Assignment:
Given the following information, in trillions, for a nation,
Consumers' disposable income = $115
Consumers' savings = $15
Investment spending = $50
Government's spending = $20
Government's taxation = $3
Imports = $1.5
Exports = $11.5
1. Calculate consumers' spending.
2. Calculate net exports.
3. Calculate the government's budget.
4. Is the government's budget in surplus, deficit or balanced budget mode?
5. Calculate the (expenditure approach) GDP for this nation.
6. If GDP for the past 5 years has been has been declining, state what the Federal Reserve can do (with respect to their monetary tools) to improve this situation.
7. What can the federal government do (with respect to their fiscal tools)?
8. When the federal government tries to correct this decrease in GDP from occurring into the future, what will happen to its budget?
9. Whether it needs or has the finances to support its fiscal decisions made above, where can/will it get/receive its money from?
10. Are there any disadvantages associated with the above decision with respect to the business sector of the economy?
11. If both the Federal Reserve and the federal government try to employ policies, are there any conflicting conditions that will arise?
12. As the economy has experienced decreases in GDP for the past 5 years, what will be its effect on the exchange rate, foreign sector of the economy?
13. Do you see the direction of the exchange rate as a benefit or a detriment to our business & household sectors of our economy?
14. What do you foresee as the effect on US GDP?
15. What affect will the proposed exchange rate have on other nations, if any?
16. Again, employing expansionary policies, what do you suspect will happen to the equilibrium interest rate in the US and how will the sectors of our economy react?
17. Given this new equilibrium interest rate, what will that mean for other countries, if anything?