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2 years ago

Suppose the marginal propensity to consume is 0.8 and the government cuts taxes by $40 billion. real gdp will _ by _.

1 answer:

8 0

If the government cuts taxes by $40 billion, this puts more money in consumers' pockets. Given an MPC of 0.8, this means they will spend $32 billion

Evaluating :

(0.8 × $40 = $32).

The correct answer is an increase of $32 billion.

GDP:

Gross domestic product (GDP) is a measure of the final goods and services produced with a specific region over a specified period of time. It is computed as follows:

GDP = Consumption + Government Spend + Investment + Net Exports

What is Marginal Propensity to Consume (MPC)?

Marginal propensity to consume (MPC) is measured as the portion of an increase in pay that a consumer would spend on goods and services as opposed to saving. Essentially, it is measuring how sensitive consumption in an economy is to increases in income. MPC is important in economics because it illustrates the effect that increased government spending has on the economy.

Learn more about Marginal propensity :

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Answer:

Touch point is a method of interaction with a customer, such as telephone or customer service desk.

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3 years ago

Government is typically a ________.

xxTIMURxx [149]

Answer: D. net demander of funds because it borrows more than it saves

The government incurs more debts than gain profits as shown by most financial reports. The government is viewed similarly to that of business firms being net demanders by loaning huge amounts to financial institutions indirectly. The indirect borrowing done by government is done through debt security selling.

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3 years ago

You are saving for retirement. To live comfortably, you decide you will need to save $ 4 million by the time you are 65. Today

olasank [31]

Answer: $50,846.3701

Explanation:

Need to save $4 million to live comfortably,

Interest rate, r = 3%

N = 40 years

$Present\ value=\frac{FV_{N} }{(1+i)^{N}}$

$Present\ value=\frac{4,000,000 }{(1+0.03)^{40}}$

$Present\ value=\frac{4,000,000 }{3.262}$

= 1,226,241.57

$Present\ value\ of\ annuity= C\times\frac{1}{i}\times(1-\frac{1}{(1+i)^{N}}) + C$

$1,226,241.57= C\times\frac{1}{0.03}\times(1-\frac{1}{(1.03)^{40}})+C$

$1,226,241.57=C[\frac{1}{0.03}\times(1-0.3065)+1]$

$1,226,241.57=24.1166\times C$

$C=\frac{1,226,241.57}{24.1166}$

= $50,846.3701

Hence, $50,846.3701 will be the annual payment to have $4 million in the account on 65th birthday.

7 0

3 years ago

Many corporations allow CEOs to use their firm's corporate jet for personal travel. The Internal Revenue Service (IRS) require

Margaret [11]

Answer:

The explicit cost of flight includes cost of fuel, maintenance cost, payment to pilot.

Explanation:

The explicit costs are the direct costs incurred during the process of production or business. Here, the payments made to the pilot will be a variable cost, the cost of fuel, etc will be explicit cost.

The marginal explicit cost is the increase in the explicit cost with an additional output. The incremental cost of flight correctly determines the marginal explicit cost.

Opportunity cost is the cost of sacrificing the alternative. Here, the marginal opportunity cost will be the revenue that the firm would have earned by renting the flight to other firms or individuals.

3 0

3 years ago

Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0%

Feliz [49]

Answer:

$587,500

Explanation:

You are required to calculate the value of the levered firm;

vL = vU + Dt, whereby;

vL = Value of levered firm

vU = value of unlevered firm

Dt = debt * tax ; which is the tax shield

Find value of unlevered firm;

vU = [EBIT(1-tax) ]/ rE

= [100,000(1-0.30)] / 0.16

= 437,500

Value of levered firm;

vL = 437,500 + (500,000*0.30)

= 437,500 +150,000

= $587,500

6 0

3 years ago

Suppose the marginal propensity to consume is 0.8 and the government cuts taxes by $40 billion. real gdp will _____ by _____.

Suppose the marginal propensity to consume is 0.8 and the government cuts taxes by $40 billion. real gdp will _ by _.