Author Question: Arguments for the balanced budget amendment include all of the following EXCEPT A) a balanced ... (Read 150 times)

gonzo233 · **on:** Jun 30, 2018

Arguments for the balanced budget amendment include all of the following EXCEPT

A) a balanced budget amendment would limit Congress from using fiscal policy during a recession.
B) a balanced budget amendment would increase capital formation.
C) a balanced budget amendment would reduce the taxation burden on future generations.
D) a balanced budget amendment would exert fiscal discipline on the federal government.

Question 2

Given below are the current account transactions of an economy in a year.

a. exported goods and services worth 120 billion
b. imported goods worth 200 billion
c. revenue earned from manufacturing plants situated abroad equals 80 billion
d. dividend paid to foreign investors equals 10 billion
e. donations and disaster relief funds given to a foreign country equal 10 billion
f. received gifts worth 5 billion from foreign donors towards poverty alleviation

i) Calculate the economy's trade balance.
ii) What will be the balance in the economy's current account?

chevyboi1976 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

i) The trade balance of an economy is the difference between the value of exports and imports of goods and services. In this case, the economy's trade balance is 120 billion - 200 billion = -80 billion.
ii) Current account balance = Net Exports + Net factor income from abroad + Net transfers.
In this case, current account balance = 120 billion - 200 billion + 80 billion - 10 billion - + 5 billion = -15 billion. Thus, there will be a balance of 15 billion in the economy's current account.