When the economy is in a recession, the government can use expansionary fiscal policy to stimulate and encourage economic growth
. Which of the following scenarios represent expansionary fiscal policies from both a supply perspective and a demand perspective? Choose one or more: A. The government raises tax rates and scales back aid to families with dependent children. B. The government lowers tax rates and expands funding for medical research . C. The government lowers tax rates and issues a partial refund of taxes that have already been paid. D. The Federal Reserve increases the money supply and lowers the interest rate while the government simultaneously reduces future taxes.
1 answer:
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a). Breakeven point = Total fixed costs ÷ Contribution margin ratio
Contribution ratio = Contribution margin ÷ Total sales
Contribution ratio = $822,212 ÷ $1,953,000 = 0.421
Breakeven point = $520,000 ÷ 0.421= $1,235,154.
b). Margin of safety = Total Sales - Break-even point
Margin of safety = $1,953,000 – $1,235,154= $717,846.
c) Target profit =(Total fixed costs + Target profit) ÷ Contribution margin ratio
Target profit = ($520,000 + $200,000) ÷ 0.421= $720,000 ÷ 0.421= $1,710,214
Explanation:
The Data sheet has been added as an attachment
