Answer:
a. The situation can be shown with a normal equilibrium supply and demand graph (as shown in the attached file).
b. There is a shift in demand from left to right due to the crowding out of the deficit budget.
Explanation:
If the government is running a deficit budget, there will be an increase in the total demand for loanable funds. This is because the government must borrow money to balance the situation. As a result, the interest rate will increase. However, the private demand will remain the same and investment will be less due to the high interest rate.
Answer:
<u>to pay for road improvements</u>
Explanation:
Remember, the term municipal bonds basically refers to a special kind of loan issued to a local government by its citizens or investors and<em> meant to be used by the government to fund public projects such as road construction, hospitals, and other forms of infrastructure that benefit the general public.</em>
Therefore, the city would most likely use these funds to pay for road improvements as this would benefit the general public.
Answer:
$2 trillion
Explanation:
In a closed economy GDP is $12 trillion
Consumption is $8 trillion
Government spending is $2 trillion
Taxes is $0.5 trillion
Therefore the investment spending can be calculated as follows
= $12 trillion - $8trillion-$2trillion
= $2 trillion
Hence investment spending is $2 trillion
Answer: D. Current ratio will decrease and total debt to equity ratio will decrease.
Explanation:
The Current ratio is calculated by dividing the firm's current assets by it current liabilities. This transaction will have the effect of reducing the cash account of Silica Labs by $500,000 which means the numerator will be less in the equation which would lead to a lesser Current ratio.
The total debt to equity ratio is calculated by dividing the firms's total debt by its equity. Silica offered equity to June thereby increasing their equity account. This will mean that the denominator has increased in the equation which will lead to a lesser total debt to equity ratio.
