Consider an economy with a real income of $10,000, consumption spending of $7,000, and net tax revenue of $2,000.
a. Calculate domestic private saving and Suppose government spending is $2,000. What is the public saving?
b. Continuing from part last part, what is national saving?

c Continuing from part b, suppose net foreign investment is -$3,000. What is private domestic investment spending?

Consider an economy with a real income of $7,000, consumption spending of $5,000, and net tax revenue of $1,000.
a. Calculate domestic private saving
b. Suppose government spending is $1,000. Calculate public saving.
c. Continuing from part b, what is national saving?

d. Continuing from part c, suppose net foreign investment is -$2,000. What is private domestic investment spending?

Inefficient uses of variable overhead resources will affect:

Many people are out of work as a result of COVID-19. This means that they will not be paying as much money in taxes so government revenue will decrease. At the same time, the government spending has increased as the government bails out businesses, increases spending on healthcare, and provides income assistance to a growing number of people. How does declining tax revenue and increasing government spending impact the government debt?

3. Using the IS-LM graphs, show that a decrease in government spending will cause output and interest rates to fall.

4. Using the IS-LM graphs, show what will happen to output and the interest rates if there is a balanced budget increase in spending—that is higher spending financed by higher taxes.

5. Using IS-LM graphs, predict what will happen to output and the interest rate if the central bank reduces the money supply.

The nation of Maximus has a marginal propensity to consume of .90 and the government has decreased taxes by a lump-sum amount of $1 billion. Assume there is no international trade or changes to the aggregate price level. a. What is the value of the tax multiplier in Maximus? b. By how much will real GDP change after the $1 billion decrease in taxes? c. If the government wanted to accomplish the same increase in real GDP you found in part (b), but with government spending instead of taxes, would the government need more than $1 billion in spending, less than $1 billion in spending, or exactly $1 billion in spending? Explain.

1. Does the US Government have a spending problem, a revenue problem or both? Why or Why not?
2. Let's look at spending...what is the breakdown of the federal budget (where does the money go)? What proportion is discretionary vs. non-discretionary? Where is the majority of the spending growth taken place?
3. Given the spending growth (where it is taken place), what does this indicate regarding the role of the federal government?
4. What do you make of the US Government's deficits and overall debt from an economic perspective? This might include any consequences (good or bad) that you see. (Back up your thoughts with data.)

1. Does the US Government have a spending problem, a revenue problem or both? Why or Why not?
2. Let's look at spending...what is the breakdown of the federal budget (where does the money go)? What proportion is discretionary vs. non-discretionary? Where is the majority of the spending growth taken place?
3. Given the spending growth (where it is taken place), what does this indicate regarding the role of the federal government?
4. What do you make of the US Government's deficits and overall debt from an economic perspective? This might include any consequences (good or bad) that you see.   Back up your thoughts with data.

4. What is the meaning of this equation: Total Spending (GDP) = C + I + G + (X-M)? What information does this equation try to communicate to us? Why? Why should we care about this information?

5. In theory, what is so ‘unique’ and ‘special’ about Business Spending (I)? One can argue that this area of spending is MUCH MORE IMPORTANT than “just 17% of Total Spending”---why may this be true?

6. In theory, what must a firm be thinking in order to START the process of building factory #5? How and when and why might the firm give itself “the green light”??

4. Italiano Manufacturing Company produces one type of pasta. For the coming quarter, it estimates that it will sell 25,000 kg of finished product. It currently has 1,000 kg in stock and expects to increase this to 2,000 kg at the end of the quarter.

The main ingredients to make 1 kilogram of pasta are 900 grams of durum wheat and two eggs. Prices for these items are budgeted at $2,100 per tonne of wheat and $3 per dozen eggs.

The company is holding 2.5 tonnes of wheat but wants to reduce this to 2.2 tonnes by the end of the quarter. It holds no stock of eggs, buying them in as needed.

a) Prepare the production budget for the quarter.

b) Prepare the direct materials budget for the quarter.