+1-415-670-9189
info@expertsmind.com
What the long-run effects would be on real gdp-public saving
Course:- Business Economics
Reference No.:- EM13891949




Assignment Help
Assignment Help >> Business Economics

Many people believe that Congress will eventually have to reduce Social Security benefits in order to reduce the budget deficit. Although most of the changes would not take place until later, assume for the purpose of this problem that Social Security benefits were cut today by $100 billion per year.

A) If the marginal propensity to consume is 0.8, explain what the long-run effects would be on real GDP, public saving, and national saving.

B) The US is a large open economy with a trade deficit. Use the appropriate graphs to illustrate and state what the reduction in Social Security benefits would do to each of the following in the long run: national saving, investment, the US real interest rate, net capital outflows, the real exchange rate, and the trade deficit.

C) Now, consider the small open economy of Norway, which has a trade surplus. If the US, a large open economy, were to reduce its Social Security benefits, use the appropriate graphs to illustrate and state what would happen in the long run to Norway’s national saving, investment, interest rate, real exchange rate, and trade surplus.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Does one who kills another "deserve" to die? Why or why not? Are there circumstances that would change your answer? Make two lists (perhaps using a table with two columns). Ca
During the past year, gasoline prices have been very volatile. One reason given for at least some of the volatility is the threat of war between Israel and Iran. More recently
For parts a through d of this problem, determine whether supply or demand, or both, will change. Indicate whether the price and quantity will rise or fall in the indicated mar
Fred Smith, the inventor of FedEx, came up with a new product called Zap Mail in the mid 1980's. Zap mail, although a monopoly, was not successful. The company lost about $390
Tracy has utility given by U(F,H) = FH^2. Last week Tracy had an income of 6 and the price of food was 1, the price of housing was 1. This week Tracy has income of 12, the pri
1. Develop a simple regression model with paint sales (Y) as the dependent variable and selling price (P) as the independent variable. a. Show the estimated regression equat
A new income tax policy has been proposed in the legislature. The policy would require individuals with incomes of $15,000 or less to pay no tax and for those with incomes abo
Appraise this statement: In equilibrium, a monopsonistic hospital will hire fewer nurses at lower wages than would a hospital in a more competitive market, to the detriment of