A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the primary budgetdeficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(ii) The real interest rate is 5%?

A real interest rate is one that has been adjusted for inflation, reflecting the real cost of funds…

A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the priímary budget deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(i) The real interest rate is 5%?

A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the priímary budget deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(i) The real interest rate is 5%?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter16: Government Spends, Collects, And Owes

Section: Chapter Questions

Problem 17AA

See similar textbooks

Related questions

Q: Assume that the two universities in USA (UA and UAA) are competing with one another to attract top s...

A: A payoff matrix represents the startegic decision of players which shows their payoff in the case of...

Q: The National Zoo is enlisting your help in setting the price of its admission. The management is awa...

A: Answer-

Q: what are two issues with the Law associated Dodd-Frank

A: Dodd-Frank Law: A summary of government guidelines, essentially influencing monetary organizations a...

Q: A small entrepreneur invested a capital of P 80,000 for a buy and sell business. He estimated to hav...

A: A benefit–cost ratio is an indicator, used in cost–benefit analysis, that attempts to summarize the ...

Q: The availability of alternative entertainment methods has resulted in a large decrease in theme-park...

A: Meaning of Price Elasticity of Demand: The price elasticity of demand refers to the situation unde...

Q: 51. If rate of interest is 10%, the PV (present value) of Rs.100 received in 1 vear's time is

A: To find : Present Value of item.

Q: According to the government budget constraint discussed in the lecture, budget surpluses lead to a/n...

A: A budget is a legal document of the government which is formulated either by a political entity or b...

Q: Identify and explain using appropriate diagrams the 2 main categories of gains from trade

A: Introduction: The exchange of products and services between parties, or the buying and selling of co...

Q: 12. Based on the aggregate production function model, we can be certain output will increase if a. t...

A: Aggregate production function: Y = AK0.5L0.5 Where Y is output A is total factor productivity K is p...

Q: Why is the presentaion of corparate results increasingly accompanied by the presentation of a social...

A: As we know that production is needed for completion of our daily life demand or for money . But thes...

Q: Mortgage loans whose interest rates change periodically due to changes in market conditions. * Fixed...

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new que...

Q: Draw the indifference curves when: i) X is fake news or hoax, Y is journalist’s work winning the Pul...

A: An indifference curve is a graphical representation of two goods' combinations in which are utility ...

Q: What is true about equilibrium in the market for loanable funds? A. Savings = gross domestic ...

A: Market equilibrium of any things whether goods Markets or money market or Loanable funds market the ...

Q: Pls help with below homework, dont copy answer from chegg. How does rising organic composition of ca...

A: The "organic composition of capital" is defined as the ratio of the value of the materials and fixed...

Q: 4

A: Farmer optimal demand of good x1 and x2: Equating MRS to price ratio MRS = MUx1MUx2 =12 x112 x2 = ...

Q: If the cost of a new production line is $40,000 and the expected free cash flows resulting from this...

A: particular Amount Cost -40,000 Inflow in Year 1 12000 Inflow in Year 2 12000 Inflow in Year ...

Q: The project is to construct a lateral canal that will provide irrigation for 150 ha production area ...

A: Given information Project provides irrigation=150 ha Land cost=950 per ha Construction cost=4500000 ...

Q: Discuss the Contingent Valuation Method

A: Contingent valuation method is a procedure for the valuation of benefit and cost analysis and enviro...

Q: QUESTION 2 Suppose that an economy's production function is y-ALO.5g0.3y0.7, where Y is output, A is...

Q: Under the FLSA, states are preempted from requiring a higher minimum wage than the federal amount. ...

A: For employees in the private sector, as well as federal, state, and local governments, the Fair Labo...

Q: Identity the effect on either demand or supply curve and the equilibrium interest rates on issuanc...

A: Issuance of open market operations refers to the issue of government treasury bills or bonds by the ...

Q: Show that absolute PPP is satisfied when the domestic price of the consumption basket in foreign ...

A: ANSWER The outright computation is determined by separating the worth of a fair in one cash, by th...

Q: The social optimum occurs where price is __________ and quantity is __________.

A: The social optimum is at Social cost equal to price.

Q: what is the derivative of TC = 3Q^2 + 7Q +12

A: Given:- TC=3Q2+7Q+12 To calculate:- Derivative of TC=?

Q: discuss in detail the primary objectives of the municipal finance management act and public financia...

A: South Africa embarked on a process of public management reform shortly after the new democratic regi...

Q: Assume that the government sets a binding price ceiling on the interest rate that banks charge on lo...

A: A price ceiling is the set limit on how much a seller can charge for a product or service. Price cei...

Q: Economist defined economic recession as more the 2 consecutive quarters in which there is a decline ...

A: 1. Economist defined economic recession as more the 2 consecutive quarters in which there is a decli...

Q: 14. (continued) What happens to the labor productivity, which is the output per unit of labor, Y/L, ...

Q: Using the information provided in the table below, answer the following questions. Country A Count...

A: A country is said to have comparative advantage in the production of a good if it can produce the go...

