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- What role taxes policy plays in determining the GDP or national income in an economy? Explain with numerical examples?Which of the following would cause the level of income to change by the greatest amount? a. An increase in defense spending of $20 billion. b. An increase in social security payments of $20 billion. c. A reduction in personal income taxes of $20 billion. d. The changes suggested above have equal impacts on the level of income.Over the years, as the US has passed from an industrial to a service economy, have US national income accounting calculations changed?
- Excise taxes on tobacco and alcohol and state sales taxes are often criticized for being regressive. Although everyone pays the same rate regardless of income, why might this be so?GDP is not a perfect measure of social welfare and the society's economic well-being because Group of answer choices it does not include all economic activities in the economy. it does not say anything about the distribution of income. All of the above GDP accounting rules do not adjust for production that causes negative externalities.When Britney Spears married one of her dancers, what effect might it have had on national income? Explain.
- Which of the following will most likely lead to a more equal distribution of income? a. More regressive national sales tax b. More progressive income taxes c. An increase in the high school dropout rate d. An increase in structural unemployment e. An increase in earnings for owners of capitalWhich country has the highest ratio of government spending to GDP? United States China O Japan O SwedenExplain how a severe drought in a country whose main activity is agriculture can affect: The gross domestic product of that country The unemployment rate The price index of agricultural products
- Suppose a small economy has two income tax rates: 15% for all income up to $50,000 and 30% for any income earned above $50,000. Suppose that the economy has a Government Budget for this year (year 1) of $58,500, and a total of five individuals earning the following income: Amy $20,000, Betty $40,000, Charlie $60,000, Dimitry $80,000, Evelyn $100,000. In chapter 5 we saw that GDP can be calculated in two ways, via the expenditure approach or the income approach, and that when the income approach is used, there must be adjustments made to National Income, specifically adding the Consumption of Fixed Capital and a Statistical Discrepancy. For the sake of simplicity, let's imagine that National Income is equal to GDP, in other words the Fixed Capital and the Statistical Discrepancy are equal to zero. Now assume that a recession (triggered by a reduction of Aggregate Demand) causes each of the five incomes to fall by 25%. In other words, income is 75% of what they used to be. What is the…Suppose a small economy has two income tax rates: 15% for all income up to $50,000 and 30% for any income earned above $50,000. Suppose that the economy has a Government Budget for this year (year 1) of $58,500, and a total of five individuals earning the following income: Amy $20,000, Betty $40,000, Charlie $60,000, Dimitry $80,000, Evelyn $100,000. In chapter 5 we saw that GDP can be calculated in two ways, via the expenditure approach or the income approach, and that when the income approach is used, there must be adjustments made to National Income, specifically adding the Consumption of Fixed Capital and a Statistical Discrepancy. For the sake of simplicity, let's imagine that National Income is equal to GDP, in other words the Fixed Capital and the Statistical Discrepancy are equal to zero. 6. What is the Nation's Income in year 2?Suppose a small economy has two income tax rates: 15% for all income up to $50,000 and 30% for any income earned above $50,000. Suppose that the economy has a Government Budget for this year (year 1) of $58,500, and a total of five individuals earning the following income: Amy $20,000, Betty $40,000, Charlie $60,000, Dimitry $80,000, Evelyn $100,000. In chapter 5 we saw that GDP can be calculated in two ways, via the expenditure approach or the income approach, and that when the income approach is used, there must be adjustments made to National Income, specifically adding the Consumption of Fixed Capital and a Statistical Discrepancy. For the sake of simplicity, let's imagine that National Income is equal to GDP, in other words the Fixed Capital and the Statistical Discrepancy are equal to zero. Assuming a Marginal Propensity to Save (MPS) of 20% or 0.20, use the Keynesian Multiplier to determine the additional amount of government spending required.