this is macro economics the long run predicted effect on trade balance (NX). 2.
ID: 1129756 • Letter: T
Question
this is macro economics
the long run predicted effect on trade balance (NX). 2. Recently the government of Barbados increased taxes to reduce the country's fiscal deficit. It also proposed to borrow on the international market in order to boost foreign reserves, finance their day-to-day spending and reschedule the government's debt maturity profile. [References if interested: and https://www.barbadostoday.bb/2016/08/17/new-taxes/ http://www.barbadostoday.bb/2013/08/21/mcclean-govt-can-borrow-us500- million/.] a. As an economist consultant hired by the government, write a detailed report, showing (graphically) and explaining to the government the predicted long-run impact of increasing tax revenue on the budget balance, national saving, investment, trade balance and net capital outflow. Note: Use the classical model of an open economy and assume Barbados ha.s perfect capital mobility. b. In your regort alkoexnlain ho the proposed us of foreign borowing will affect future generations c. Is it good or bad for a country to run a trade deficit? Discuss.Explanation / Answer
Ans b The correct answer is option b.
C The correct answer is option c.
So this is been proved and it will benefit for them
Hence solved.
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