1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ostrovityanka [42]
3 years ago
14

If the Ricardian equivalence theorem LOADING... is not​ relevant, then an​ income-tax-rate cut A. will result in a multiple time

s higher increase in equilibrium real GDP in the long​ run; however, a​ tax-rate reduction will increase the​ automatic-stabilizer properties of the tax​ system, so equilibrium real GDP would be more stable. B. will result in a multiple times higher decrease in equilibrium real GDP in the long​ run, however; a​ tax-rate reduction will reduce the​ automatic-stabilizer properties of the tax​ system, so equilibrium real GDP would be more stable. C. will result in a multiple times higher increase in equilibrium real GDP in the short​ run; however, a​ tax-rate reduction will reduce the​ automatic-stabilizer properties of the tax​ system, so equilibrium real GDP would be less stable. D. will result in a multiple times higher decrease in equilibrium real GDP in the short​ run; however, a​ tax-rate reduction will increase the​ automatic-stabilizer properties of the tax​ system, so equilibrium real GDP would be less stable.
Business
1 answer:
LenKa [72]3 years ago
6 0

Answer:

The correct answer is D. will result in a multiple times higher decrease in equilibrium real GDP in the short​ run; however, a​ tax-rate reduction will increase the​ automatic-stabilizer properties of the tax​ system, so equilibrium real GDP would be less stable.

Explanation:

Ricardian Equivalence is an economic theory that suggests that when a government increases expenses financed with debt to try to stimulate demand, demand does not really undergo any change.

This is because increases in the public deficit will lead to higher taxes in the future. To keep their consumption pattern stable, taxpayers will reduce consumption and increase their savings in order to offset the cost of this future tax increase.

If taxpayers reduce their consumption and increase their savings by the same amount as the debt to be returned by the government, there is no effect on aggregate demand.

The fundamental concept of Ricardian equivalence is that it does not matter which method the government chooses to increase spending, whether by issuing public debt or through taxes (applying an expansive fiscal policy), the result will be the same and demand will remain unchanged.

You might be interested in
began a new development project in 2020. The project reached technological feasibility on June 30, 2021, and was available for r
gogolik [260]

Answer:

$352,500

Explanation:

Development costs incurred prior to June 30, 2021 must be expensed, they cannot be capitalized.

Capitalized R&D costs = $1,410,000

External use software (software intended to be sold to third parties) should be amortized using straight line amortization (4 years in this case):

amortization expense = $1,410,000 / 4 = $352,500

4 0
3 years ago
Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year and that real GDP per capita
Andrej [43]

Answer:

40 years

Explanation:

Given:

Per capita GDP of United states = $32,000

Per capita GDP of China = $4,000

Growth rate of United states = 2%

Growth rate of China = 7%

Now, By the rule of 70 , the GDP will double in \frac{\textup{70}}{\textup{Growth rate}} years

Therefore,

The United States GDP will double in = \frac{\textup{70}}{\textup{2}}  = 35 years

Thus,

The GDP of united states in 35 years will be (2 × $32,000 ) = $64,000

this is equals to the 16 times the current GDP of the China

Now,

The China GDP will double in = \frac{\textup{70}}{\textup{7}} = 10 years

Therefore,

The GDP of china will be

2 × $4,000 in 10 years   = $8,000

in 20 years  = 2 × $8,000 = $16,000  ( i.e 4 times)

in 30 years  = 2 × $16,000 = $32,000  ( i.e 8 times)

in 40 years  = 2 × $32,000 = $64,000  ( i.e 16 times)

Hence, it will take 40 years for China to catch up with the united states

6 0
3 years ago
An economic model can be defined as___________a. a testable claim which can be evaluated with proper data.b. a representation of
Radda [10]

Answer:

b. a representation of a theory or a part of a theory

Explanation:

A model is different from theory because is a more applied and empirical representation of a situation while the theory is more abstract. An economic model is a simplified prediction of a complex and real economic behavior, it uses variables to analyze different scenarios, it also uses logical and quantitative relationships between economic processes, is usually mathematical. <em>The results of these models can lead to a new investigation, theorization or to prove theories.</em>

I hope you find this information useful and interesting! Good luck!

5 0
3 years ago
When looking to finance higher education what is the best order to look for funding sources
elena-s [515]
<span>When trying to finance higher education, one should first turn to scholarships and grants. Scholarships and grants are free money given by either the government or the educational institution that is there to recognize outstanding pupils in the area they are great in. Following that, one should turn to federal student loans as they offer a low interest rate, followed finally by private loans.</span>
6 0
3 years ago
Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power,
grigory [225]

Purchase the machine because the expected rate of return exceeds the interest rate

5 0
2 years ago
Other questions:
  • Joe Keller and Ed Keller are brothers and both are lawyers. They start a personal injury law firm. Over the course of six months
    8·1 answer
  • Is phoenix forgotten based on a true story and how does it end?
    5·1 answer
  • A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. Thi
    9·1 answer
  • PB1.
    11·1 answer
  • Choose the correct statement. A. Income tax creates a deadweight loss in the markets for capital and labor. B. Income tax is a t
    5·1 answer
  • Suppose we have a bond issue currently outstanding that has 20 years left to maturity. The coupon rate is 8% And coupons are pai
    15·1 answer
  • PLEASE HELP!!! Compare U.S. government savings bonds to mutual funds and collectibles in terms of risk and potential return. Exp
    15·1 answer
  • Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are $560,000, and factory payro
    8·1 answer
  • A firm has $3,600,000 in its common stock account and $36,000,000 in its paid in capital accountThe firm issued 450,000 shares o
    15·1 answer
  • What would a central bank need to do to reverse the effects of a favorable supply shock on inflation? what would its reaction do
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!