Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 31, Problem 27P
Assume that the newly independent government of Tanzania employed you in 1964. Now free from British rule, the Tanzanian parliament has decided that it will spend 10 million shillings on schools, roads, and healthcare for the year. You estimate that the net taxes for the year are eight million shillings. The government will finance the difference by selling 10-year government bonds at 12% interest per year. Parliament must add the interest on outstanding bonds to government expenditure each year. Assume that Parliament places additional taxes to finance this increase in government expenditure so the gap between government spending is always two million. If the school, road, and healthcare budget are unchanged, compute the value of the accumulated debt in 10 years.
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dependent of the country's national income. Given these data on Ghana…
Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal
Policy. The Research Director of the Ministry brought you the following data on Ghana for the
previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021,
households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption.
In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of
income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G)
which stood at GHe8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00
(independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood
at GH€2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of
GH¢1,000.00 which was independent of the country's national income and 10% which was
dependent of the country's national income. Given these data on Ghana…
Assume you are the Minister of Finance and Economic Planning for Ghana, in charge of Fiscal
Policy. The Research Director of the Ministry brought you the following data on Ghana for the
previous fiscal year, 2021. An examination of the data reveals that, during the fiscal year 2021,
households in Ghana saved 20% of their disposable income (Y) and spent the rest on consumption.
In addition, GH¢5,000.00 was spent on Consumption expenditure (C), which is independent of
income and Gross Private Investment (I) was GH¢7,000.00. Total Government expenditure (G)
which stood at GHc8,000.00 was supposed to be financed by a lump sum tax of GH¢2,000.00
(independent of income) and a proportional tax rate of 25% of national income. Exports (X) stood
at GH¢ 2,500.00. In addition, the country's import (M) during the previous fiscal year comprises of
GH$1,000.00 which was independent of the country's national income and 10% which was
dependent of the country's national income. Given these data on Ghana…
Chapter 31 Solutions
Principles of Economics 2e
Ch. 31 - In a country, private savings equals 600, the...Ch. 31 - Assume an economy has a budget surplus of 1,000,...Ch. 31 - In the late 1990s, the U.S. government moved from...Ch. 31 - Imagine an economy in which Ricardian equivalence...Ch. 31 - Why have many education experts recently placed an...Ch. 31 - What are some steps the government can take to...Ch. 31 - Based on the national saving and investment...Ch. 31 - How would you expect larger budget deficits to...Ch. 31 - Under what conditions will a larger budget deficit...Ch. 31 - What is the theory of Ricardian equivalence?
Ch. 31 - What does the concept of rationality have to do...Ch. 31 - What are some of the ways fiscal policy might...Ch. 31 - What are some fiscal policies for improving a...Ch. 31 - What are some fiscal policies for improving the...Ch. 31 - Explain how cuts in funding for programs such as...Ch. 31 - Assume there is no discretionary increase in...Ch. 31 - Explain how decreased domestic investments that...Ch. 31 - The U.S. government has shut down a number of...Ch. 31 - Explain how a shift from a government budget...Ch. 31 - Describe how a plan for reducing the government...Ch. 31 - Explain whether or not you agree with the premise...Ch. 31 - Explain why the government might prefer to provide...Ch. 31 - Under what condition would crowding out not...Ch. 31 - What must take place for the government to run...Ch. 31 - Sketch a diagram of how a budget deficit causes a...Ch. 31 - Sketch a diagram of how sustained budget deficits...Ch. 31 - Assume that the newly independent government of...Ch. 31 - Illustrate the concept of Ricardian equivalence...Ch. 31 - During the most recent recession, some economists...
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