In the graph you've just made, how does a tax on interest income influence the real interest rate and investment? A tax on interest income _______ loanable funds, which _______ the real interest rate and _______ investment. A. decreases the demand for; raises; decreases B. decreases the supply of; raises; decreases C. increases the supply of; lowers; increases D. increases the demand for; lowers; increases
Q: 2. Question 3. Derive the price elasticity for the following functions. Show your work. a. q-50-3p…
A: Price elasticity is a measurement of how a change in price or in the amount of a supply affects the…
Q: Label the following as either being a final or intermediate good. A_ Recycled steel purchased by a…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Suppose again that checkable deposits started off at $400,000 in First Main Street Bank, the…
A: Given - initial fund by Federal Bank = $400000 Reserve requirements ratio =.15(15%)…
Q: If Q = 0.5 K² L², and we use 2 units of capital and 2 units of labour, how much can we produce?…
A: As given production function is Q = 0.5K2L2 Also given K =2 , L=2
Q: Suppose you had ₱100 in a savings account and the interest rate is 20% per year and you never…
A: Amount in savings account = 100 interest rate = 20% n = 5
Q: The law of supply-and-demand is an important principle in economics. If the price of a product…
A: The law of supply and demand combines two fundamental economic principles describing how changes in…
Q: For Part A, could you format it in a different way thats easier to read. I can't follow what the…
A: Price elasticity of demand for a good is estimated to know about the changes in the quantity…
Q: i.What was the growth rate of nominal GDP between 2016 and 2017? ii. Was the growth rate of real…
A: Inflation A few costs rise; a few costs fall. Expansion happens when there is a wide expansion in…
Q: How much money should be deposited each year for 10 years starting 1 year from today, if you wish to…
A: Here we are given the cash flow. And using the formulas mentioned below of annuity and present value…
Q: III. Suppose the inverse demand for a monopolist's product is given by P = The monopolist can…
A: Profit maximization is a process business firms undergo to ensure the best output and price levels…
Q: he variance of the OLS estimator Select one: a. increases as the number of observations increases…
A: Assume we have the linear regression model with 1 explanatory variable: Y = β0 + β1X + μY :…
Q: Suppose a firm operating in a competitive market has the following cost curves: PRICE a. $9 Ob. $50…
A: Economic profit is the difference between total revenue and total expenditure.
Q: What is the dominant strategy of the column player? Column Row Top Middle Left (-5, -1) (1,-3)…
A: Dominant strategy is the best course of action irrespective of rival firms or players strategies.…
Q: 1. Imagine an economy with a constant returns to scale production function. Answer the following:…
A: Constant returns to scale refers to that technology /production function in which the output changes…
Q: explain what is the circular flow diagram illustrates for a macroeconomy.
A:
Q: The WTO has managed to solve all the problems of world trade. a) true b) false
A: Introduction WTO is an intergovernment organization that regulate and facilitate international…
Q: Consider the table. Labor (hours) 0 40 50 60 70 80 90 Quantity 0 18 45 Fixed Cost ($) 10,000 10,000…
A: Total cost is the sum of fixed cost and variable cost. Fixed cost remains constant and does not…
Q: Answer True, False or Uncertain. Brieáy explain your answer. 2.The negative correlation between…
A: Real interest rate refers to the rate of interest charged after taking into consideration the level…
Q: Define the Fisher effect. To what extent do empirical tests confirm that the Fisher effect exists in…
A: The measure that depicts the amount being charged by the lender that is over and above the principal…
Q: Let A denote the efficiency of the matching process (the TFP parameter of the matching function). As…
A: Beveridge curve shows the relationship between the vacancy and unemployment.
