Yes i am guesting try that
Answer:
B) decrease taxes to increase consumer disposable income.
Explanation:
Recession can be defined as a period of economic meltdown, in which there's a general decline in all economic activities such as trade.
Fiscal policy in economics refers to the use of government expenditures (spending) and revenues (taxation) in order to influence macroeconomic conditions such as Aggregate Demand (AD), inflation, and employment within a country. Fiscal policy is in relation to the Keynesian macroeconomic theory by John Maynard Keynes.
A fiscal policy affects combined demand through changes in government policies, spending and taxation which eventually impacts employment and standard of living plus consumer spending and investment.
Furthermore, if during a severe recession, Congress passes legislation to cut taxes, this would be an example of an expansionary fiscal policy.
According to the Keynesian theory, government spending or expenditures should be increased and taxes should be lowered when faced with a recession, in order to create employment and boost the buying power of consumers
Hence, to combat a recession with discretionary fiscal policy, Congress and the president should decrease taxes to increase consumer disposable income.
Answer:
a. Net Present Value = Present value of cashflows - Investment
Year 1 cash inflow = Receipts - Additional investment figure
= 20 million - 5 million
= $15 million
Net Present Value = (15,000,000 / (1 + 10%)) - 10,000,000
= $3,636,363.64
b. The total that the firm will receive from the government in today's value is:
= 20,000,000 / ( 1 + 10%)
= $18,181,818.18
<em>The company can borrow this $18,181,818.18 now, assuming they can get it at a rate of 10%. When they are to pay it off in the next year, they will use the $20,000,000 that the government then pays them to pay off the loan. </em>