Answer:
For the Economist A the spending multiplier is = 8, the tax multiplier = 4, the increase in spending is = $4 billion, the tax cut is = $8 billion.
For the Economist B, the spending multiplier is =4, the tax multiplier = 2, the increase in spending is = $8 billion, the tax cut is = $16 billion.
Explanation:
Solution
Given that:
(1)The Economist A
The Spending multiplier = 8
In closing the output gap of $32 billion, required increase in spending = $32 billion / 8 = $4 billion
Thus,
The tax multiplier = 4
To close output gap of $32 billion, required decrease in tax = $32 billion / 4 = $8 billion
(2)The Economist B
Now,
The spending multiplier = 4
To close output gap of $32 billion, required increase in spending = $32 billion / 4 = $8 billion
So,
Tax multiplier = 2
To close output gap of $32 billion, required decrease in tax = $32 billion / 2 = $16 billion
Answer:
Record all transactions in a check register.
Explanation:
It's easier to track how money is spent if there is a paper trail.
Answer: The price elasticity of demand for good A is 0.67, and an increase in price will result in a increase in total revenue for good A
Explanation:
The following can be deduced form the question:
P1 = $50
P2 = $70
Q1 = 500 units
Q2 = 400 units
Percentage change in quantity = [Q2 - Q1 / (Q2 + Q1) ÷ 2 ] × 100
Percentage change in price = [P2 - P1 / (P2 + P1) ÷ 2 ] × 100
% change in quantity = (400 - 500)/(400 + 500)/2 × 100
= -100/450 × 100
= -22.22%
% change on price = (70 - 50)/(70 + 50)/2 × 100
= 20/60 × 100
= 33
Price elasticity of demand = % change in quantity / % change on price
= -22.22 / 33
= -0.67
This means that a 1% change in price will lead to a 0.67% change in quantity demanded. As there was a price change, there'll be a little change in quantity demanded because demand is inelastic. Thereby, he increase in price will lead to an increase in the total revenue.
Therefore, the price elasticity of demand for good A is 0.67, and an increase in price will result in an increase in total revenue for good A
Answer:
0.147 or 14.7%
Explanation:
Equity (E) =$7
Debt (D) = $1
Cost of equity capital (Ce) = 0.16
Pretax cost of debt (Cd) = 0.08
Tax rate (r) = 0.3
The weighted average cost of capital of the firm is given by the following relationship:
The weighted average cost of capital of the firm is 0.147 or 14.7%.
No, It would not be because it does not have a serial number.
