In an attempt to offset debt accumulated during the covid crisis, the Nigerian government passes long-lerm fiscal austerity measures (a reduction in government expenditure). This fiscal action would cause domestic national savings to increase domestic national savings to decrease domestic firm investment to increase domestic firm investment to decrease O 0 0 O
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- Explain fiscal policy and give an exmple of how it could be applied to the current COVID situation in the United States.Most tax payments increase as GDP increases. O True O FalseThe data in columns 1 and 2 in the table below are for a private closed economy Instructions: For all parts, enter only whole numbers for your answers. If you are entering any negative values, be sure to include a negative sign (-) in front of the number you are entering. (1) Real Domestic Aggregate Output (Billions) $200 (6) Aggregate Expenditures, Exports Open Economy (Billions) (2) (5) Net (3) Expenditures Exports, (Billions) $20 $20 $20 (4) Imports, (Billions) $30 (Billions) (Billions) $240 $250 $300 $350 $280 $30 $320 $30 $360 $20 $30 $400 $400 $20 $30 $450 $440 $480 $520 $20 $30 S %24 $500 $550 $20 $20 $30 $30 a. Using columns 1 and 2, what is the equilibrium GDP for this hypothietical economy? $ billion b. Now open up this economy to international trade by Including the export and import figures of columns 3 and 4. Fill in columns 5 and 6 What is the equilibrium GDP for the open economy? $ billion
- a ssume HPC =0.80 and that taxes are at by64billion goverment purchases are increused by $4billion Accord ing to keynesian analy sis (fiscal policy) How mich will ŘGDPchang e? will it increase or deciease?Which of the following statementsabout how fiscal policy should mostappropriately be used in a crisis iscorrect? a. If fiscal policy is usedappropriately, a fiscal deficitshould appear duringrecessionary gaps and asurplus during inflationary gaps b. Fiscalpolicy should be used at anyand all points of the cycle toaccelerate growth c. None of these statements iscorrect d. If fiscal policy is usedappropriately, a fiscal surplusshould appear duringrecessionary gaps and a fiscaldeficit during inflationarygaps'The U.S., world's largest economy, went into recession in February of 2020. It has taken a broad range of steps to combat the economic disruption caused by COVID-19. In response to this crisis, governments have enacted sweeping and sizable fiscal stimulus of trillions of dollars.' Is it an appropriate policy response if the primary responsibility of the government is to maintain economic growth? Explain the significance of Fiscal policy for an economy? Is there any difference in the two approaches of fiscal expansion through - direct transfer benefit and government spending directly on purchase of goods and services that may influence real GDP? What role does multiplier play? Explicate. Support your answer with the suitable diagram/s.
- LAS 130 SAS 120 110 B. 100 90 AD1 ADo 14 15 16 17 18 19 Real GDP (trillions of 2009 dollars) 19) In the above figure, if the economy initially is at point A and government expenditure increases, in the short run the economy will move to point A) B. C) A, that is, the equilibrium will not change. B) C. D) None of the above answers is correct. lnim that protectionism saves domestic jobs? Price level (GDP deflator, 2009-100The US and China are the two biggest economies of the world. Which of these situations will most likely increase the value of the US dollar as it trades with China? a. China's GDP increases faster than US O b. China imports more from the US than it exports to the US O c. China exports more to the US than it imports from the US O d. China's exports increases sharplyChina's Economy Just Shrank for the First Time in Decades. It Could Still Eke Out Growth This Year China's real GDP decreased 6.8 percent in the first quarter of 2020. Investment decreased by 16 percent and consumer spending by 12.5 percent. Exports decreased 13 percent. Explain how gavemment expenditure minus imports changed in the first quarter of 2020. Government expenditure minus imports O A. decreased by more than 6.8 percent O B. must have increased OC. must have remained constant O D. decreased by less than 6.8 percent or increased
- Suppose an economy can be represented by the folowing table, in which employment is in millons of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1275 1350 1425 1500 1575 1650 1200 105 1300 1400 1500 1600 1700 110 115 120 125 fut employment is 120 milion workers? What is its what kind of expenditure oap exists size? Suppose government spending, taxes, and net exports ane all independent of the level of rcal GDP. What is the multplier an ths economy? below the econemy's potential, what is the size of the recessionary expenditure qapt. Suppose the United States economy is repre- sented by the following equations: Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, YD = Y − T , G = 2000 Given the above variables, calculate the equilibrium level of output. assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?Imagine that the U.S. economy finds itself in the followingsituation:agovernmentbudgetdeficitof$100 billion, total domestic savings of $1,500 billion, and total domestic physical capital investment of $1,600 billion.Accordingtothenationalsavingandinvestment identity,whatwillbethecurrentaccountbalance?What willbethecurrentaccountbalanceifinvestmentrisesby $50billion,whilethebudgetdeficitandnationalsavings remain the same?