Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Let the stock of government debt at time t be denoted by the stock of government debt evolves according to the relation:
Bt = (1 + r) Bt-1 + Gt - Tt
Where G is government spending (excluding debt interest) in period t and T is the flow of tax revenue.
A sustainable position for government debt is one where the ratio of government debt to GDP does not keep rising; and a stable position for government debt is one where the ratio of debt to GDP is constant.
Suppose that GDP is, on average, growing at a rate that is equal to the interest rate. Derive a condition that would ensure that the government debt is guaranteed to be sustainable because the debt to GDP ratio eventually declines to zero. Comment on the condition and what it implies about how long a primary deficit (G > T) can be sustained.
Now suppose that the growth rate of GDP need not be the same as the interest rate. Derive a condition on the size of the primary fiscal deficit (that is G-T) that ensures that the debt to GDP ratio is stable. How does this condition compare with the condition from question 1?
Would you expect Ricardian equivalence to hold if debt was on a path that many people thought might be unsustainable? Explain.
Elucidate tools are used to accomplish conscious fiscal policy.
An economy can be stimulated by printing more money. Illustrate what are the dangers of doing that. Inflation can be decreased by reducing the money supply.
Calculate the official measure of the deficit in year t and calculate the correct (i.e. inflation adjusted) measure of deficit in year t.
Suppose Congress (in an attempt to stimulate the economy in both the short and long run) passes an investment-tax credit, which subsidizes domestic investment. How will this policy affect (comparing the state of the economy prior to the enactment o..
The public's preference is to hold their money as half cash, half demand deposit. Reserve requirement is 25%. Determine monetary multiplier.
Discuss the role of social diversity and business ethics as it relates to globalization? Consider how different cultures around world perform such business activities.
Assume that the nominal wage rate equals 60. In the short-run, aggregate demand and aggregate supply are equal at a price level of 1.0.
Describe arbitrage and the law of one price. What role do they play in a market-based system. What do we call the 'one price' of an asset.
Suppose there are two airlines, each one runs one flight a day to Chicago. Delta runs one at 8AM and United runs one at 6PM. There are 100 people whose preferences are evenly distributed between 8AM and 6PM. Each consumer values the flight at $300..
QUESTION The Keynesian AD curve differs from the classical AD curve in that:
The interest rate is tied to the economy. Based on your opinion, will the economy grow or recede for the rest of 2011 and 2012? Will the pace of growth (or recession) fast or slow? The current interest rate is very low. Do you think the interest rate..
Current machines have a 5 year life and were purchased 3 years ago at $1500000 - Invest $1 Million in upgrade costs to extend the life of the machines for another 5 years - Savings in labor resulting from upgrade, $300000 per year in 1st year doll..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd