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What is the connection between an increase in government purchases and the trade deficit?
This is a question of the crowding effect of government spending.
When the government increases purchases, it will increase the GDP by a multiplier effect, i.e., the change in GDP is the change in G times 1/(1-MPC). In an IS-LM model, the increased GDP will raise the interest rate and discourage the private investment. Such a "crowding out" effect will reduce the GDP increase.
On the other hand, the increased interest rate will raise the international demand for domestic currency and, in turn, increase the exchange rate. A higher exchange rate makes the domestic products more expensive and foreign goods cheaper. Therefore, the export will be lowered while the import will be increased. As a result, the trade deficit will be enlarged.
What else can I help you with?
What is the difference between consumption and government purchases?
In macroeconomics, GDP is defined as: Consumption+Investments+Government Purchases+Imports-Exports. This is the "guns versus butter" debate: every dollar the government spends on buying guns (or on government salary, buying pens for government use, etc) is one less dollar available for private consumption of butter. Though technically, since investment is also there, you could make it guns versus butter versus cows.
What is the relationship between government debt and inflation?
The relationship between government debt and inflation is complex. In general, high levels of government debt can lead to inflation if the government tries to pay off the debt by printing more money. This can increase the money supply in the economy, leading to higher prices for goods and services. However, other factors such as economic growth, interest rates, and government policies also play a role in determining the impact of government debt on inflation.
What are the differences between producers and consumers?
The difference between a producer and a consumer is that a producer makes his own food and consumer purchases his own food.
What is the connection between elasticity and total reveneu?
The connection between elasticity and total revenue lies in how changes in price affect consumer demand. When demand is elastic, a decrease in price leads to a proportionally larger increase in quantity demanded, resulting in higher total revenue. Conversely, if demand is inelastic, a price decrease results in a smaller increase in quantity demanded, causing total revenue to decline. Therefore, understanding the price elasticity of demand helps businesses optimize pricing strategies to maximize total revenue.
Difference between an increase in Supply and an increase in quantity supplied?
check your answer
Explain the connection between abolishing parole and an increase in sentences of probation?
You would have to demonstrate that there is a connection - which I dispute that there is. Thus, my conlusion is that there is no connection.
The increase in connections between cultures around the world is called?
The connection between cultures around the world is called: GLOBALIZATION
What is the connection between the Mayflower Compact and the Declaration of Independence?
the pilgrims wrote a self government for themselves and the colonist wanted to create their own self government
What is the difference between consumption and government purchases?
In macroeconomics, GDP is defined as: Consumption+Investments+Government Purchases+Imports-Exports. This is the "guns versus butter" debate: every dollar the government spends on buying guns (or on government salary, buying pens for government use, etc) is one less dollar available for private consumption of butter. Though technically, since investment is also there, you could make it guns versus butter versus cows.
What is the connection between government funding and science programs in public schools?
They are public schools, so the government funding allows the science programs to be run and taught.
What is the connection between temperature collisions and reaction rate?
More collisions between particles of matter means a faster reaction rate. When you increase the kinetic energy of a sample of matter, you increase the number of particle collisions, as well as the force with which they collide. This in turn increase the rate of reaction.
What is the connection between immigration and urbanization?
what is the connection between urbanization and Immigration
What is the connection between twitter and mr assange?
The government wanted his Twitter details to find out about leaked information through WikiLeaks.
Difference between NJ ST-3 and ST-4?
St-3 is for resale only . ST-4 is for usage like equipment sales or for state government purchases.
How do you put connection in a sentence?
i can not see the Connection. Do you feel the Connection with this place?
What is the meaning of the acronym BPA?
BPA in a business sense stands for Blanket Purchase Agreement. This agreement is between a company and the government. It will allow several purchases within a certain amount of time.
What is the connection between color blindness and leprosy?
Red/green color blindness may slightly increase an affected person's chances of contracting leprosy.
