Chapter Checkpoint

Study Plan Problems and Applications

  1. Suppose that in an economy, investment is $400 billion, saving is $400 billion, tax revenues are $500 billion, exports are $300 billion, and imports are $200 billion. Calculate government expenditure and the government’s budget balance.

  2. Classify the following items as automatic fiscal policy actions, discretionary fiscal policy actions, or neither.

    • An increase in expenditure on homeland security

    • An increase in unemployment benefits paid during a recession

    • Decreased expenditures on national defense ...

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