+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
Consider the following market for used cars. There are many sellers of used cars. Each seller has exactly one used car to sell and is characterized by the quality of the used
During World War 2 gasoline and other consumer goods were in short supply on the home front so that maximum resources could be diverted to the war effort. In order to cut back
Suppose Sam and Kevin can produce pens and pencils as shown in the table below. Pens Pencils Sam 12 hours 8 hours Kevin 4 hours 6 hours Who has a comparative advantage in prod
Suppose a 3% fall in the price of strawberries increases the quantity of strawberries demanded by 4% and increases the quantity of chocolate demanded by 2%. Using this informa
Write a ~350 word essay explaining which process your believe is preferable in a democracy and why (either choice is fine as long as it is well supported): the hybrid process
Assess the following situation and calculate the expected percentage of depreciation: the spot rate of the British pound at the moment is $1.73, while the anticipated spot rat
The worlds price of zinc had increase to the point where mothballed zinc mines in east Tennessee have been reopened because of their potential profitability. What is estimated
All loans shall be computed at an annual percentage interest rate(APR) of 3.75%. It is assumed that you will need the loan for four years (eight semesters). You can take the l