National Commercial Bank etc all have their own rates that they offer to customers.
‘Lending rates’ given to surplus units (the depositors/savers who supply funds) and ‘borrowing rates’ charged to deficit units are different.
An individual bank can give or charge different rates to customers...
changes in the interest rate.
B U D G E T A N A LY S I S A N D D E F I C I T F I N A N C I N G
1986 the federal government would have a $48 billion surplus. Instead, by 1986,
there was a $211 billion deficit. The CBO’s 1983 predictions for 1988 were
much closer, only...
increases by 66%.
This is increasing returns to scale.
Mankiw, Sample Essay, Chapter 3, Question 3
If the government wants to increase the amount of savings in the economy, how should it
alter government spending ? What effect will this action have on the interest rate in the
economy ? (Use...
, therefore, involves investigating how demand changes when prices and income
Changes in income
N o rm al G oo ds
B u d ge t L in e s
Consider how consumer demand changes given a change in income. We want to know
how the optimal choice at one...
that are probably looming in your mind. Why should countries trade? How does trade work? What is the effect of international trade? How do exchange rates affect trade? Can the government interfere in free trade? What is the trade deficit?
The benefits and pitfalls of trade affect the economy at its...
reached 15.4% of GD 3 h DP. As the deficit numbers wors s n sened, nervou financial m us markets had k kept demand ding higher in nterest rates on governm ment debt. At one point, interest rates reached alm i s most 19%. In the end, on an n nly emerg gency loan from the Europ pean Union (EU) and the...
4.02 per cent.
3.14. F i s c a l sus t a i n a b i l i t y c o n s i d e r a t i o n s
demand a reduction in debt financing for funding of
GBS for the Tenth Plan. Accordingly, the gross
fiscal deficit, which stood at 5.90 per cent of GDP
in 2001-02 has been projected to reduce to 4.32
spending of goods and services by individual house holds. In its approach, microeconomics essentially assumes the importance of full employment. It also assumes as given the total output, total employment and total spending of all goods and services. It then proceeds to examine how output and...
foreigners. ___17. The average unemployment rate has fallen since the 1970s.
SHORT ANSWER QUESTIONS 1. In what sense do different sources of government deficits cause different effects on the economy? 2. How is it that the growth rate of money supply explains long-run inflation? 3. What happened to...
– were removed, and cyclical surplus or deficit as the automatic net changes in revenues and outlays that are attributable to cyclical movements in real (inflation-adjusted) output and unemployment. USA Inc. | High Level Thoughts 36
How Did USA Inc.'s Financial Reality Get to this Difficult Point...
reasonably inexpensive to
collect, i.e. the cost of collection should form a small
percentage of the revenue collected and they should not
have negative side-effects such as reducing work incentives
Certainty. The taxpayer should be clearly aware how much is
due, and when...
Chapter 34 Summary
A. The Economic Consequences of the Debt 1. Budgets are systems used by governments and organizations to plan and control expenditures and revenues. Budgets are in surplus (or deficit) when the government has revenues greater (or less) than its expenditures...
. Net exports in the United States decline, and like the crowding-out effect, diminish the expansionary fiscal policy.
CHAPTER TWELVE 12-2 Assume that a hypothetical economy with an MPC of .8 is experiencing severe recession. By how much would government spending have to increase to shift the...
Fifth round deposits rise by
Total deposits after five rounds
4. Assuming that banks choose to maintain a liquidity ratio of 20 per cent and assuming that new cash deposits of £100m are made in the banking system: (b) How much credit will have been...
the decline in production, hence, output deteriorated.
Before the Great Depression the U.S. government did not have a fiscal policy, at least not in the sense that economists have meant for the past two generations. The deficit and the surplus were not tuned by the government in order to...
freely between countries it can be relatively easy to finance a deficit - but it may require higher interest
rates to attract buyers of debt. This in turn will have a negative effect on economic growth.
In the long run, a high PSNCR adds to the accumulated National Debt.
This means that the...
otherwise would have been unemployed, there is no inflationary effect; however, if the stimulus employs a worker who otherwise would have had a job, the stimulus is increasing labor demand while labor supply remains fixed, leading to wage inflation and therefore price inflation
The gross domestic...
(generally defined as all men and women aged 15–64)
p = participation rate = LF / LFpop
E = number employed
e = rate of employment = E / LF
U = number of unemployedu = rate of unemployment = U / LF
The labor force participation rate explains how an increase in the unemployment rate can...
diagram with a tax
on the sale of the good. Show the deadweight
loss. Show the tax revenue.
3. How do the elasticities of supply and demand
affect the deadweight loss of a tax? Why do they
have this effect?
4. Why do experts disagree about whether labor
taxes have small or large deadweight...
UK and 6.5 points in the Eurozone. Public debtshave swollen dramatically, and recent trends cannot be sustained. The impact on interest charges has not been very significant given the decline in interest rates, but naturally this effect cannot be replicated.