Effect on gdp, International Economics

Assignment Help:

The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interest rates, investment spending drops by $10 billion. How much should the government spend to bring the economy back to full employment? (Hint: the government must account for the crowding out effect. The fall in investment spending is also subject to the multiplier effect. For example, if investment falls by $10 billion, real GDP will fall by 5 x $10 billion = $50 billion.)

The multiplier in a country is 3. What will be the effect on real GDP if the government cuts taxes by $100 billion if there is no Ricardian equivalence in this society? (Assume there are no distortionary effects from the tax) What will be the effect on real GDP if there is a strong Ricardian equivalence effect?


Related Discussions:- Effect on gdp

WTO - TRIPS, What are the benefit derived by Indian Corporates due to WTO -...

What are the benefit derived by Indian Corporates due to WTO - TRIPS?

Manage the translation risk of your multinational enterprise, Question : ...

Question : (a) Differentiate between Transaction, economic risk and Translation risk in foreign exchange market. (use an illustrative and numerical example in each case. (b)

Is there is liquidity in the international monetary system, Is there is Liq...

Is there is Liquidity in the international monetary system

Product market shocks without exchange rate change, Q. Explain why the Euro...

Q. Explain why the European Union's current combination of rapid capital migration with limited labor migration may actually raise the cost of adjusting to product market shocks wi

Goal of a single shared currency, Q. Why did the EU countries move away fro...

Q. Why did the EU countries move away from the EMS toward the goal of a single shared currency? Answer: 1. To produce a superior degree of European market integratio

Nationalization of the YPF, I need a research essay about the effects socia...

I need a research essay about the effects socially and economically of nationalization of the YPF with 8 pages. How much it costs?

Excessive current account surpluses, Q. Using an equation, explain why gove...

Q. Using an equation, explain why governments prefer to avoid excessive current account surpluses. Answer: This pursue from the national income identity S = CA + I which says

Differences in social support networks and satisfaction, A vast body of lit...

A vast body of literature has been dedicated to the study of social support and satisfaction.  Social support is commonly viewed as one of the most important concepts of close pers

Development by stabilisation & reform-lower income countries, Development t...

Development through stabilisation and reform can be understood as follows     The reasoning here was that the trade and resource transfer could not, by themselves, lift L

Write Your Message!

Captcha
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!

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