Answer:
Economy's marginal propensity to save (MPS) is small.
Explanation:
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.
For instance, measuring the time between when a fiscal policy is implemented and when the people feel its impact in the society refers to a lag.
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. Monetary policy affects the money supply in an economy, which then creates an impact on interest rates and the inflation rate.
Basically, an expansionary fiscal policy comprises of rebates, transfer payments, tax cuts, as well as an increase in government spending on the improvement of infrastructure and other public projects.
Hence, if a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary when the Economy's marginal propensity to save (MPS) is small.
Answer:
Bond Price= $26,042.12
Explanation:
Giving the following information:
Coupon= (0.044/2)*30,000= $660
YTM= 0.068/2= 0.034
Time to maturity= 7*2= 14 semesters
Face value= $30,000
<u>To calculate the price of the bond, we need to use the following formula:</u>
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 660*{[1 - (1.034^-14)] / 0.034} + [30,000 /(1.034^14)]
Bond Price= 7,256.14 + 18,785.98
Bond Price= $26,042.12
From a functionalist perspective, one way to promote economic growth is to allow innovators to earn unlimited wealth.
Economic growth is the rise or improvement in the market value of the goods and services generated by an economy over a predetermined period of time, adjusted for inflation. Traditionally, statisticians have calculated growth as a percentage rate of real gross domestic product, or real GDP.
In order to remove the inflationary distortion on the prices of produced items, growth is typically calculated in real terms, or terms adjusted for inflation. Economic growth is measured using national income accounting. Economic growth has both the benefits and disadvantages of GDP growth because it is calculated as the yearly percent change.
Learn more about Economic Growth here
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Saving is called a leak because money is not used in the economy in a particular way it is leaked out of the economy.
Explanation:
A planned investment is called an injection because capital investments are moved into the existing economy. This method is used to expand a business.
To avoid savings leakage savings must be equivalent to planned GDP equilibrium investment in the private closed economy. The leakage is the non-consumption use of income, that includes savings,taxes and imports.
At equilibrium GDP there will not be any changes in unplanned inventories because the expenditures will exactly equal the planned output levels that include consumer goods and services and planned investment. Hence, There is no unplanned investment and no unplanned inventory changes.
