If an economy has a budget deficit of 600, private savings of 2,000, and investment of 800. What is the balance of trade in this economy? When government policy moves from a budget surplus to a budget deficit and the trade deficit remains constant: investment will decrease if savings also remains constant .
When a government records a budget surplus the national savings and investment identity is written as?
Question: When a government records a budget surplus, and acts as a saver rather than a borrower, the national savings and investment identity is written as: S = 1 + (G-T) + (X-M) S-(M-X) – (T – G) = 1 S+I+(M – X) = T S+(M-X) + (T – G) = 1 Which of the following is counted as part of the M2 money supply?
What happens when the government runs a budget deficit?
When the government runs a budget deficit, it is spending more than it is taking in . In this way, national savings decreases. When national savings decreases, investment–the primary store of national savings–also decreases. Lower investment leads to lower long-term economic growth.
When the interest rate in an economy decreases it is likely the result of either a an?
14. When the interest rate in an economy decreases, it is most likely as a result of: A. an increase in the government budget surplus or its budget deficit .
When the interest rate in an economy increases it is likely the result of either what?
When the interest rate in an economy increases, it is likely the result of either: Select one: a. an increase in the government budget surplus or its budget deficit .
Which of the following is a traditional tool used by the Fed during recessions group of answer choices?
The Fed has traditionally used three tools to conduct monetary policy: reserve requirements , the discount rate, and open market operations.
What is the theory that supports Ricardian equivalence?
The Ricardian equivalence proposition (also known as the Ricardo–de Viti–Barro equivalence theorem ) is an economic hypothesis holding that consumers are forward-looking and so internalize the government’s budget constraint when making their consumption decisions.
Why is budget deficit not necessarily a bad thing?
Question: Question 8 1 pts Why is a budget deficit not necessarily a bad thing? Saving money is not something a government should do . Deficits may allow for tax rate stability during recessions. Governments should always spend more than they collect in revenue to encourage economic growth.
What is the current deficit?
According to the U.S. Bureau of Economic Analysis, the United States’ current account deficit totaled $124.8 billion in the third quarter of 2018, an increase from the second quarter of the same year. This means the U.S. continues to spend more on its imports than it is on its exports.
What is the difference between a budget deficit and the national debt?
Debt is money owed , and the deficit is net money taken in (if negative). ... Debt is the accumulation of years of deficit (and the occasional surplus).
When government policy moves from a budget surplus?
If an economy has a budget deficit of 600, private savings of 2,000, and investment of 800. What is the balance of trade in this economy? When government policy moves from a budget surplus to a budget deficit and the trade deficit remains constant : investment will decrease if savings also remains constant.
When increasing oil prices cause aggregate supply to shift to the left then?
When increasing oil prices cause aggregate supply to shift to the left, then: a /unemployment decreases and inflation increases .
When inflation begins to climb to unacceptable level in the economy the government should?
Question: Question 7 1 pts When inflation begins to climb to unacceptable levels in the economy, the government should use contractionary fiscal policy to shift aggregate demand to the left .
What type of government policy can cause crowding out?
Description: Sometimes, government adopts an expansionary fiscal policy stance and increases its spending to boost the economic activity. This leads to an increase in interest rates. Increased interest rates affect private investment decisions.
What factors contributed to the deficit spending of the 2000s?
the crowding-out effect, high interest payments , and the influence of foreign debt-holders. Which of the following factors contributed to the deficit spending of the 2000s? How might a budget deficit be related to the national debt? A deficit adds to the debt.
What can lead to disruptive economic patterns and heavy strains on a country’s banking and financial system?
Moreover, a sustained pattern of large budget deficits can lead to disruptive economic patterns of high inflation, substantial inflows of financial capital from abroad, plummeting exchange rates, and heavy strains on a country’s banking and financial system.
