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Quiz 17 :

Comparative Advantage, Exchange Rates, and Globalization

Quiz 17 :

Comparative Advantage, Exchange Rates, and Globalization

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How can a government that isn't running a deficit still get itself into financial trouble?
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Fiscal policy is the tool used by government to control and manipulate the economy. The main tools of fiscal policy are tax rates and government purchases. The government take decision for two different frameworks i.e.

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Inflation is 20 percent. Debt is $2 trillion. The nominal deficit is $300 billion. What is the real deficit?
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Fiscal policy is the tool used by government to control and manipulate the economy. The main tools of fiscal policy are tax rates and government purchases. The government take decision for two different frameworks i.e.Here, nominal deficit is $300 billion, inflation is 20% and debt is $2,000 billion.
Calculate the real deficit as follows: img Thus, the real deficit is img

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Calculate the real deficit or surplus in the following cases: a. Inflation is 10 percent. Debt is $3 trillion. Nominal deficit is $220 billion. b. Inflation is 2 percent. Debt is $1 trillion. Nominal deficit is $50 billion. c. Inflation is -4 percent. (Price levels are falling.) Debt is $500 billion. Nominal deficit is $30 billion. d. Inflation is 3 percent. Debt is $2 trillion. Nominal surplus is $100 billion.
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Fiscal policy is the tool used by government to control and manipulate the economy. The main tools of fiscal policy are tax rates and government purchases. The government take decision for two different frameworks i.e.a.Here, nominal deficit is $220 billion, inflation is 10% and debt is $3,000 billion.
Calculate the real deficit as follows: img Thus, the real deficit is img b.Here, nominal deficit is $50 billion, inflation is 2% and debt is $1,000 billion.
Calculate the real deficit as follows: img Thus, the real deficit is img c.Here, nominal deficit is $300 billion, inflation is -4% and debt is $500 billion.
Calculate the real deficit as follows: img Thus, the real deficit is img d.Here, nominal deficit is -$100 billion, inflation is 3% and debt is $2,000 billion.
Calculate the real deficit as follows: img Thus, the real deficit is img

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Canada's debt was $630 billion at the end of 2003. Using the information below (in billions of Canadian dollars), fill in the blanks for Canada's budget balance and debt for the following years: img
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You've been hired by Creative Accountants, economic consultants. Your assignment is to make suggestions about how to structure a government's accounts so that the current deficita. Government pensions. b. Sale of land. c. Social Security taxes. d. Proceeds of a program to allow people to prepay taxes for a 10 percent discount. e. Expenditures on F-52 bombers.
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What are the two ways government can finance a budget deficit?
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If the actual budget deficit is $100 billion, the economy is operating $250 billion above its potential, and the marginal tax rate is 20 percent, what are the structural deficit and the passive deficit?
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Two economists are debating whether the target rate of unemployment is 4 percent or 6 percent. Mr. A believes it's 4 percent; Ms. B believes it's 6 percent. One says the structural deficit is $40 billion; the other says it's $20 billion. Which one says which? Why?
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If future economic growth rates average as little as 2.4 percent-far slower than the 3.0 percent average growth rate the U.S. economy posted over the last 75 years-the Social Security system will remain solventa. How does that position differ from your textbook's position that the real problem with Social Security is not its solvency but the future mismatch between real production and real expenditures? b. What do both these positions suggest about the effectiveness of proposals to divert Social Security funds into private accounts? (Radical)
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How would your answer to question 9 differ if you knew that expected inflation was 15 percent?
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To help understand the distributional consequences of the tax cuts advocated by many conservative politicians, answer the following: a. What income groups have the largest marginal propensity to consume: high orb. If your goal were to minimize the deficit cost of a tax stimulus, who should receive the tax cuts? Who received the tax cuts? c. What will the tax cut do, relatively speaking, to the debt? d. Is there a pattern here? (Institutionalist)
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Assume a country's nominal GDP is $600 billion, government expenditures less debt service are $145 billion, and revenue is $160 billion. The nominal debt is $360 billion. Inflation is 3 percent and interest rates are 6 percent. a. Calculate debt service payments. b. Calculate the nominal deficit. c. Calculate the real deficit.
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After President George W. Bush's election in 2000, he proposed cutting taxes. a. Would you consider that proposal Keynesian, Classical, or a combination of the two? b. From your response, how should President Bush have dealt with the U.S. deficit to be consistent with the school of thought that you chose? (Post-Keynesian)
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Your income is $40,000 per year; your expenditures are $45,000. You spend $10,000 of that $45,000 for tuition. Is your budget in deficit or surplus? Why?
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"Budget deficits should be avoided, even if the economy is below potential, because they reduce saving and lead to
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Over 40 countries in the world now report what has been called a "women's budget," analyzing public expenditures and revenue from a gender perspective. a. What might be an example of a gender effect on the expenditure side of the budget? b. On the revenue side? c. Why are these effects important to consider? (Feminist)
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International issues aside, what limits government's ability to undertake monetary or fiscal policy? (Austrian)
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Say the marginal tax rate is 30 percent and that government expenditures do not change with output. Say also that the economy is at potential output and that the deficit is $200 billion. a. What is the size of the passive deficit? b. What is the size of the structural deficit? c. How would your answers to a and b change if the deficit were still $200 billion but the output were $200 billion below potential? d. How would your answers to a and b change if the deficit were still $200 billion but output were $100 billion above potential? e. Which is likely of more concern to policy makers: a passive or a structural deficit?
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If the structural budget deficit is $100 billion and the actual deficit is $300 billion, what is the size of the passive or cyclical deficit ?
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"The debt should be of concern." What additional information do you need to undertake a reasonable discussion of this statement?
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