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matrenka [14]
3 years ago
10

Say the marginal tax rate is 30 percent and that government expenditures do not change with output. Say also that the economy is

at potential output and that the deficit is $200 billion.Required:a. What is the size of the cyclical deficit?b. What is the size of the structural deficit?c. How would your answers to a and b change if the deficit was still $200 billion but output was $200 billion below potential?d. How would your answers to a and b change if the deficit was still $200 billion but output was $100 billion above potential?
Business
1 answer:
tekilochka [14]3 years ago
7 0

Answer:

a. The Cyclical deficit refers to the deficit arising from the difference between the potential output and the actual output.

The question assumes that the economy is producing at potential which means actual output equals potential output.

Cyclical Deficit = Tax rate * ( Potential Output - Actual Output)

Cyclical Deficit = 0.3 * 0

Cyclical Deficit  = $0

b. Structural deficit occurs even when the economy is at potential because it refers to Government deficits that happen when the economy is experiencing normal activity.

Structural Deficit = Actual deficit - Cyclical deficit

Structural Deficit = 200 billion - 0

Structural Deficit = $200 billion

c. Output is $200 billion below potential

Cyclical Deficit = Tax rate * ( Potential Output - Actual Output)

Cyclical Deficit = 0.3 * 200

Cyclical Deficit  = $60 billion

Structural Deficit = Actual deficit - Cyclical deficit

Structural Deficit = 200 billion - 60

Structural Deficit = $140 billion

d. Output is $100 billion above potential

Cyclical Deficit = Tax rate * ( Potential Output - Actual Output)

Cyclical Deficit = 0.3 * -100 as actual is above potential

Cyclical Deficit  = -$30 billion

Structural Deficit = Actual deficit - Cyclical deficit

Structural Deficit = 200 billion - (-30)

Structural Deficit = $230 billion

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Economic models
Fiesta28 [93]

Answer:

D.

Explanation:

A economic model can be used to explain or predict economic phenomena, because every model has to have key variables that command the economic decisions and operations.

An economic model is define to get a specific goal, so when some problem comes, you can study every decision based on the model applied, that 'simplifies' solutions, or even better, you must be able to predict when economic problems will arrive.

7 0
3 years ago
Explain why supply and price are positively related
pishuonlain [190]

Answer:

see below

Explanation:

A positive correlation signifies that an increase in one variable results in the other variable moving in the same direction. Because supply and price are positively correlated, a price increase will increases supply. The opposite is also true.

Suppliers are business people whose main objective is to make profits. Higher prices give higher margins. Suppliers make higher profits when prices are high. The possibility of making higher profits motivates suppliers to increase supplies to the market. On the other hand, low prices may result in losses. When prices are low, supplies will shy away from the market to avoid making losses.

6 0
3 years ago
Beta Company leased equipment from Summer Industries. The lease agreement qualifies as a finance lease and requires annual lease
Tamiku [17]

Answer:

Total increase in pretax earnings on Summer’s December 31, 2019, income statement is $20,253

Explanation:

Fair value of asset sold on lease = Present value of lease payments = $50,000 * Cumulative PV factor at 6% for 8 periods of annuity due

= $50,000 * 6.20979

= $310,490

Interest income for 2019 = ($310490 - $50,000) * 6% = $15,629

Total increase in pretax earnings on Summer’s December 31, 2019, income statement = $310490 - $300,000 + $15,629 - 5866 = $20,253

3 0
3 years ago
You put $10000 in an account earning 5%. After 3 years, you make another deposit into the same account. Four years later (7 year
ikadub [295]

Answer:

money deposited after end of 3rd year is $4877.75  

Explanation:

given data

initial amount  = $10000

rate = 5%

time = 3 year

after 7 year account balance = $20000

solution

we consider here money deposited after end of 3rd year is = x

first we get here compounded amount after 3 years as

compounded amount = initial amount × (1+r)^{t}    ................1

compounded amount = 10000 × (1+0.05)^{3}

compounded amount = $11576.25

so at 7 year account balance is

account balance = ( compounded amount + x )  × (1+r)^{t} ....................2

$20000  = ( $11576.25 + x ) × (1+0.5)^{4}  

solve it we get

x =  $4877.75  

so money deposited after end of 3rd year is $4877.75  

7 0
3 years ago
Why shouldn’t i let someone else use my business name
Strike441 [17]
Hello,

Not sure if this is a school related question but i have the answer for ya (:

There are multiple reasons on why you shouldn't let another person use your business name.
1. They can make YOUR profit off of what you sell
2. It can lead to a law suit in the future
3. 2 businesses using the same name always leads to unwanted problems, finance cases, business claims, and the possibility of being sued by the other person.

Best option would be for you to make your own business name and get it trademarked so that nobody will copy you! (:
4 0
3 years ago
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