Answer: Option A
Explanation: In simple words, intertemporal decision making refers to the study of how the decision made by an individual today affects the choices that he or she have in the future. It is based on the assumption that less consumption today will bring significant increase in consumption tomorrow.
In the given case, despite of having enough income to lead a healthy lifestyle in present,Lee decided to save his money in the future. This will lead to choices fro him that will give him higher utility.
Hence from the above we can conclude that the correct option is A.
Answer:
Government's tax revenues would decrease by $1,250
Explanation:
Please refer the complete question below
Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax). Answer the questions below assuming that Congress increases the income tax rate such that Song's average tax rate increases from 20 percent to 25 percent.
What will happen to the government’s tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and therefore earns only $75,000 in taxable income
If Song opts for pursuing his other passions he will end up earning $75,000 and therefore since the tax rate is now 25% he will have to pay $18,750 ($75,000 x 25%) as against the $20,000 ($100,000 x 20%) taxed previously and hence government's tax revenues would decrease by $1,250 ($20,000 - $18,750).
Answer:
Future value = 16007.81437
Explanation:
we have to compound all the rates for the time period together as the 7,750 as exposed to this rate and their interest generated in one period are taking into consideration for the subsequent period interest calculations.
We multiply them and get the future value factor:
we now can solve for future value:
Future value = 16007.81437
Answer: B. The capital gains yield is positive.
Explanation:
The Capital Gains Yield is a percentage figure that tells how much an investment has increased in price from it's acquisition.
It works by taking the new value and dividing it by the original value.
Using Stacy as an example, the Stock increased by $4 so assuming she bought the stock for even $0.1 then her Capital Yield is,
= 4/0.1
= 40 * 100%
= 4000% which is positive
As long as the stock was sold for more than it was bought, Capital Yield Gain is positive.
