The option that correctly states about the impact of increase in government budget deficit.

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Chapter 26, Problem 8MCQ

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The option that correctly states about the impact of increase in government budget deficit.

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When a government runs a deficit, it _________ a. It cuts fundings for defense and uses the money to other government services. b. It shuts the government down. c. It borrows from the public through the financial system to increase its spending. d. It reallocates money from departments that have excesses to departments that have deficits.

• Analyze the effects of a government budget deficit. • Examine how the interest rate is determined in a variety of scenarios. • Synthesize knowledge of saving, investment, and the financial system. Government budget and national saving: 1. Suppose that GDP equals $10 trillion, consumption equals $6.5 trillion, and the government spends $2 trillion and has a budget deficit of $300 billion. Please find public saving, taxes, private saving, national saving, and investment.

2. When the government runs a fiscal deficit, it finances it by: a. issuing stocks b. decreasing taxes c. borrowing money from a commercial bank d. issuing bonds

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Chapter 26, Problem 8MCQ

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The option that correctly states about the impact of increase in government budget deficit.

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Answer 3

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Chapter 26, Problem 8MCQ

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The option that correctly states about the impact of increase in government budget deficit.

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Answer 4

Question

Chapter 26, Problem 8MCQ

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The option that correctly states about the impact of increase in government budget deficit.

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Answer 5

Chapter 26, Problem 8MCQ

To determine

To find:

The option that correctly states about the impact of increase in government budget deficit.

Answer 6

Chapter 26, Problem 8MCQ

To determine

To find:

The option that correctly states about the impact of increase in government budget deficit.

Answer 7

Chapter 26, Problem 8MCQ

To determine

To find:

The option that correctly states about the impact of increase in government budget deficit.

Answer 8

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Answer 11

Ch. 26 - Prob. 1SPPA Ch. 26 - Prob. 2SPPA Ch. 26 - Prob. 3SPPA Ch. 26 - Prob. 4SPPA Ch. 26 - Prob. 5SPPA Ch. 26 - Prob. 6SPPA Ch. 26 - Prob. 7SPPA Ch. 26 - Prob. 8SPPA Ch. 26 - Prob. 9SPPA Ch. 26 - Prob. 1IAPA

The option that correctly states about the impact of increase in government budget deficit.

Solution Summary: The author explains that an increase in the government budget deficit decreases private saving and investment because it increases the demand for loanable funds thereby decreasing the real interest rate.

To find:

The option that correctly states about the impact of increase in government budget deficit.

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Chapter 26 Solutions

The option that correctly states about the impact of increase in government budget deficit.

Solution Summary: The author explains that an increase in the government budget deficit decreases private saving and investment because it increases the demand for loanable funds thereby decreasing the real interest rate.

To find: The option that correctly states about the impact of increase in government budget deficit.

Want to see the full answer?

Chapter 26 Solutions

To find:

The option that correctly states about the impact of increase in government budget deficit.