Q: Exercise 3. Suppose a game has an exact potential o. Show that is an exact potential for the game if…
A: Let us fix z∈S. For all s∈S define,H(s) =∑i=1nui(ai-1) - ui(ai) Where, a0=s and for every 1≤i≤n,…
Q: The Idaho Corporation earned $23,458,933 before interest and taxes for the year ended December 31,…
A: The moral obligation of paying taxes stems from the virtue of commutative justice. This theory was…
Q: uppose the government of the island has decided to make tomatoes more affordable to consumers by…
A: The equilibrium is established where the demand and supply forces are equal. The subsidy increases…
Q: O a. O b. 6% 8%
A: Given initial cost = 50,000 P Salvage = 10,000 Time = 10 years
Q: iven the following on a closed economy , determine the following. The equilibrium level of…
A: The above question is based on the concept of national income accounting where we have to calculate…
Q: Equilibrium employment is_______ hours and the equilibrium real wage rate is $ _________ an hour.…
A: Demand refers to the curve which shows various quantities of a good being demanded at different…
Q: The WTO has been able to solve all global trade problems. A) True B) False
A: WTO was established in 1995 during the GATT (General Agreement on Trade and Tariffs) discussions in…
Q: An individual makes five annual deposits of $100,000 in a savings account that pays interest at a…
A: Annual deposit = $100,000 Interest rate for first 6 years is 4% and for next 4 years is 6%
Q: Given the following information: Qs = 200 + 3P Qd = 400 – P, where Qs is the quantity…
A: The equilibrium occurs at such a price where the quantity demanded is equal to the quantity…
Q: What are the effects of an increase in government expenditure on infrastructure capital on the…
A: Economics is a concept that has multiple effects on every action. In simple words, every action…
Q: Of the 4 graphs below, in P-Q space, which best represents a demand curve that is (comparatively) a.…
A: The demand curve depicts the inverse relationship between price and quantity demanded, keeping other…
Q: in a simple economy, the savings function In this economy, equilibrium GDP is $ (Round your answer…
A: Y=C+I where, Y stand for total expenditure C stand for consumption expenditure I stand for…
Q: True or false? The European Union seeks to reduce its regional economic disparities by having…
A: European Union (EU) refers to an economic and political partnership that depicts a unique form of…
Q: Choose one of the following essay questions and write a thorough response (1-3 paragraphs). I. II.…
A: It's crucial that we pay attention to the precise terminology used in both the queries and the…
Q: Acme Distributors has an annual demand for an airport metal detector of 1,575 units. The unit cost…
A: When more goods or materials are purchased, a customer is given an incentive called a quantity…
Q: Suppose that the parents of a young child decide to make annual deposits into a savings account,…
A: Given cash flow: Rate of interest =8% compounded continuously. Required: Value of A.
Q: information describe
A: Given present value of fiscal outlays = 75 % of GDP Present value of future fiscal revenues = 50 %…
Q: 2. Refer to the monetary policy curve described in Problem 1. Assume now that the monetary policy…
A: When the inflation rate increases, the central bank implements a contractionary monetary policy in…
Q: A person buys a piece of lot for Php 104239 down payment and 10 deferred semi-annual payments of P…
A: The present value of cash flows in future is an approach of discounting cash that an individual…
Q: Explain how the multiplier affects equilibrium real GDP. Give examples
A: When talking about multiplier in economics, it can be said that it is the change in one variable due…
Q: Globalization makes new forms of consumption possible, but the effects of globalization on an…
A: The term "globalisation" refers to the increasing interdependence of the economies, population and…
Q: Suppose the state of Georgia government believe that golf should be available to the "common man,"…
A: Price celling is the one of the tool that government use to price control in the market. price…
Q: For each shock identified below, shift the AD curve, the SRAS curve, or both to show its effects on…
A: Macroeconomics refers to the branch of economics dealing with performance, structure, behavior, and…
Q: Firms use rubber to produce either bicycle tires and car tires. Suppose consumers want to ride…
A: Two goods are considered substitutes in economics if they can both satisfy the same need. In the…
Q: d. Consider the following scenarios: Variable Cost/Book Access Price Demand Scenario 1 $6 $46 2,500…
A: Profit refers to the difference between the total revenue and total costs . Total Revenue = Price *…
Q: True or false with reasoning 1)_______When an extra glass of wine is consumed, the total utility…
A: Sol:- since, marginal utility is simply the change in total utility per unit change in the…
Q: Assume Australia, a large country, exports wine and imports cars. Recently climate change has…
A: The economic exchange of goods and services between nations is known as international trade.…
Q: 1) Which one is not considered in the calculation of the human development index? a) expected years…
A: As there are three multiple questions, so answer is provided to the first question: 1) "A country's…
Q: How much money should be deposited each year for 10 years starting 1 year from today, if you wish to…
A: A set of regular payments that are made at the same rate and interval are referred to as an annuity.…
Q: a fiscal gap and a generational gap
A: The time bomb caused by social security and Medicare creates both a fiscal as well as a generational…
In the graph you've just made, how does a tax on interest income influence the real interest rate and investment? A tax on interest income _______ loanable funds, which _______ the real interest rate and _______ investment.
