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disa [49]
3 years ago
12

A year ago a country reduced the tax rate on all interest income from 20% to 10%. During the year private saving was $500 billio

n as compared to $400 billion the year before the tax reform. Taxes on interest income fell by $10 billion. Assuming no other changes in income, or government revenues or spending, which of the following is correct? a. the substitution effect was larger than the income effect; national saving rose b. the substitution effect was larger than the income effect; national saving fell c. the income effect was larger than the substitution effect; national saving rose d. the income effect was larger than the substitution effect; national saving fell
Business
1 answer:
pantera1 [17]3 years ago
6 0

Answer:

a. the substitution effect was larger than the income effect; national saving rose

Explanation:

In macroeconomics, the substitution effect means that as the return on savings increases, households will substitute current spending and will save more in order to be able to spend more in the future.

In this case, since interests from bonds, CDs, etc., are taxed at a much lower rate, the after tax return from investing on any of them increases. Households consider that the money that they can earn now by investing on them is more valuable than consuming goods or services immediately.

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ME Company has a debt-equity ratio of .57. Return on assets is 7.9 percent, and total equity is $620,000. a. What is the equity
Lera25 [3.4K]

Answer:

8.06

Explanation

  • Debt equity ratio=Debt÷ Equity
  • Debt÷Equity=0.57
  • Equity=620,000 in this question
  • Debt=620,000*0.57=353,400.
  • Assets=Debt+Equity
  • Assets in this case=353,400+620,000=973,400
  • Return on asset=Profit for the year=7.9%*973,400=76898.6
  • Equity Multiplier=Total Equity/Profit for the year
  • Equity Multiplier=620,000/76898.6=8.06

5 0
3 years ago
Cash Received from Customers—Direct Method
raketka [301]

Based on the sales figure and the change in the accounts receivable balance, the amount of cash received from customers wa<u>s $14,300.</u>

<h3>What was the amount of cash received?</h3>

The accounts receivable balance refers to the amount that customers owe to the company.

This means that if the accounts receivable balance decreases by the certain amount, it would be because that amount was paid by the customers who owe the business.

The cash paid is therefore the amount of $14,300 which the balance reduced by.

Find out more on accounts receivables at brainly.com/question/24848903.

7 0
2 years ago
A lender generally charges discount points on an FHA loan to:__________
LUCKY_DIMON [66]

Answer: provide the investors with greater interest yield

Explanation:

Federal Housing Administration (FHA) loan is simply a mortgage insured by the Federal Housing Administration and the main aim of the loan is to help meet the needs of low income earners.

A lender generally charges discount points on an FHA loan on order to provide the investors with greater interest yield.

5 0
3 years ago
Michael Mirer worked for Dawson Company for six months this year and earned $11,200. The other six months he earned $6,900 worki
hichkok12 [17]

Answer:

(a)Dawson Company $42.00

(b)McBride Company $41.40

Explanation:

The amount of FUTA taxes to be paid on Mirer's wages by the two companies are:

(a)Dawson Company $42.00

(7000*0.6%) = $42.00

(b)McBride Company $41.40

(6900*0.6%) =$41.40

7 0
3 years ago
Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amo
andre [41]

Answer:

The first coupon payment is 37.25 dollars.

Explanation:

This problem require us to calculate the first coupon payment that the firm will make. This can be easily calculated by multiplying the applicable interest rate with face value of notes issued.  

The applicable interest rate is six month libor + 0.25% (1/4)

so

First coupon payment = (7.45%)'/2 * 1000 = 37.25 dollars

'7.25%  + 0.25% = 7,45%

5 0
3 years ago
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