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”??

1. A firm’s cost of production is equal to A. its monetary outlay for inputs. B. explicit costsC. the implicit cost of not renting its own resources.D. the opportunity cost of its resources and the explicit costs.

2. The most important implicit cost facing large, modern firms is typically the cost of A. labor servicesB. capital.C. energyD. land

3. A firm’s costs are determined by A. it's production technology or production functionB. the interest rateC. labor negotiationsD. the weather

4. If the production function is such that the total product curve's slope is continually increasing then it means A. an infinite amount of labor is needed to make a given level of outputB. no diminishing marginal returns to laborC. no increasing marginal returns to laborD. labor is the only input

5. In the short-run, diminishing marginal returns are associated with A. falling average variable costB. rising marginal cost C. falling average cost curveD. all of the above

6. Which of the following statements about marginal cost is incorrect? A. A U-shaped marginal cost curve implies the existence of diminishing returns over all ranges of output.B. When marginal cost equals average cost, average cost is at its minimum.C. In the short-run, the marginal cost curve is parallel to the average fixed cost curve.D. When marginal cost is falling, total cost is rising at a decreasing rate.

7. Which of the following statements about the relationship between marginal cost and average cost is correct?A. When MC is falling, AC is falling.B. ACequals MC at MC's lowest point.C. When MC exceeds AC, AC must be risingD. When AC exceeds MC, MC must be rising.

8. Which of the following statements about costs in the long-run is correct? A. Fixed costs are equal to or less than variable costs. B. The U shape of the LAC is due to the law of diminishing returns.C. Marginal costs tend to exceed fixed costs.D. With increasing returns to scale LAC falls.

9. The slope of the total variable cost curve equalsA. average variable cost.B. marginal cost.C. average cost.D. marginal physical product.

10. The monetary cost of the space a restaurant rents to produce meals is what type of cost? A. Variable costB. Marginal costC. Fixed costD. Opportunity cost

11. Total fixed cost is the same regardless of how much A. money a firm borrowsB. labor a firm hires.C. capital a firm rentsD. output the firm produces

12. If fixed costs are $10,000 and variable costs are constant at $1.00 per unit over the relevant range of output, what will the average total cost be when 10,000 units are produced?A. $0.20B. $2.00C. $5.00D. $1.00

13. If fixed costs are $1,000 and variable costs are constant at $1.00 per unit over the relevant range of output, what will the average total cost be when 2,000 units are produced?A. $0.50B. $1.00C. $1.50D. $2.00

14. If total fixed costs are $1,000, variable costs are constant at $5.00 per unit over the relevant A. $100B. $1000C. $5000 D. $6000

15. Once diminishing returns have set in, each additional unit of the variable inputA. decreases total output. B. adds less to total output.C. adds more to total output. D. does not affect total output.