Hot Rods, Inc. is an automobile manufacturing company that obtains its automotive parts from the same supplier. The price, quant
1 answer:
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Answer:
"4,000" is the appropriate option.
Explanation:
Given:
Real interest rate,
= 6%
Inflation rate,
= 2%
Annual deposit,
= $20,000
Now,
The nominal interest rate will be:
=
=
= (%)
As per the annual deposit, I was making,
=
=
Inflation rate rise 3% i.e.,
=
= (%)
Just to earn 1200, I have to:
=
=
Thus the above is the appropriate answer.
The tax that needs to be reduced is $ 4.66 billion
<h2>Further Explanation </h2>
The amount (Deflationary / recessionary) gap =
Keynesian Spending Multiplier from government spending
k =
Tax Multiplier from tax
t =
Option 1: Increased government spending (Loosening / Expansionary Fiscal Policy) by
GovSpending (Gs) =
Option 2: Tax is reduced by (-)
Tax = =
In economics, deflation is a period in which prices generally fall and the value of money increases. Deflation is the opposite of inflation. If inflation occurs due to a large amount of money circulating in the community, deflation occurs due to a lack of money in circulation. One way to overcome deflation is to reduce interest rates.
In the macroeconomy, a recession is a condition when the gross domestic product (GDP) decreases or when real economic growth is negative for two quarters or more in one year. Recession can result in a simultaneous decline in all economic activities such as employment, investment, and corporate profits. Recession is often associated with falling prices (deflation), or, conversely, sharply rising prices (inflation) in a process known as stagflation. The economic recession that lasts long is called economic depression. The drastic decline in the level of the economy (usually due to severe depression, or due to hyperinflation) is called economic bankruptcy (economic collapse). Columnist Sidney J. Harris distinguishes the above terms in this way: "A recession is when a neighbor loses a job; depression is when you lose a job."
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Deflationary brainly.com/question/13135934
To Reduce Tax brainly.com/question/13135934
Details
Class: College
Subject: Business
Keywords: Deflationary, tax, recessionary