EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Question
Chapter 4, Problem 4RQ
To determine
To define the expected real after-tax interest rate. The effects of a decrease in tax rate on interest incomes on the expected real after-tax interest rate is to be explained.
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Students have asked these similar questions
What is the effect of a rise in the income tax on interest income?
A rise in the income tax on interest income ______.
A. increases the before-tax interest rate paid by borrowers and decreases borrowing and investment
B. increases the after-tax interest rate received by lenders and increases saving
C. decreases the before-tax interest rate paid by borrowers and increases borrowing and investment
D. decreases the after-tax interest rate received by lenders and increases lendin
For an economy, the following information is given to you.
C= 0.7(1 -t)Y
I 300-0.02r
M"/P= 2+0.2Y – 0,3r
where C is consumption t is proportion income tax rate, I is investment, M" is money demand, P is price, Y is
income (output) and r is real interest rate. If Government expenditure (G) is 479 , tax rate (t) is 14%, price level (
P) is 17, and nominal money supply is 980, the IS-LM equilibrium output is
(two decimal
points).
The country of Aquilonia has a tax system identical to that of Canada. Suppose an
Aquilonian bought a parcel of land for $10,000 in 1960 when the price index equalled
100. In 2019, the person sold the land for $100,000, and the price index equalled 500. If
the person must pay 20 percent of any capital gain in taxes, what is the after-tax real
capital gain (in 2019 dollars) on the land?
$72,000
$32,000
O $6400
O $62,000
Chapter 4 Solutions
EBK MACROECONOMICS
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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