What Happens When the Fed Raises Rates?
——> When the Fed raises the federal funds target rate, the goal is to increase the cost of credit throughout the economy.
Answer:
Tax multiplier= 2,9
Explanation:
Tax multiplier represents the multiple by which gross domestic product (GDP) increases (decreases) in response to a decrease (increase) in taxes.
In the simple version of tax multiplier, it is assumed that any increase or decrease in tax affects consumption only (and has no effect on investment, government expenditures, etc.)
The formula is:
TMs=MPC/MPS=MPC/(1-MPC)
TMs= is the simple tax multiplier;
MPS= marginal propensity to save (MPS); and
MPC= marginal propensity to consume.
In this exercise, we do not possess the required information to use the general formula.
We need to use an alternative formula:
Decrease in taxes= change in GDP/tax multiplier
tax multiplier= change in GDP/Decrease in taxes
tax multiplier= 130,5billion/45billion=2,9
Answer:
True.
Explanation:
A radical innovation also known as the disruptive innovation is an innovative approach aimed at destroying or supplanting old business strategies and models with an invention to breakthrough and change the whole industries by creating new products.
Hence, an innovation and enterprise can help to develop new and niche markets as the business would be starting afresh and offering new products and services to meet the unending needs or requirements of its customers.
