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Assoli18 [71]
3 years ago
15

Suppose that the government introduces a tax on interest earnings. That is, borrowers face a real interest rate of r before and

after the tax is introduced, but lenders receive an interest rate of (1 − x)r on their savings, where x is the tax rate. We will analyze what happens when the tax rate x increases from zero to some value greater than zero, with r assumed to remain constant. [Hint: When x = 0, you would have a normal straight budget constraint like we’ve seen in the lecture.]
1.) Show the effects of the increase in the tax rate on a household’s lifetime budget constraint. [Hint: Draw what the lifetime budget constraint looks like when x = 0. Then show how that changes when x > 0.]
2.) Suppose the household was initially a borrower when x = 0. Graphically show how the increase in the tax rate x affect the optimal choice of consumption (in the current and future periods) and saving for this household. Specifically, show how the income and substitution effects matter for your answer.
3.) Suppose the household was initially a lender when x = 0. Graphically show how the increase in the tax rate x affect the optimal choice of consumption (in the current and future periods) and saving for this household. Specifically, show how the income and substitution effects matter for your answer.

Business
1 answer:
soldi70 [24.7K]3 years ago
4 0

Answer

The answer and procedures of the exercise are attached inthe following image.

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

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Three really important roles are allocation function, distribution function, stabilization function 

hope this helps:) have a good day and maybe think about brainliest
8 0
2 years ago
How is the advancement of technology blurring the lines between humans and non- humans?
MArishka [77]

Answer:

As robotics quickly advance, scientists say the lines between robots and humans is beginning to blur.

That means one day with robotic prosthetics that work seamlessly with a human's muscles, with tiny robots that swim in our blood streams and fix medical problems and nano-scale robots implanted in our brains, we will become robotic humans.

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Explanation:

3 0
2 years ago
A health insurance provider has used market ________ to identify groups of businesses that have unique needs when providing insu
Kaylis [27]

Answer:

Segmentation

Explanation:

Market segmentation is a study that decides whether the company splits its members or populations into smaller categories based on factors such as age, wealth, personality features or actions. These divisions will also be used to tailor goods and ads to specific consumers.

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8 0
3 years ago
After a financial crisis hits the country of Barbaria, 8 million people become unemployed. If 35 million individuals are lucky e
madam [21]

Answer:

18.60%

Explanation:

Total labor force = $8 million + $35 million = $43 million

Unemployment Rate = (Unemployed/Labor force)*100

Unemployment Rate = $8 million/$43 million * 100

Unemployment Rate = 0.1860465 * 100

Unemployment Rate = 18.60%

5 0
3 years ago
The rate of economic growth per capita in france from 1996 to 2000 was 1.9% per year, while in korea over the same period it was
bagirrra123 [75]

Answer:

36.83 years

16.85 years

$63,710.88

$ 71,490.43  

Explanation:

We can use the nper  formula in excel  to compute the doubling time for the capital real GDP of both countries

=nper(rate,pmt,-pv,fv)

FV is the future real GDP which $28,900*2=$57,800 for France while that of Korea is $25,400 ($12,700*2)

PV is the present real GDP

rate is the economic growth rate of 4.2% in Korea and 1.9% in France

France=nper(1.9%,0,-28900,57800)= 36.83  

Korea=nper(4.2%,0,-12700,25400)= 16.85  

In 2045 ,which is 42 years from now the real GDP are shown thus:

=fv(rate,nper,pmt,-pv)=fv(1.9%,42,0,-28900)=$63,710.88  

=fv(rate,nper,pmt,-pv)=fv(4.2%,42,0,-12700)=$ 71,490.43  

3 0
3 years ago
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