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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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Answer:

False

Explanation:

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The government prepares a central plan for the entire economy. The plan determines the production level, the goods and services to be produced, and their prices.  The central government employs all workers. The private sector does not exist.

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What is outstanding credit card debt?​
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3 years ago
When sales exceed production, the net operating income reported under variable costing generally will be:_____.
padilas [110]

When sales exceed production, the net operating income reported under variable costing generally will be <u>greater than the net operating income reported under absorption costing</u>.

Under variable costing, constant manufacturing overhead fee is handled as product cost. If the range of devices produced exceeds the range of gadgets sold, then net operating income under absorption costing will: be extra than net operating earnings underneath variable costing.

Variable costing is a concept used in managerial and cost accounting wherein the fixed production overhead is excluded from the product price of manufacturing. The technique contrasts with absorption costing, in which the fixed manufacturing overhead is allotted to products produced.

Absorption costing, once in a while known as “full costing,” is a managerial accounting technique for taking pictures of all prices associated with manufacturing a selected product. The direct and oblique costs, together with direct substances, direct exertions, leases, and insurance, are accounted for with the aid of the use of this method.

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6 0
1 year ago
Raphael Corp. incorrectly expensed a major addition to equipment when the company should have capitalized the expenditure. What
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When Raphael Corp. incorrectly mentioned an expense of equipment addition instead of capitalizing the effect of the same, then in such case, the net income of the company is understated in the financial statements.

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The income which is left at the end of an organization at the end of a financial period after making all the regulatory and compliant payments and deductions, such as taxes and depreciation, it is known as net income.

Hence, the significance of net income is aforementioned.

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7 0
2 years ago
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ivanzaharov [21]

Answer:

Variable cost= $42

Explanation:

Giving the following information:

Each unit is sold for $50

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The incremental cost is the variable cost (there is available capacity)

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3 years ago
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