User Account

All Pages

Finance the expenditures with an equal increase in taxes

Assignment Help Macroeconomics
Reference no: EM1396992

Paranoia, the largest country in central Antarctica, receives word of an imminent penguin attack. The news causes expectations about the future to be shaken. As a consequence, there is a sharp decline in investment spending plans.

a. Explain in detail the effects of such an event on the economy of Paranoia assuming no response on the part of the central bank or the Treasury. (Ms, T, and G all remain constant.) Make sure you discuss the adjustments in the goods market and the money market.

b. To counter the fall in investment, the king of Paranoia calls for a proposal to increase government spending.

To finance the program, the chancellor of the exchequer has proposed three alternative options:

(1) Finance the expenditures with an equal increase in taxes

(2) Keep tax revenues constant and borrow the money from the public by issuing new government bonds

(3) Keep taxes constant and finance the expenditures by printing new money Consider the three financing options and rank them from most expansionary to least expansionary. Explain your ranking.

Reference no: EM1396992

Questions Cloud

Discuss the likely nature of the polymer : A colloidal system is stable in the absence of polymer. A small amount of polymer is added and the colloidal particles coagulate but if a large amount of polymer is added they redisperse.
How students get equal opportunity in education today : How did students come to get the opportunities, like Title 1, they presently have in public education? What present issues are influencing equal opportunity in education today?
Confidence interval for the population mean : A candy confectioner measures the weight of 30 pieces of candy and obtains a mean and standard deviation of 32.5 gms and 2.6 gms, respectively. Construct the 98% confidence interval for the population mean.
What are the unique ecological contraints : What are the unique ecological contraints that limit/encourage asexual versus sexual reproduction in multi cellular plants versus multi cellular animals.
Finance the expenditures with an equal increase in taxes : Finance the expenditures with an equal increase in taxes and keep tax revenues constant and borrow the money from the public by issuing new government bonds
Find the most common mode of regulation : Among various factors that influence enzyme activity, phosphorylation is one of the most common mode of regulation.
Description of statistics-psychology : You want to determine whether or not an observational coding system you've created for ADHD is better as a system with 5 behavioral scales or 3 behavioral scales. What test should be run?
Determine which patient has primary hypercortisolism : Drug X is used to suppress the secretion of CRH. Two patients with hypersecretion of cortisol are given Drug X. Patient A's cortisol secretion level remains elevated, but patient B's cortisol secretion level falls to normal levels.
Determine the distinct reaction of enter doudoroff pathway : The wider orrcurence of glycolysis in nearly all organisms, both aerboic and anaerobic, indicates that it is one of the most ancient metabolic pathways.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Explain why should you as a future employe

Explain why should you, as a future employe, be concerned about the downward trend in labor productivity increases that have been observed since the early 1970s.

  The us cigarette industry has negotiated with congress

The US cigarette industry has negotiated with Congress and government agencies to settle liability claims against it. Under the proposed settlement.

  Explain why does the magnitude of price elasticity differ

Explain why does the magnitude of price elasticity differ in a and b above, although the same set of price-quantity combinations are used to compute the price elasticity of demand

  Suppose q is the quantity demanded for medical care services

Suppose Q is the quantity demanded for medical care services. The linear industry demand function takes the form.

  Calculate the competitive market long run equilibrium

The Hair Stylist, limited, has a monopoly in College Park market because of restrictive licensing requirements, and not because of superior operating efficiency.

  Elucidate what are some of the models that predict

Elucidate what are some of the models that predict the effects that reducing protection of imports will have on factor price. Briefly explain the effects shown by these models.

  Assume the market for computer chips is dominated

Assume the market for computer chips is dominated by two firms: Intel and AMD. Intel has discovered how to make superior chips and is considering whether or not to adopt the new technology.

  Change in macro variables

Explain how an increase in interest rates initiated by the Federal Reserve affects:

  Free market wage rate and employment level

In 1996 Congress increased minimum wage from $4.25 to $5.15 every hour. Some people advise that a government subsidy could help employers finance higher wage.

  Utilizing fully explained indifference curve analysis

Utilizing fully explained indifference curve analysis, derive a demand curve for a product.

  Correlation between unemployment and inflation rate

This problem uses Okun's law to study how the unemployment and inflation rates change when there are demand shocks.  Assume that the relationship between the output ratio and the unemployment rate, U is given by the equation U = 6.0 - 0.5 (output ..

  Income at a major cellular telephone manufacturer

Income at a major cellular telephone manufacturer when it decreased the average selling price of its phones.

Free Assignment Quote

Assured A++ Grade

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd