Answer:
Money supply increase=500000/10%=5000000
Explanation:
Answer:
The answer is: C) There will be an increase in wealth, creating a shift to the right in the demand curve for bonds in France. France can therefore expect permanent lower interest rates in the future.
Explanation:
When the residents of a nation decide to permanently increase their savings, that affects the economy in several ways. At first, it will lower the total demand for products and services (to be able to save money you must spend less) and increase the quantity demanded for bonds. This increase will lower the price (in this case interest rate) of bonds.
When the interest rates of bonds is lower, it means the cost of borrowing money for the general population will also lower. The interest rate commercial banks charge their clients always follow the interest rate of bonds. That will lead to greater investment and spending in the economy, and future economic growth.
Answer:
A. The government lowers tax rates and undertakes a replacement of old bridges and roads
B. The government lowers tax rates and issues a partial refund of taxes that have already been paid
These 2 statements are correct explained below
Explanation:
A. The government lowers tax rates and undertakes a replacement of old bridges and roads, this statement is correct because when the government lowers tax rates it means that people have higher disposable income on their hands therefore they can spend more which increases demand, and people also invest more which increases supply, also the replacement of bridges and roads is improvement in infrastructure and this also increases supply as transportation is easier and cheaper for businesses.
B. The government lowers tax rates and issues a partial refund of taxes that have already been paid, this statement is correct because when the government lowers tax rates it means that people have higher disposable income on their hands therefore they can spend more which increases demand, and people also invest more which increases supply, also refund of taxes will increase the disposable money that people have so they can invest and consume both which will increase both supply and demand.
C. The government raises tax rates and reduces unemployment insurance payment
This is contraction fiscal policy and will do the opposite of expansionary fiscal policy, that is why this statement is incorrect.
D. The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes. This statement is wrong because lowering the interest rate is an expansionary monetary policy and not an expansionary fiscal policy.
