Gao Hongye Macroeconomics, Fourth Edition, 522 pages, on Crowding Out Effect 200

1. The crowding out effect refers to the increase in spending that leads to a rise in interest rates, which in turn reduces private investment, thereby reducing GDP. It is equal to the amount of GDP growth generated by spending minus the amount of GDP loss due to the decrease in private investment due to rising interest rates. It requires conditions and prerequisites, and it will not have a crowding out effect in all cases, such as the Great Depression in 1931, when it was the great spending that brought the United States out of the economic crisis.

This premise is that the expenditure of ** is greater than the income, that is, when the fiscal deficit.

2. The amount of loanable funds in the economy as a whole depends on national savings, which includes ** savings and private savings. Savings is income minus expenditure, if there is a fiscal surplus, there will be no crowding out effect on expenditure, because it uses its own funds, it will not cause private savings to be taken up, so that private savings will not decrease, interest rates will not rise, private investment will not decrease, so GDP growth will not decrease; On the other hand, if there is a fiscal deficit, spending means that private savings are being tied up, then the funds for private investment are reduced, interest rates will rise, private investment will be reduced, and therefore GDP will also be reduced. It is precisely because spending crowds out private investment that this is known as the crowding-out effect.

The total savings of a country are certain, and if private savings are occupied, private investment will decrease, and GDP will naturally decrease.

3. Its logic is as follows: ** Savings are not positive - ** Spending crowds out private funds - Private funds decrease - Interest rates rise - Private investment decreases - GDP decreases - crowding out effect occurs.

4. The above analysis is a classic analysis of the crowding out effect, which is a closed economy, that is, a domestic economy without external capital. If a country has a large net inflow of capital, it is a different matter. Because external funds increase the funds available to the country, even deficits can increase investment because foreign funds fill the private funds it occupies.

Just like the United States, it has a large fiscal deficit, but it can still increase its fiscal deficit with impunity, because there is a constant flow of money into the United States.

In short, crowding out does not occur when spending does not crowd out private funds.

Basically no problem, 1First of all, speculation is illegal in Chinese law, and secondly, the reduction of the amount of real money will definitely cause the price of supply and demand Then the investment in the production of commodities will definitely show vitality and vitality, people's enthusiasm and opportunities to invest and the basis have increased, plus speculation is generally a gambling transaction without physical goods, investors are wary. On the whole, investors will definitely choose more reliable industrial investment, and the amount of speculative money will naturally decrease.

2.** Due to the activity of the economy, it should rise. At this time, most of these manual laborers use deposits as a means of financial management, and the deposits that banks need to absorb have increased, and interest rates will naturally rise according to the relationship between supply and demand.

23 due to.

One: This is a very classic economic relationship. A decrease in the money supply leads to a decrease in interest rates, as banks lend less abroad, which reduces the amount of money for speculative purposes. (because of interest rates-).

Second, the relationship between the decrease in private investment and private consumption is a long-term relationship, and the decrease in private investment will lead to a long-term decrease in income, thereby reducing consumption. But the fact of the relationship between the two is not obvious.

Because private investment and private consumption are affected by many other factors, such as deposits and market confidence, interest rates, etc

Three: Bonds **** are the effect of reduced investment. Of course, its relationship with interest rates is also long-term, in the consideration of the natural economic cycle, when investment decreases (interest rates decrease), the market economy will regulate, so that interest rates will recover back to their original levels.

Of course, this is controlled by ** banks in our country.

Four: This brings us back to the issue of macro control. Personally, I don't believe in political economy, so I can't.

Thank you for your question. I was preparing for my midterm exam, and I just happened to use your questions to revise.

Moreover, I strongly disagree with Gao's statement. He seems to have overlooked many important determinants of the economy. Maybe I'll take this one another day and read it.

It is roughly understood that due to the large-scale purchase of **, the product and labor value will produce prices**, and under the condition that the procurement funds remain unchanged, the items purchased due to the ** price will be reduced, so that the investors who hold the currency will show a decrease in purchasing the materials that are lacking.

First, the state does not print money for no reason, because this will cause inflation and social unrest. In fact, money is just like ordinary commodities, and if there is more supply, it will cause a decline. The decline of the currency is manifested in the depreciation of the currency, that is, the money is no longer worth anything.

The amount of money issued is determined by economic growth. This one is more complicated, so I won't talk about it here.

Second, the international ** generally uses the agreed currency transactions, more of which are US dollars, euros, etc., and of course may also be RMB, depending on the agreement between the two parties.

Moreover, the international ** generally does not use cash, but mainly bills of exchange. It's kind of like Alipay.

goime

1 Because of the rise in interest rates and the lack of money, consumption and investment have decreased.

2. The bond market belongs to the capital market, which requires the accumulation of funds, and the reduction of currency causes insufficient purchasing power and oversupply, so the bond ** declines.

The link and distinction between full and underemployed employment: one is theory and the other is reality.

First of all, we must understand what mrs=1 >1 1=p1 p2 means.

This equation means that commodity 1 and commodity 2** are the same, but at this time, the utility increment brought by adding 1 unit of commodity 1 is 1, and the utility increment brought by adding 1 unit of commodity 2 is .

So buying 1 with the same ** is more incremental than buying 2 (That's how it came about.)

The elasticity of demand mentioned in pages 46 and 47 of Western economics refers to the arc elasticity of **, because "2-16 Elasticity of Demand and Sales Revenue" involves two points a and b.

Question 1: Is the elasticity of a commodity different at each point in its function?

Question 2: What about the elastic goods of e>1, which is not a friend or a friend of e<1. What's going on here?

Answer: Not necessarily, when the elasticity is infinite, there is no case where the elasticity is less than 1, refer to figure (b) on page 44; However, when the demand curve chain is a straight line with an oblique downward trend, the value of e ranges from 0 to infinity;

e>1 refers to a certain **, the point elasticity of this commodity is greater than that of Pengxiao 1, or that the commodity is about to change from a certain ** to another ** (not changed, but it is about to change), the arc elasticity of this commodity is greater than 1, of course, a commodity can have a variety of **, so that its elasticity is greater than 1 ** is only a part of **, and there is another part of ** that will make his elasticity less than 1, referring to Figure (a) on page 44 is not difficult to understand.