If she were to move to another state where her marginal state rate would be 10 percent, would her choice be any different? Assume that Dana itemizes deductions. When the state rate is 5 percent, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond yields $1,125 or $30,000 x [.05 x (1-.25)] after tax. The corporate bond yields $1,282.50 or $30,000 x [.06 x (1 - .25 - .05(1-.25))] after tax. Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
b. shortage of loanable funds and the interest rate will fall. c. surplus of loanable funds and the interest rate will rise. d. shortage of loanable funds and the interest rate will rise. 3. Suppose that the nominal interest rate was 3 percent and the inflation rate was 1 percent.
Trident University Macro-Economic Indicators: GDP, CPI, Unemployment, Interest Rates TAWANNA J. RICHARD ECO202 MODULE 2 Cases Dr. Canarella GDP 1. Y= C+ I+ E+ G 1750= 1,000+ 200+ 300+ 250 2. If we increase our domestic energy production, and imported less oil from foreign countries the GDP would raise extremely high due to no out sources. Inflation 1. ((111-106)/106)*111 111-106=5 5/106= 0.0471 0.0471*111= 5% 2.
Suppose a constitutional amendment is adopted which requires the federal government to balance its budget annually. If the budget is currently balanced and now policymakers wish to increase the equilibrium level of the national product by $30 billion, the federal government: A. would be unable to bring about this change through fiscal policy. B. should increase both its spending and taxes by $15 billion. C. should increase both its spending and taxes by $30 billion. D. should reduce both its spending and taxes by $30 billion.
Answer | | a tank purchased by the federal government | | | welfare benefits | | | teacher's salaries paid by a local government | | | a bridge purchased by the state government | 10 points Question 5 1. In periods when prices are falling, on average, Answer | | real GDP will grow as fast as nominal GDP. | | | real GDP will grow faster than nominal GDP. | | | real GDP will grow slower than nominal GDP. | | | one cannot calculate real GDP.
The real wage and rental price of capital also increase by 10 percent. Question 4 (15 marks) a) Public saving equals T-G. An increase in government spending, G, reduces public saving. b) Private saving equals Y-T-C. An increase in government spending does not affect private saving. c) National saving equals Y-C-G. An increase in government spending reduces national saving by an amount equal to the increase in government spending. d) The equilibrium interest rate increases to bring desired investment into equilibrium with the reduced quantity of national saving.
Depreciation affects cash flow by reducing the amount of cash a business must pay in income taxes. 3. Calculate the current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position in 2013? AS the current and quick ratios both went down over the past year, I am concerned that the company liabilities may be rising faster than assets and we may not be able to liquidate assets quickly enough to cover debt, if necessary.
If earning rate goes up then the number calculated in Part A will go down because the raise in interest makes the present value of the amount go down. P4-46 A. PMT= 15,000/(1-1.14/0.14) PMT = $15,000 ÷ 2.321632 PMT = $6,460.97 B. End of Loan Beginning of Payment End of Year Year Payment Year Principal Interest Principal Principal 1 $ 6,460.97 $15,000.00 $2,100.00 $4,360.97 $10,639.03 2 6,460.97 10,639.03 1,489.46 4,971.51 5,667.52 3 6,460.97 5,667.52 793.45 5,667.52
Explain how an increase in federal budget deficit due to recession can stabilize the economy. A deficit means that the government spends more than it receives in tax revenues in a given year (O’Sullivan, Sheffrin, & Perez 2010, p. 374). The total deficit is spending, plus all the interest payments on top of the original debt, minus the total tax revenue (http://www.blurtit.com). There are three factors, known as automatic stabilizers, that affect and stabilize the economy, they are: 1) government purchases of goods and services, such as public safety, government transfer of payments, and unemployment insurance, 2) Medicaid or Medicare etc.,and 3) the collection of taxes. If the government cut taxes or increases transfer payments such as unemployment insurance and food stamps this helps to offset the decrease in household income.
The base average is 215.495 (US Government). To maintain Social Security’s purchasing power, retirement benefits, effective December, automatically increase each year by the percentage change in the consumer price index for urban wage earners and clerical workers (CPI), a measure of price inflation. Some experts argue that the CPI overstates cost-of-living increases. • Critics argue that the CPI does not adequately factor in consumers’ ability to find cheaper substitutes when the prices of those goods increase. • COLA reductions would lower the cost of Social Security and help preserve the program’s solvency for a longer period of