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fgiga [73]
3 years ago
9

This question compares the effects of a tax cut on aggregate demand and aggregate supply. A tax cut of 150 is targeted to busine

ss enterprises so that, as their after-tax profits rise, they raise their spending on investment goods by the full 150. When subsequent rounds of increases in income occur, however, there is a normal marginal propensity to consume, and a multiplier of two. Investment has the following effect on aggregate supply: for every $3 of investment goods produced, annual output rises by $1.a) What increase in aggregate demand will result from this tax cut?b) What increase in aggregate supply will occur in the first year?c) Comparing your answers in a) and b), which impact is bigger?d) Assuming the tax reduction is permanent, how many years will it take before the effects on aggregate demand and aggregate supply are equal?e) Suppose the tax cut is not quite as well targeted toward the supply side as the government hoped. Of the cut of 150, initially 60 is spent on investment, 60 is spent on consumption, and 30 is saved. Answer questions a) through d) above under these circumstances.
Business
1 answer:
salantis [7]3 years ago
6 0

Answer:

Check the following explanation.

Explanation:

Ans a - Aggregate demand will increase by $150.

Ans b - Aggregate supply will increase by $50 in the first year.

Ans c - The aggregate demand impact is bigger.

Ans d - If the tax reduction is permanent then the aggregate demand and aggregate supply will be equal in 3 years.

Ans e - The aggregate demand increases by 120. The aggregate supply increases by 20. The aggregate demand impact is bigger. If the tax reduction is permanent then the aggregate demand and aggregate supply will be equal in 6 years.

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3 years ago
Exercise 16-05 a-b (Video) In Waterway Company, materials are entered at the beginning of each process. Work in process inventor
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Answer:

(a) Total units for January = 14,200

Total units for May = 23,260

(b). Conversion cost for :

January = 13,053  

March = 13,660

May = 21,688

July = 11,212

Explanation:

As per the data given in the question,

1)

                                                 Jan.                        May

Units to be accounted for

Beginning WIP                            0                            0

Started into production            14,200                   23,260

Total number units                   14,200                   23,260

Units accounted for

Transferred out                         11,100                   15,400

Ending WIP                                 3,100                      7,860

Total units                                 14200                   15400

2)

We can calculate the conversion cost by using following formula:

Conversion cost = Transferred out unit + (Work in process  unit × conversion cost)

                            Material           Conversion cost

Jan.                       14,200                    13,053              (11,100 + 3,100 × 63%)

Mar.                      15,700                     13,660              (12,300 + 3,400 × 40%)

May                       23,260                   21,688             (15,400 + 7,860 × 80%)

July                        12,400                   11,212              (10,200 + 2,200 × 46%)

7 0
3 years ago
Gino's Restaurant is a popular resaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better underst
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The answer & explanation for this question is given in the attachment below.

 

7 0
3 years ago
QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lope
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Answer:

S/n   General Journal              Debit      Credit

a       Insurance expense        $1,200

               Prepaid Insurance                   $1,200  

        (To record insurance expired)

b       Supplies expense          $6,200

                Supplies                                  $6,200

                ($5,000 + $2,000 - $800)

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(Advanced analysis) The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0
ioda

Answer:

Q = 10

Explanation:

Assuming that supply remains the same, the new supply and demand equations are, respectively:

P_S = 2 + 0.2Q\\P_D = 7 - 0.3Q

The equilibrium quantity occurs at the point for which the prices in the supply and demand equations are the same:

2 + 0.2Q = 7 - 0.3Q\\0.5Q=5\\Q=10

The new equilibrium quantity is Q = 10.

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