers should not be restricted from outsourcing work to foreign nations.
O Central banks should focus more on maintaining low…
Briefly explain the FOUR stages of Budget cycle of the Union Government, with focus on the role of the Parliament in context of the Union Budget in India?
Chapter 24 Solutions
Macroeconomics
Ch. 24.1 - Prob. 1RQCh. 24.1 - Prob. 2RQCh. 24.1 - Prob. 3RQCh. 24.1 - Prob. 4RQCh. 24.2 - Prob. 1RQCh. 24.2 - Prob. 2RQCh. 24.2 - Prob. 3RQCh. 24.2 - Prob. 4RQCh. 24.2 - Prob. 5RQCh. 24.3 - Prob. 1RQ
Ch. 24.3 - Prob. 2RQCh. 24.3 - Prob. 3RQCh. 24.3 - Prob. 4RQCh. 24.3 - Prob. 5RQCh. 24.3 - Prob. 6RQCh. 24.4 - Prob. 1RQCh. 24.4 - Prob. 2RQCh. 24.4 - Prob. 3RQCh. 24 - Prob. 1SPACh. 24 - Prob. 2SPACh. 24 - Prob. 3SPACh. 24 - Prob. 4SPACh. 24 - Prob. 5SPACh. 24 - Prob. 6SPACh. 24 - Prob. 7SPACh. 24 - Prob. 8SPACh. 24 - Prob. 9SPACh. 24 - Prob. 10SPACh. 24 - Prob. 11SPACh. 24 - Prob. 12SPACh. 24 - Prob. 13APACh. 24 - Prob. 14APACh. 24 - Prob. 15APACh. 24 - Prob. 16APACh. 24 - Prob. 17APACh. 24 - Prob. 18APACh. 24 - Prob. 19APACh. 24 - Prob. 20APACh. 24 - Prob. 21APACh. 24 - Prob. 22APACh. 24 - Prob. 23APACh. 24 - Prob. 24APACh. 24 - Prob. 25APACh. 24 - Prob. 26APACh. 24 - Prob. 27APACh. 24 - Prob. 28APACh. 24 - Prob. 29APACh. 24 - Prob. 30APA
Knowledge Booster
Similar questions
- During the most recent recession, some economists argued that the change in the interest rates that comes about due to deficit spending implied in the demand and supply of financial capital graph would not occur. A simple reason was that the government was stepping in to invest when private firms were not. Using a graph, explain how the use by government in investment offsets the deficit demand.arrow_forwardSketch a diagram of how sustained budget deficits cause low economic growth.arrow_forwardThe U.S. government has shut down a number of times In recent history Explain how a government shutdown will affect the variables In the national Investment and savings identity Could the shutdown affect the government budget deficit?arrow_forward
- David Rubenstein mentions that stock and bond traders are not presently very worried about the increase in the federal deficit. However, he adds that they might become more concerned in six to twelve months. The accompanying diagram shows the market for loanable funds. Use the graph to show the effect of an increase in the federal deficit on this market. Real interest rate (%) Loanable funds ($) Supply Demand Why might traders be worried about the deficit increasing? The resulting change in the interest rate stocks and bonds - less valuable. will makearrow_forward8. Agreement and disagreement among economists Suppose that Edison, an economist from a research institute in Texas, and Hilary, an economist from a nonprofit organization on the West Coast, are arguing over budget deficits. The following dialogue shows an excerpt from their debate: Hilary: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Edison: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits. Hilary: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to a.differences in scientific judgments . b.differences between perception versus reality . c.differences in values Despite their differences, with which proposition are two economists chosen at random most…arrow_forwardEconomics The table shows an economy's demand for loanable funds schedule and supply of loanable funds schedule when the government's budget is balanced Real interest rate Loanable funds demanded Loanable funds supplied (percent per year) (trillions of 2010 dollars) (trillions of 2010 dollars) 3 12 6 11 10 9 9 7 8 10 11 If the Ricardo-Barro effect occurs, and if the government budget deficit is $2 trillion, the real interest rate is percent year and the quantity of investment is trillion. O A. 7.0, $8.0 O B. 7.0; $10 0 OC. 5.0; $10.0 OD. 6.0, $9.0arrow_forward
- 5. Impact of budget deficits The following graph shows the loanable funds market in the United States. It plots both the demand (D) for loanable funds and the supply (S) of loanable funds. At the current equilibrium, the government is operating with a balanced budget. Assume now that the U.S. government bails out several large automotive manufacturers experiencing financial difficulties without a rise in taxes, creating a budget deficit. Show the effect of the budget deficit on the market for loanable funds by shifting the demand (D) curve, the supply (S) curve, or both. INTEREST RATE LOANABLE FUNDS þ • ļ -arrow_forward10 eBook The diagram shows government expenditures and tax revenues for the fictional country of Mountainia. Currently, there is a recession in Mountainia. The country's leaders want to use tax-rate changes to create a cyclically adjusted budget deficit of $3 billion. a. Illustrate how the country's tax revenues will change after the government adjusts tax rates to create this cyclically adjusted budget deficit. Instructions: Use the tool provided 'T2' to illustrate the country's tax revenues after the tax changes are enacted. Government expenditures, G, and tax revenues, T (billions) $25 $20 $15 $10 $5 0 G $40 $80 $120 $160 $200 Real domestic output, GDP (billions) Tools T₂arrow_forwardBased on this model, the budget deficit leads to in the level of investment and in the interest rate. Which of the following arguments might a supporter of a balanced budget make in defense of their position? Check all that apply. An individual's share of the government debt represents only a small portion of his or her lifetime earnings. Budget deficits decrease national saving. Budget deficits increase national saving. Budget deficits place a burden on future taxpayers. Supporters of a balanced budget claim that the government's budget deficit cannot grow forever, but critics believe that this is not necessarily true. They argue that what matters is the size of debt relative to national income. For example, suppose that real output in the United States grows at approximately 6%. If the inflation rate is 3% per year, this means that nominal income must be growing at a rate of % per year. Because nominal income grows over time, the nation's ability to pay back the national debt than…arrow_forward
- 8. Agreement and disagreement among economists Suppose that Rajiv, an economist from a university in Arizona, and Simone, an economist from a university in Massachusetts, are arguing over budget deficits. The following dialogue shows an excerpt from their debate: Simone: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Rajiv: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits. Simone: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to differences between perception versus reality Despite their differences, with which proposition are two economis differences in values O Rent ceilings reduce the quantity and quality of available differences in scientific judgments O Having a single…arrow_forward5. Impact of budget deficits The following graph shows the loanable funds market in the United States. It plots both the demand (D) for loanable funds and the supply (S) of loanable funds. At the current equilibrium, the government is operating with a balanced budget. Assume now that the financial industry is close to bankruptcy and the U.S. government decides to implement a bailout plan of several billion dollars without increasing taxes, causing a budget deficit. Show the effect of the budget deficit on the market for loanable funds by shifting the demand (D) curve, the supply (S) curve, or both. INTEREST RATE LOANABLE FUNDS S • ¢ ° ¢arrow_forward4. What is a government budget deficit? How does it affect interest rate, investment, and economic growth 5. Draw a graph when government run a change in the tax that might increase private saving. How would it affect the market for loanable funds?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax