Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Financing of Fiscal Deficit:
Since the size of balanced budget of the multiplier is small, it is not for all time possible to get the needed demand expansion by raising the expenditures and taxes symmetrically. Thus, the case of the deficit spending and financing should be considered. Here the government expends more than its revenues, and raises debt to the finance excess of expenditures over the revenues. The three borrowing options were mentioned previously:
i. Borrow from the domestic banking system or the general public by the sale of the treasury bills and bonds. Bills are short-term debt instruments (< 1 year) and bonds are the long-term bond instruments (> 2 years).4 The main disadvantage of this type of borrowing is that it can lead to the crowding out of the private sector activity. How is this possible? Consider market for loan able funds. An enlarged demand for the funds by the government will cause interest rates in economy to rise which means making loans more expensive for everybody, including private sector as well squeeze the quantity of credit available for lending to the private sector.
ii. Borrow from central bank by ordering the latter to print the money and lend it to government for onward spending. All governments would adore doing this, except that this type of “apparently free” financing is very highly inflationary. You can simply imagine why. The increased supply of money given the fixed or limited supply of gods will naturally cause the prices of those limited goods to increase.
iii. Borrow from the foreign sources either through the bonds floated on international capital markets or the bilateral, multilateral or the commercial loans. The benefit of this type of borrowing is that it does not lead to the crowding out and is not right away inflationary, particularly if some of the loan helps finance import and expenditure. If all the borrowed money is expended locally given the fixed exchange rate, the monetary effects of the foreign borrowing may become similar to those of borrowing from the central bank.
Given the demand and cost data you will have available (see information below), briefly describe the process you would use to determine optimum output and price levels in the devel
Elplain the casual factors of the traditional business cycle and its effects on sectors of the economy
A coil of inductance 0.04H and resistance 10Ω is linked to a 120V, d.c. supply. Determine (a) The ?nal value of current, (b) The time constant of the circuit, (c) The va
I am writing a research paper for my macroeconomics class and I am having trouble with it. I am writing on the topic of the monetary policy and i can''t seem to understand a few th
Price 10,9,8,7,6,5,4,3,2,1 QD 0,1,2,3,4,5,6,7,8,9,10 TR? Ed?.
GKX Industries expects sales of its hydraulic seals (in inch and metric sizes) to increase according to the cash flow sequence $70+4k, where k is in years and cash flow is in $1000
The _______________ illustrates the notion of opportunity cost. If an economy is fully utilizing its resources, it can produce more of one product only if it produces less of anoth
constructing a opportunity set and budget line for $15 lottery ticket and intending on buying a candy bar for $0.75 and peanut bag for $1.50
Four different measures of GDP Using circular flow model we see that there are 4 equivalent ways of measuring GDP: Using the definition: market value of all finished goo
a. State concisely, in your own words, the essence i.of what GDP measures and ii.what GDP doesnot measure. b. Stocks and bonds issued by firms comprise the "Investment" co
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd