45. What effect will the combination of a decrease in the capital stock and increasingly costly government regulations have on LRAS? a. It will shift LRAS to the left. b. It will shift LRAS to the right. c. It will leave LRAS unchanged. d. It will have an indeterminate effect on LRAS.
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- In 2001, the Bush Administration increased spending by $100 billion and raised taxes by $70 billion at thesame time. It’s likely that:A. interest rates will most likely not increase.B. interest rates will most likely increase.C. business investment is not likely to change.D. business investment is likely to increase due to crowding outThe macroeconomic effects of federal investment can decrease if : a.State and local governments tax investment spending towards other non-investment areas. b.State and local governments complement federal policy by also increasing investment. c.State and local governments keep local investment spending unchanged. d.State and local governments substitute investment spending towards other non-investment areas.The higher the interest sensitivity of investment the a. less effective are both monetary and fiscal policies. b. less effective is monetary policy and the more effective is fiscal policy. c. less effective is fiscal policy and the more effective is monetary policy. d. more effective are both monetary and fiscal policies.
- Suppose the government borrows $50 billion more next year than this year. a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall? b. What happens to investment? To private saving? To public saving? To national saving? Compare the size of the changes to the $50 billion of extra government borrowing, C, see the attached picture.Economics In the figure, the DLF curve is the demand for loanable funds curve and the PDLF curve is the private demand for loanable funds curve. If there is no Ricardo-Barro effect, the figure Real interest rate (percent per year) 12- shows the situation in which the government has a so that the equilibrium real interest rate is equilibrium quantity of investment is 10- and the SLF 8- O A. budget deficit; 6 percent; $1.5 trillion B. budget deficit; 4 percent; $1 trillion 6- OC. budget surplus; 6 percent; $1.5 trillion D. budget surplus; 4 percent; $1 trillion E. balanced budget; 6 percent; $1.5 trillion 2- DLF PDLF 0- 2.0 Loanable funds (trillions of 2012 dollars) 0.5 1.0 1.5 2.5 3.0 O O O O Oii) A new president, who promised during the campaign that she would cut taxes, has just been elected. People trust that she will keep her promise, but expect that the tax cuts will be implemented only in the future. Determine the impact of the election on current output, the current interest rate, and current private spending under each of the assumptions in parts (a) through (c). In each case, indicate what you think will happen to Y", r'e and Te and then how these changes in expectations affect output today a) The Fed will not change either the current real policy interest rate or the future real policy interest rate.
- 28. Which of the following policies might provide a remedy when the equilibrium output in an economy is above the potential level of output? a. Increase government spending. b. Decrease the federal funds rate. c. Increase transfer payments. d. Raise taxes. e. Buy more government securities.In the figure to the right, the leftward shift from the demand for loanable funds curve DLF, to the demand for loanable funds curve DLF3, could be the result of OA the economy entering a recession. OB. a increase in interest rates during an economic expansion. OC. a government budget surplus. O D. a decrease in interest rates during an economic recession. O E. the economy entering an expansion. Real interest rate (percent per year) 10- 8 0 I DLF, DLF₂ DLF3 1.5 2.0 2.5 3.0 3.5 Loanable funds (trillions of 2005 dollars)The multiplier is ? a. the ratio of government debt to income b. the ratio of an increase in consumer spending to an increase in GDP c. the ratio of the total increase in GDP to an initial increase in exogenous spending (e.g. investment or government spending, if these are assumed not to depend on GDP) d. the ratio of the money supply to nominal expenditure
- a. How much more output does the $22 trillion U.S. economy produce when GDP increases by 1.0 percent? in BILLION not .22 b. By how much does this increase per capita income if the U.S. population is 340 million?There is recently an increase in private saving in Canada. Assume this occured by a drop in autonomous consumption. What happens to a. investment? up, down, stay the same b. national savings? up, down, stay the same c. public savings? up, down, stay the samePlease see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?