The implication of a government budget surplus
Not what you're looking for?
Assess the implication of a government budget surplus on the following:
a. National saving
b. Interest rates
c. Private investment
d. Economic growth
e. Future living standards
When assessing the effects of the budget surplus, list the assumptions you are making.
Purchase this Solution
Solution Summary
The implication of a government budget surplus is determined.
Solution Preview
Assess the implication of a government budget surplus on the following:
(I'm just giving you ideas here - I can't directly answer the question. There are also different opinions on the concepts involved.)
a. National saving
This should rise, since the state is not taking in as much in taxes as before. This also boosts investor confidence, so there will be a greater demand for liquidity.
b. Interest rates
In the short term, these might go down, but the medium term might go up, since there is more demand for money. If savings rises, then, for a time, interest rates might be pushed downward. The Federal Reserve might keep rates low for the sake of boosting investment. A surplus will give more impetus ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.