Based on the economic data given, and the fact that the government is running a deficit, the equilibrium GDP will be 336.67.
If government spending is cut to balance the budget, the new level of GDP will be 321.67.
The effect of balancing the budget will be a decrease in GDP and a slower recovery from the recesssion.
<h3>What is the equilibrium GDP?</h3>
This is given by the variable "Y" so we can find the equilibrium GDP by solving for it:
C = 50 + .7(Y – T)
Y = C + I + G - XN
C = Y - I - G + XN
Solving gives:
Y - I - G + XN = 50 + .7(Y – T)
Y - 40 - 35 + 10 = 50 + 0.7Y - 14
Y - 0.7Y = 50 + 40 + 35 - 10 - 14
0.3Y = 101
Y = 101/0.3
= 336.67
<h3>What is the new GDP if government spending is cut?</h3>
Government spending will have to be cut to a size that would make it equal to taxes so government spending becomes 20.
New GDP becomes:
= C + I + G - XN
= ( 50 + .7(Y – T)) + 40 + 20 - 10
= 271.67 + 40 + 20 - 10
= 321.67
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Answer:
A budget system based on expected activities and their levels that enables management to plan for resources required to perform the activities is: Activity-based budgeting. A budget is best described as: A formal statement of a company's future plans usually expressed in monetary terms.
The Securities and Exchange Commission (SEC) is a U.S. government oversight agency responsible for regulating the securities markets and protecting investors.
The SEC protects buyers by enforcing our state's securities laws, taking movement against wrongdoers, and overseeing our securities markets and companies to make certain that investors are dealt with fairly and in reality.
The Securities and exchange commission (SEC) is the U.S. government organization in fee of the state's securities enterprise. It monitors transactions, as well as the sports of monetary specialists.
The SEC is an impartial federal business enterprise, installed pursuant to the Securities change Act of 1934, headed via a five-member commission. The Commissioners are appointed by the President and showed by way of the Senate.
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Answer:
the total deferred tax liability is $50,000
Explanation:
The computation of the total deferred tax liability is shown below:
Tax Depreciation 2019 $17500 {[$150000 ÷ 3] × 35%}
Tax Depreciation 2020 $17500 {[$150000 ÷ 3] × 35%}
Tax Depreciation 2021 $15000 {[$150000 ÷ 3] × 30%}
Total Deferred Tax Liability $50,000
Hence, the total deferred tax liability is $50,000
Answer: C. the cost of debt reduces when calculated after taxes.
Debt is one of ways of financing and refers to the quantum of loans taken by a company at an agreed interest rate for a specified period of time. Loans require the borrower to pay interest at specified intervals.
The total interest paid on debt is a tax-deductible expense, and reduces the amount of taxable income on which tax is charged.
If 'i' is the cost of debt, the after-tax cost of debt is calculated as 
, which is lower than the cost of debt.
