Question
In: Economics
8. In order to address its Federal Budget Deficit, the Greek Government increased the tax rate...
8. In order to address its Federal Budget Deficit, the Greek Government increased the tax rate by 7% for the top 50th percentile of household incomes. Included in this law, the government loosened capital requirements for banks lending to start-up businesses in its newly emerging biochemical sector. If all else remains equal, using the concept of Aggregate Demand and Aggregate Supply, what will happen to Greece’s GDP and Price Level?
Solutions
Rahul Sunny answered 6 months agoRelated Solutions
A federal budget deficit acts as an automatic stabilizer because: government tax revenues decrease during a...
A federal budget deficit acts as an automatic stabilizer
because:
government tax revenues decrease during a recession.
unemployment benefit payments decrease during a recession.
tax receipts decrease during expansionary periods.
Medicare payments increase during expansionary periods.
New Zealand's government has increased its spending this year, leading to a growing budget deficit. At...
New Zealand's government has increased its spending this year,
leading to a growing budget deficit.
At the same time, the Reserve Bank of New Zealand (New Zealand's
central bank) said it would continue to try to stimulate the
economy. This stimulus is likely to lead to rising prices for
consumer goods, even as the prices of producer goods remain
low.
1.How should we expect inflation as measured by CPI and as
measured by the GDP deflator to compare to each...
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government...
Suppose, the government of Australia incurs a budget deficit of
$50 billion due to increased government spending in 2020 as result
of Covid 19. Because of this, the government borrowing in 2021
increases by the same amount.
a) Show this development using a graph representing the market
for loanable funds for Australia . Explain in writing the effect of
this on interest rates.
b) Compare the size of equilibrium changes in 1) investment, 2)
public saving, 3) private saving and...
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government...
Suppose, the government of Australia incurs a budget deficit of
$50 billion due to increased government spending in 2020 as result
of Covid 19. Because of this, the government borrowing in 2021
increases by the same amount.
a) Show this development using a graph representing the market
for loanable funds for Australia . Explain in writing the effect of
this on interest rates. .
Answer Graph
Effect on interest rate (1 mark)
b) Compare the size of equilibrium changes in...
Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased government...
Suppose, the government of Australia incurs a budget deficit of
$50 billion due to increased government spending in 2020 as result
of Covid 19. Because of this, the government borrowing in 2021
increases by the same amount.
Show this development using a graph representing the market for
loanable funds for Australia[1]. Explain in writing the effect of
this on interest rates. .
Graph
Effect on interest rate (1
mark)
Compare the size of equilibrium changes in 1) investment, 2)
public...
Explain the connection between the federal government budget deficit in the early '80s and the accompanying...
Explain the connection between the federal government budget
deficit in the early '80s and the accompanying twin foreign trade
deficit. Would you expect the same in the current economic
situation the country is facing? Explain.
An increase in the federal government budget deficit will cause the: saving function to shift inward...
An
increase in the federal government budget deficit will cause the:
saving function to shift inward . investment function to shift
inward . saving function to shift outward . investment function to
shift outward .
Should the federal Government have a balanced budget (i.e. revenues = expenses), or is a deficit...
Should the federal Government have a balanced budget (i.e.
revenues = expenses), or is a deficit –OK? What are some of the
positive reasons to run a deficit?
Suppose that the federal government begins to run a large budget deficit at a time when...
Suppose that the federal government begins to run a large budget
deficit at a time when many productive resources are idle factories
are operating far below capacity in most industries, and there are
surplus of labour in almost every area of the economy.
How might the existence of all these idle resources prevent
even a very large increase in government borrowing from leading to
an increase in interest rates?
If you found part (a) hard to answer, ask yourself whether...
Suppose the U.S. government announces that it will bring the federal budget deficit to zero, over...
Suppose the U.S. government announces that it will bring the
federal budget deficit to zero, over the next ten years, with no
change in tax rates. Describe the effects of such a policy
according to the three business cycle models, assuming that the
policy is fully credible) Suppose the U.S. government announces
that it will bring the federal budget deficit to zero, over the
next ten years, with no change in tax rates. Describe the effects
of such a policy...
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