Please include J-Curve in your answer. The government budget deficit and the trade deficit are often...

Please include J-Curve in your answer. The government budget deficit and the trade deficit are often called the "twin deficits." Explain why this name applies, and why it is not always accurate.

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Rahul Sunny answered 2 years ago

1. What is the link between the budget deficit and the trade deficit? Government borrowing from...

1. What is the link between the budget deficit and the trade deficit? Government borrowing from the budget deficit leads to higher real interest rates which cause foreigners to invest in the U.S. which increase the international value of the dollar causing imports to rise and exports to fall....i.e. trade deficit. Government borrowing from the budget deficit leads to higher real interest rates which cause foreigners to pull their money out of the U.S. due to its cost which decrease...

Effects of a government budget deficit

3. Effects of a government budget deficitConsider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget.Screen Shot 2020-10-09 at 3.24.05 PM.pngGiven the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use...

What is the difference between the trade and budget deficit? How might an extended budget deficit...

What is the difference between the trade and budget deficit? How might an extended budget deficit lead to lower economic growth?

What is the difference between the trade and budget deficit? How might an extended budget deficit...

What is the difference between the trade and budget deficit? How might an extended budget deficit lead to lower economic growth?

When the government runs a budget deficit,

When the government runs a budget deficit,a. national saving is higher than it would be if the budget were balanced.b. investment is lower than it would be if the budget were balanced.c. interest rates are lower than they would be if the budget were balanced.d. All of the above are correct.e. None of the above is correct.

If a government has a budget deficit, it must Group of answer choices: decrease taxes. decrease...

If a government has a budget deficit, it must Group of answer choices: decrease taxes. decrease its expenditures. increase taxes. borrow in the loanable funds market.

Following an increase in the Canadian budget deficit, it has been observed that the trade deficit...

Following an increase in the Canadian budget deficit, it has been observed that the trade deficit has increased, the Canadian real exchange rate has appreciated, the net capital outflow has decreased, and the interest rate has decreased. Which one of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit? a. The interest rate has decreased. b. The real exchange rate has appreciated. c. The net capital outflow has...

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Please include J-Curve in your answer. The government budget deficit and the trade deficit are often...

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Related Solutions

1. What is the link between the budget deficit and the trade deficit? Government borrowing from...

Effects of a government budget deficit

What is the difference between the trade and budget deficit? How might an extended budget deficit...

What is the difference between the trade and budget deficit? How might an extended budget deficit...

When the government runs a budget deficit,

If a government has a budget deficit, it must Group of answer choices: decrease taxes. decrease...

Following an increase in the Canadian budget deficit, it has been observed that the trade deficit...

a.What are the links between the budget deficit and trade deficit? What would be the most...

what are the links between the budget deficit and trade deficit? what would be the most...

Commentators often refer to government budget deficits and trade deficits as "twin deficits". Explain how the...