Q: In what way, may a population become a hindrance for development? Expal

A: For the following reasons, population can be a limiting factor in economic development:

Q: 6 Can you provide me answer Answer Must Be In " Giuseppe Format " i.e Hnnt format ... With explainat...

A: In the short run, the Philips curve dips downward. Because it accounts for the impact of the unemplo...

Q: According to Ibn Hazm, when zakah collection is not sufficient to satisfy the basic needs of the poo...

A: Answer-

Q: Which of the following examples shows the most elastic demand?

A: Price elasticity of demand: Price elasticity of demand shows the effect on demand with the change in...

Q: Help please

A: i) Impact of good harvest on world's sugar cane crop:- Sugarcane market:- Due to good harvest, suppl...

Q: Carrot Apple 0 10 1 9 2 7 3 4 4 0 Using the table above, draw the PPF for Happyland.

A: The table shows that happy land can either produce carrots or apples. It can produce 4 carrots or 10...

Q: A grocery store raises the price of baked goods and finds that the total revenue in the bakery depar...

A: When due to increase in price of a good if total revenue decreases then it shows decrease in demand ...

Q: Assume that the labour demand equation for a fictional country is La= 90 - 2(w), where w is the wage...

A: Here we calculate the following terms by using the given information ,and fill the blanks so the cal...

Q: Ecological fallacy occurs when a researcher interprets the results of group-level data to the indivi...

A: Ecological Fallacy : The Ecological fallacy can be defined as the failure in reasoning when the inte...

Q: Most U.S. states impose gasoline taxes as a way to collect revenue. Assume that there are no market ...

A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you wan...

Q: How much do you need to deposit today (P) to withdraw BD25,000 at n =1, BD3,000 at n = 2, and BD5,00...

Q: In the small closed economy of Bonretia, the currency is the denar. Statistics for last year show th...

A: Given: Private savings = 50 billion Taxes = 40 billion Government expenditure = 30 billion Transfer ...

Q: What was the approximate value of the inflation rate in Q4 of 2021?

A: Price index shows the living cost and represents the average change in general price level during a...

Q: On the graph, label your starting AD line as AD 2019. Draw a new AD line showing the change to AD d...

Q: Draw the indifference curves when: i) X is water pollution, Y is air pollution, ii) X is beautiful s...

A: IC(indifference curves) shows the locus of points (combination of 2 products) that provide the consu...

Q: 13. In Avengers: Infinity War the character Thanos seeks to use the power of the infinity stones to ...

Q: the graph, which statement is TRUE? 30 25 20 15 10 7.5 10 125 15 175 Quartity O The flatter long-run...

A: Supply curve is more price elastic in the long run. Hence, supply curve is flat in the long run and...

Q: A firm that electroplates inexpensive jewelry produces toxic waste, some of which ends up in a nearb...

Q: If the government implements a cap-and-trade system to reduce pollution in a particular industry, th...

A: Cap and trade system refers to a government regulatory program which is designed to limit the total ...

Q: A recent study shows, that when airfares within the continental US increase by 10%, the quantity dem...

A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with res...

Question

A country is growing at 3% and has a debt/GDP ratio of 50%. Assuming no money financing, what is the primary budget
deficit/surplus that keeps the debt/income ratio constant when (i) The real interest rate is 2%?(ii) The real interest rate is 5%?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The government budget is in DEFICIT when Taxes (T) - G > 0 Government expenditures (G) - Investment expenditures (I) 0 OT-G- Transfers (TR) - Interest on the Debt (INT) < 0
Define government budget in not more than 3 lines
How will the deficit for the bottom line budget of $3.1 trillion affect the economy?
The government budget is in DEFICIT when T - G - Transfers (TR) - Interest on the Debt (INT) < 0 Government expenditures (G) - Investment expenditures (I) < 0 Taxes (T) - G > 0 G - Consumption expenditures (C ) - I > 0
What is public debt? Why public debt a burden on future generation?
How does the typical state budget process work, and what are the various actors involved in that process? What are the main characteristics of a sustainable budget? What are the main sources of revenues for states and local governments? Is it possible to balance the demands for government services with existing revenue sources? What have been the various approaches advocated to reform budgeting processes at the state and local levels? What are the five key areas of future state and local budget needs? Which one do you think is the most critical and why? Explain. assignment #10 be sure to cite your source(s) using APA Style
Why would the private sector purchase government debt?
What is role of the private sector in helping the Filipino government ease its fiscal pressure?
What is the relationship between budget deficit and debt ratio to Gross Domestic Product (GDP)
Determine the state of the budget (in deficit, in balance, in surplus), if: Government spending on the economy is 5000 monetary units, while rate of taxes incomes is 7000 monetary units. Public transfers are purchased in the amount of 1100 monetary units. The national debt is 9000 monetary units, so the State spends 10% per annum to pay this loan off.
How will the debt held by the public for the bottom line of $17.7 affect our economy?
The government budget is in DEFICIT when OT G-Transfers (TR) - Interest on the Debt (INT) 0 Government expenditures (G) - Investment expenditures (I) 0