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uranmaximum [27]
2 years ago
10

If the government of Balancia runs a deficit of $50 million per year in Year 1 and in Year 2 due to its recession, but then has

a $100 million surplus in Year 3 due to strong economic recovery, Balancia is likely following which type of rule?
Business
1 answer:
natima [27]2 years ago
6 0

Answer:

Cyclically balanced budget

Explanation:

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Compute the two-year nominal interest rate using the exact formula and the approximation formula for each set of assumptions lis
gregori [183]

Answer:

a) 2.5%

b) 6%

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Explanation:

The Formula to be used is the <em>habitat hypothesis </em>

as stated in the document attached below

a)  it = 2%; it+1 =3%

i_{2,t} = 0 + ( 2 + 3 ) / 2

    = 2.5% ( two year nominal interest rate )

b) it = 2%;  it+1+1 = 10%

i_{2,t} = 0 + ( 2 + 10 ) / 2

     = 6% ( two year nominal interest rate )

c) it = 2%;  1t+1 = 3%. ∝₂,t = 1%

i_{2,t}  = 1 + ( 2 + 3 ) / 2

     = 1 + 2.5 = 3.5%

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