A. decreases the
B. decreases the supply of; raises; decreases
C. increases the supply of; lowers; increases
D. increases the demand for; lowers; increases
Screenshot attached
thanks
Step by step
Solved in 2 steps
- The table given below shows an economy’s demand for loanable funds and the supply of loanable funds schedules when the government’s budget is balanced. Real Interest rate (% per year) Loanable fund demanded (Trillian of 2002 $) Loanable fund supplied (Trillian of 2002 $) 4 8.5 5.5 5 8 6 6 7.5 6.5 7 7 7 8 6.5 7 9 6 8 10 5.5 8.5 1. If the government has a budget surplus of $1 trillion, what are the real interest rate, the quantity of investment, and the quantity of private saving? Is there any crowding out in this situation? 2. If the government has a budget deficit of $1 trillion, what are the real interest rate, the quantity of investment, and the quantity of private saving? Is there any crowding out in this situation? 3. If the government has a budget deficit of $1 trillion and the Ricardo-Barro effect occurs, what are the real interest rate and the quantity of investment?The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budgetdeficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases tooffset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budget deficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases to offset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?
- “Crowding out” refers to the situation in whicha. borrowing by the federal government raisesinterest rates and causes firms to invest less.b. foreigners sell their bonds and purchase U.S.goods and services.c. borrowing by the federal government causesstate and local governments to lower theirtaxes.d. increased federal taxes to balance the budgetcause interest rates to increase and consumercredit to decrease.Accordingtothetextbook,whichofthefollowingstatementsis(are)correct? (x) An advantage of a consumption tax over the present income tax system is that a consumption tax discourages consumption and encourages saving. (y) If interest income from savings is taxed, a disincentive to save is created and less saving occurs. (z) An advantage of a consumption tax over the present tax system is that a consumption tax places more of the tax burden on the wealthy. (x), (y) and (z) (x) and (y) only (x) and (z) only (y) and (z) only (x) onlyThe current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graph to show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budgetdeficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases tooffset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?
- Which of the following policy actions wouldunambiguously reduce the supply of loanable fundsand crowd out investment?a. an increase in taxes and a decrease ingovernment spendingb. a decrease in taxes together with an increase ingovernment spendingc. an increase in both taxes and governmentspendingd. a decrease in both taxes and government spendingSuppose, the government of Australia incurs a budget deficit of $50 billion due to increased government spending in 2020 as result of Covid 19. Because of this, the government borrowing in 2021 increases by the same amount. a) Compare the size of equilibrium changes in 1) investment, 2) public saving, 3) private saving and 4) national saving (public saving + private saving) with $50 billion increase in borrowing. Compare the changes (increase/decrease) in these variables indicating same, less or more than the $50 billion. b) Will the equilibrium quantity of national savings change by more or less than the initial change in public saving? Explain your answerBy how much did the disposable income of rich people increase as a result of the 2017 drop in the top marginal tax rate from 39.6 percent to 37 percent? Assume rich people have $2 trillion of gross income in the highest bracket.
- The graph illustrates the demand for loanable funds and the private supply of loanable funds when the government budget is balanced. In the graph, draw the supply of loanable funds curve if the government budget surplus is $0.2 trillion. Label the curve. Draw a point to show the new equilibrium real interest rate and quantity of loanable funds. >>> Draw only the objects specified in the question.As a result of this policy, the equilibrium interest rate . Which of the following statements accurately describe the effect of the increase in government borrowing? Check all that apply. National saving decreases by less than $20 billion. Private saving increases by less than $20 billion. Public saving decreases by exactly $20 billion. Investment increases by less than $20 billion. The more elastic the supply of loanable funds, the is the change in national saving as a result of the increase in government borrowing. The more elastic the demand for loanable funds, the the change in national saving as a result of the increase in government borrowing. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. This belief would cause people to save today, which would private saving and the supply of loanable funds. This would the…When the U.S government runs a Deficit, the savings curve in the market for loanable funds shifts to the____ ___ investment rates and _____domestic investment net capital outfiow.Multiple ChoiceO. right increasing; increasing O. left increasing; decreasing O. right decreasing; increasing O. left decreasing; increasing