Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 24.11, Problem 1ST
To determine
The expansionary fiscal policy in an open economy.
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Chapter 24 Solutions
Macroeconomics (Book Only)
Ch. 24.4 - Prob. 1STCh. 24.4 - Prob. 2STCh. 24.4 - Prob. 3STCh. 24.7 - Prob. 1STCh. 24.7 - Prob. 2STCh. 24.8 - Prob. 1STCh. 24.8 - Prob. 2STCh. 24.10 - Prob. 1STCh. 24.10 - Prob. 2STCh. 24.11 - Prob. 1ST
Ch. 24.11 - Prob. 2STCh. 24 - Prob. 1VQPCh. 24 - Prob. 2VQPCh. 24 - Prob. 3VQPCh. 24 - Prob. 4VQPCh. 24 - Prob. 1QPCh. 24 - Prob. 2QPCh. 24 - Prob. 3QPCh. 24 - Prob. 4QPCh. 24 - Prob. 5QPCh. 24 - Prob. 6QPCh. 24 - Prob. 7QPCh. 24 - Prob. 8QPCh. 24 - Prob. 9QPCh. 24 - Prob. 10QPCh. 24 - Prob. 11QPCh. 24 - Prob. 12QPCh. 24 - Prob. 13QPCh. 24 - Prob. 14QPCh. 24 - Prob. 15QPCh. 24 - Prob. 16QPCh. 24 - Prob. 17QPCh. 24 - Prob. 18QPCh. 24 - Prob. 19QPCh. 24 - Prob. 1WNGCh. 24 - Prob. 2WNGCh. 24 - Prob. 3WNG
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- The deficit in the level of domestic savings and investment can be addressed through foreign investment. True or False?arrow_forwardIn a small a small open economy, illustrate how a fiscal expansion (such as an increase in government spending) in the domestic economy can affect the flow of capital and goods in the country.arrow_forwardWhat is a foreign trade deficit or surplus? How does this affectinterest rates?arrow_forward
- You are given the following information about an open economy with government activity. Consumption C = 5 + 0.8Y. Imports M = 2.5 + 0.1Y. The only tax is a uniform income tax at a rate of 25 percent. Investment I, Government G, and exports X are autonomous. The initial level of National Income Y is 100, and trade is initially balanced. a) Find the values of I and G. b) Find the change in National Income Y if the autonomous part of imports increases to 5. c) Calculate the trade balance resulting from b above. d) Find the new tax rate which would be necessary to restore trade balancearrow_forwardIn an economy open to trade, must a government budget deficit always be accompanied by an external sector deficit? Why or why not? Could a government budget deficit lead to a government budget surplus?arrow_forwardUnder what conditions will a larger budget deficit cause a trade deficit?arrow_forward
- what combination of fiscal and monetary policies do you think it will take for The United States to fix the debt deficitarrow_forwardThe following information is provided about an open economy with a government. Use theinformation to answer the questions that follow:C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550 Q.2.4 Calculate the tax revenue to the government of this country when the economy remains in equilibrium.Q.2.5 Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.Q.2.6 Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?arrow_forwardSuppose that Jacques, an economist from a research institute in Texas, and Kyoko, an economist from a university in Massachusetts, are arguing over budget deficits. The following dialogue shows an excerpt from their debate: Kyoko: 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. Jacques: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits. Kyoko: 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 Rent ceilings reduce the quantity and quality of available housing. O Having a single income tax rate would improve economic performance. O Immigrants receive more in government…arrow_forward
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