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2 years ago

Fiscal Policy

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Based on the economic data given, and the fact that the government is running a deficit, the equilibrium GDP will be 336.67.

If government spending is cut to balance the budget, the new level of GDP will be 321.67.

The effect of balancing the budget will be a decrease in GDP and a slower recovery from the recesssion.

<h3>What is the equilibrium GDP?</h3>

This is given by the variable "Y" so we can find the equilibrium GDP by solving for it:
C = 50 + .7(Y – T)

Y = C + I + G - XN

C = Y - I - G + XN

Solving gives:

Y - I - G + XN = 50 + .7(Y – T)

Y - 40 - 35 + 10 = 50 + 0.7Y - 14

Y - 0.7Y = 50 + 40 + 35 - 10 - 14

0.3Y = 101

Y = 101/0.3

= 336.67

<h3>What is the new GDP if government spending is cut?</h3>

Government spending will have to be cut to a size that would make it equal to taxes so government spending becomes 20.

New GDP becomes:

= C + I + G - XN

= ( 50 + .7(Y – T)) + 40 + 20 - 10

= 271.67 + 40 + 20 - 10

= 321.67

Find out more on GDP at brainly.com/question/1384502.

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2700 thousand bonds with a face value of $1000 each, are sold at 106. The entry to record the issuance is

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Date, bonds sold at a premium

Dr Cash $28620000000

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Cr Premium on bonds payable $1,62,000,000

Explanation:

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<h3>What is the difference between market value and face value?</h3>

The market value is the actual price at which the security trades on the open market, as well as the price that fluctuates when the yield reacts to changes in interest rates.

The face value is determined by the issuing company. It may be the value at which the firm redeems the shares at some point in the future, but there is no guarantee.

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Explain how a firm's production function is related to its marginal product of labor, how a firm's marginal product of labor is

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The price paid to each factor adjusts to balance the supply and demand for that factor. Because factor demand reflects the value of the marginal product of that factor, in equilibrium, each factor is compensated according to its marginal contribution to the production of goods and services.

<h3><u>Explanation:</u></h3>

The incremental profit that is being earned for an additional single unit by subtracting the price of the product and all the variable cost that is associated with that product is the marginal contribution. It is the earnings that is obtained in total for paying all fixed expense and also for the profit generation.

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