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qaws [65]
3 years ago
5

Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $64 billion. Four economists agree t

hat expansionary fiscal policy can increase total spending and move the economy out of recession, but they are debating which type of expansionary policy should be used. Economist A believes that the government spending multiplier is 8 and the tax multiplier is 2. Economist B believes that the government spending multiplier is 4 and the tax multiplier is 8.
Compute the amount the government would have to increase spending to close the output gap according to each economist's belief. Then, for each scenario, compute the size of the tax cut that would achieve this same effect.

Policy Options for Closing Output Gap

Spending Multiplier Tax Multiplier Increase in Spending (Billions of dollars) Tax Cut (Billions of dollars)
Economist A 8 2
Economist B 4 8

1. Economist C favors tax cuts over increases in government spending. This means that Economist C likely believes that:

a. Tax cuts induce investment spending and improve workers incentives.
b. A dollar in tax cuts immediately and fully adds to aggregate demand.


2. Economist D argues that it is not possible to remove the economy from the recessionary gap by increasing government spending. Which of the following statements is consistent with Economist D's belief?

a. A rise in government spending does not crowd out private sector spending.
b. A rise in government spending completely crowds out private sector spending.
Business
1 answer:
seropon [69]3 years ago
5 0

Answer:

1a.Economist A

Government spending multiplier= $8 billion

Tax multiplier=$32 billion

1b.Economist B

Government spending multiplier = $16 billion

Tax multiplier=$8 billion

2a

a. Tax cuts induce investment spending and improve workers incentives.

2b

b. A rise in government spending will tend to completely crowds out private sector spending.

Explanation:

1a.Calculation for Economist A government spending multiplier and tax multiplier

Using this formula

Spending multiplier =Deficient aggregate demand/Government spending multiplier

Tax multiplier =Deficient aggregate demand/Tax multiplier

Economist A

Government spending multiplier =64/8

Government spending multiplier=$8 billion

Tax multiplier=64/2

Tax multiplier=$32 billion

1b.Calculation for Economist B government spending multiplier and Tax multiplier

Economist B

Government spending multiplier =64/4

Government spending multiplier =$16 billion

Tax multiplier=64/8

Tax multiplier=$8 billion

2a. Economist C likely believes that the Tax cuts will induce investment spending and help to improve workers incentives.

2b.Economist D belief that a rise in government spending will completely crowds out private sector spending.

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EA13.
almond37 [142]

Answer:

$423,000

Explanation:

Initial accounts payable added to any purchases made during the period must equal ending accounts payable plus cash payments. Therefore, the amount of budgeted cash payments is:

\$95,000 + \$420,000 = \$92,000 + budgeted\ cash\ payments\\budgeted\ cash\ payments = \$423,000

The amount of budgeted cash payments is $423,000.

3 0
3 years ago
The following labor standards have been established for a particular product:Standard labor hours per unit of output 4.3 hoursSt
Nat2105 [25]

Answer: 1. $690 (favorable)

2.  $9045 (favorable)

Explanation: These can be computed as follows :-

Labor rate variance = Actual labor cost - (standard rate * actual hours)

                                  =  $139,380 - ( $20.1 * 6900 hours )

                                  = $690 (favorable)

.

Labor efficiency variance = ( Actual hours - standard hours ) * (standard rate )

                                          = [6900 hours - (1500 units * 4.3 hours) ] * ($20.1)

                                          = $9045 (favorable)

7 0
3 years ago
D.v.g. (a minor) was injured in a one-car auto accident in hoover, alabama. the vehicle was covered by an insurance policy issue
diamong [38]

Answer:

Yes, the court ruled in favor of D.V.G.'s mother, because of the principle that contracts entered by minors are not void, but voidable, and that they do have an effect on the parties, but if voided, they cannot be enforced.

In this case, the minor died before the contract was ratified by the court, but the minor hadn't voided the contract, so it was still good at the moment of his death. The minor had the chance of either approving or rejecting the contract while still living, and decided not to revoke it.

Explanation:

NATIONWIDE MUTUAL INSURANCE COMPANY and State Farm Mutual Automobile Insurance Company v. Barbara Walker WOOD, as administratrix of the estate of D.V.G., a minor, deceased, and K.C.T., a minor, by and through Earnest T., his father and next friend.  1111486. Decided: February 22, 2013

As this Court has stated, <em>“ ‘[i]t is well settled by the authorities that infants are not liable on any of their contracts, except for necessaries. With the exception, all other contracts of infants, whether executory or executed, may be avoided or ratified at the election of the infant.’ ”</em>

The final ruling was:

<em>"Under Alabama law, an insurance company is bound to a settlement agreement negotiated on behalf of an injured minor, even if that minor dies before the scheduling of the court hearing that all parties agreed was necessary to obtain approval of the settlement agreement. In accordance with the parties' understanding, such a hearing is still required, and the minor's death does not render that hearing impossible. We thus answer in the affirmative the question certified to this Court."</em>

6 0
3 years ago
Which of these is an example of a good with elastic supply?
DerKrebs [107]

Answer:

sandwiches

Explanation:

supplier has plenty of spare capacity to increase output

high stocks levels are available to meet raising demand

short production time frame to get products to market

easy of factor substitution is high

8 0
3 years ago
Read 2 more answers
According to the california insurance code, what is the maximum penalty per violation for anyone who unwillfully commits an unfa
morpeh [17]
Accord According to the California Insurance Code, any individual who unwilfully takes part in an out of line strategy for rivalry is obligated to the state for a fine of up to $5,000 per infringement. In the event that the demonstration is resolved to be headstrong, the fine won't surpass $10,000 per act.
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3 years ago
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