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How does a government budget surplus affect interest rates and investment and economic growth?
Wiki User
∙ 11y ago
In a budget surplus the government receieves more tax than it spends (taxation>government spending), therefore the government will not need to rely on borrowing money from banks in order to funds its projects
There is less demand for borrowed money
Therefore in a demand a supply diagram for loanable funds, it can be shown that if demand decreases, the price of interest rates will also decrease.
Investment becomes more cheaper, and would potentially increase investment, increasing economic growth.
However, this effect is only minor compared to to the effect of increased taxing - this will reduce dispoable income of firms and consumers, reducing their ability to borrow funds.
Wiki User
∙ 11y ago
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IF GDP is 6000net investment is 200Goernment Purchaser is 1100Gross investment is 800Consumption is 4000 and Government budget surplus is 30 then find the NDP?
If GDP is $6000,net investment is $200,Government Purchaser is $1100,Gross investment is $800,Consumption is $4000 and Government budget surplus is $30 then find the NDP
Why is a current account surplus equivalent to foreign investment?
A country where income is greater than spending, has saving greater than investment, and a current account surplus. The excess of income over spending must be balanced by foreign investment, so there will be a financial account deficit to match the current account surplus.
What best describes the economic effect that results from the government having a budget-surplus?
Overall demand decreases, reducing the incentive for producers to increase production
Does an increase of economic surplus in a market always mean that economic efficiency has increased?
No. If marginal cost of production decreases but market output stays the same, economic surplus and deadweight loss both increase, causing economic efficiency to decrease.
Why is an economic surplus necessary for economic development?
Economic surplus is necessary for development because it means a economy is producing more than its consuming. So it is exporting and making money and getting richer which leads to development.
IF GDP is 6000net investment is 200Goernment Purchaser is 1100Gross investment is 800Consumption is 4000 and Government budget surplus is 30 then find the NDP?
If GDP is $6000,net investment is $200,Government Purchaser is $1100,Gross investment is $800,Consumption is $4000 and Government budget surplus is $30 then find the NDP
How is the Federal Deposit Insurance Corporation funded?
Its income is derived from assessments on deposits held by insured banks and from interest on the required investment of its surplus funds in government securities. It also has authority to borrow from the Treasury
Should one be investing funds?
One should be investing funds if they have some surplus to invest. An investment of funds can be very rewarding and gratifying once the interest is earned.
Why is a current account surplus equivalent to foreign investment?
A country where income is greater than spending, has saving greater than investment, and a current account surplus. The excess of income over spending must be balanced by foreign investment, so there will be a financial account deficit to match the current account surplus.
What is the best describes the economic effect that results from the government having a budget surplus?
Overall demand decreases reducing the incentive for producers to increase production
What best describes the economic effect that results from the government having a budget-surplus?
Overall demand decreases, reducing the incentive for producers to increase production
Does an increase of economic surplus in a market always mean that economic efficiency has increased?
No. If marginal cost of production decreases but market output stays the same, economic surplus and deadweight loss both increase, causing economic efficiency to decrease.
What has the author Anders Danielson written?
Anders Danielson has written: 'The economic surplus' -- subject(s): Economic conditions, Economic development, Surplus (Economics) 'The political economy of development finance' -- subject(s): Economic policy, Fiscal policy
Distinguish between domestic and international finance?
Finance is the process of transferring fund from surplus economic unit to deficit economic unit. Domestic finance is the process of transferring fund from surplus economic unit to deficit economic unit within a country. And International finance is the process of transferring fund from surplus economic unit to deficit economic unit when any of these units is located outside a national country.
Why is an economic surplus necessary for economic development?
Economic surplus is necessary for development because it means a economy is producing more than its consuming. So it is exporting and making money and getting richer which leads to development.
What is surplus economic unit?
An economic unit having access of funds and wants to lend his funds
Which was the most direct result of the production of surplus food?
economic specializtion
