Question

If the government increases transfer payments to households, then the effect of this on the government’s...

If the government increases transfer payments to households, then the effect of this on the government’s budget

a. will make investment rise.

b. will make the rate of interest rise.

c. will make public saving rise.

d. All of the above are correct.

*Can you please explain why the answer is what it is?*

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

b. will make the rate of interest rise.

Transfer payment. In budgetary perspectives, a transfer payment (or government transfer ) is a redistribution of pay and wealth by techniques for the organization making a payment, without stock or organizations being gotten in kind.

So option a and c are wrong as this time people try to increase their spending during transfer payments rather than investing and saving it . People spend money for their daily needs which will generally make the rate of interest increase .

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
please do not answer unless you're sure. thanks! 2) Government transfer payments: A are received as...
please do not answer unless you're sure. thanks! 2) Government transfer payments: A are received as payment for inputs in the factor market. B do not affect the level of public or private saving. C are included as part of government purchases, G. D can be viewed as negative tax payments, T.
1; the government increases its spending by $1000 billion. if the marginal propensity to save is...
1; the government increases its spending by $1000 billion. if the marginal propensity to save is 0.2, what happens to the following: do they rise or fall and  by what amount a public saving b private saving c national saving d investment e interest rate  
a)According to wealth substitution effect, private saving increases due to social security taxes. b)Government’s health care...
a)According to wealth substitution effect, private saving increases due to social security taxes. b)Government’s health care program can solve both moral hazard and adverse selection problems. c)The only reason why countries have social security is to improve the economic status of the aged STATE whether the statement is True or False or Uncertain. explain in detail please
If the Federal Government increases taxes: What will be the effect on money demand, money supply,...
If the Federal Government increases taxes: What will be the effect on money demand, money supply, and interest rates? Please explain. What will be the effect on planned investment, AE, and GDP? Please explain In the short-run: What will be the effect on AD and SRAS? What will be the effect on prices? Please explain.
​Which of the following is a component of aggregate demand? a. ​Transfer payments from government b....
​Which of the following is a component of aggregate demand? a. ​Transfer payments from government b. ​Borrowing by government c. ​Purchases by government d. ​Saving by consumers e. ​Taxation by government ​Which of the following is an automatic stabilizer? a. ​Net taxes b. ​Government spending c. ​The interest rate d. ​The minimum wage set by the government e. ​Unemployment insurance ​The effect of automatic stabilizers on the business cycle is to: a. ​make upswings smaller and downswings larger. b. ​make...
France's government is running a budget deficit. With no Ricardo-Barro effect, which of the following events...
France's government is running a budget deficit. With no Ricardo-Barro effect, which of the following events will occur? I.      The supply curve of loanable funds will shift leftward. II.    A higher real interest rate crowds out investment. III.   Saving increases. A) I and II B) II and III C) I only D) III only
The federal government in Australia has been running large budget deficits. The government has stated that...
The federal government in Australia has been running large budget deficits. The government has stated that it will take actions that will turn the budget deficits into budget surpluses over time. Use a market for loanable funds graph to illustrate the effect of the federal budget surpluses. What happens to the equilibrium real interest rate and the quantity of loanable funds? What happens to the level of saving and investment? Now suppose that households believe that surpluses will result in...
Consider an economy in which the loanable funds market is initially in equilibrium. Represent this using...
Consider an economy in which the loanable funds market is initially in equilibrium. Represent this using the appropriate graphs. a. Other things the same, if the government increases transfer payments to households, without raising taxes, then how does the equilibrium level of national saving, investment and interest rates change? Explain your answer and show the changes using the graph from part (a).
Consider the goods market equilibrium model (the saving-investment diagram). When the government increases its spending temporarily,...
Consider the goods market equilibrium model (the saving-investment diagram). When the government increases its spending temporarily, what would happen to the real interest rate and national saving in equilibrium? Explain using the saving-investment diagram.
The response of investment spending to an increase in the government budget deficit is called Select...
The response of investment spending to an increase in the government budget deficit is called Select one: a. crowding out. b. income minus net taxes. c. private dissaving. d. expansionary investment. How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes) affect private saving in the economy? Select one: a. Private saving will decrease by less than the amount of increase in the budget surplus. b. Private saving...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT