+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
Two Cournot competitiors, Nick Limited(firm 1) and Junior LLC(firm 2), face an inverse demand curve p = 400 - 2q in the market (q = q1 + q2). Both producers have a marginal co
A car dealership typically determines a distinct price for a car for each customer. This is an example of what type of price discrimination? Why is the dealership able to carr
For this assignment you need to identify and describe three differences between macroeconomics and microeconomics. For each of the three examples, give one of the following to
Steve Slacker is age 25, has an MBA degree, but is not working. Instead he is living at a major ski area, using the $2,000 per week he gets from his wealthy family. Construct
Steve Slacker is age 25, has an MBA degree, but is not working. Instead he is living at a major ski area, using the $2,000 per week he gets from his wealthy family. Construct
Foster and Kaplan, drawing on research they’ve conducted at McKinsey & Company on more than 1,000 companies over 36 years show that even the best-run and most widely admired c
What are the issues related to exchange rates - their impact on national economies when they change, their different equilibrium concepts (PPP and IP), how governments manage
Describe the process of decision analysis with probabilities. Make sure to talk about the expected value approach, decision trees, sensitivity analysis, and how sample informa