Because the assumption does not require for the growth to be at the same constant every year, instead it states that the best estimate of growth for any future year is the expected growth rate from the previous year. It is just very unreasonable to assume that the growth rate will be constant every year. Companies just cannot maintain the same rate earning every year; sure they can for a few years in a row but not forever. If they do there could be a suspicion of fraud. 2.
The fixed tax will not change the average variable cost. Because a fixed tax is a fixed cost it has no impact on variable cost. Average Total Cost Average total cost is “the total cost per unit of output, which also equals average fixed cost plus average variable cost. Because both the marginal and average variable cost increase due to a wage increase and decrease due to material cost decrease, average total cost does so likewise. The biggest difference is that a fixed tax imposed by the government does increase the average total cost.
Question 1: Score 0/1 Your response Correct response P16-37 Find Missing Data for Profit Variance Analysis (L. O.4) Find the values of the missing items. Assume that the actual sales volume equals actual production volume. (There are no inventory level changes.) (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).
The level to which higher demand increases output and prices depends on the state of the business cycle. Without changing the price level will lead to an increase in demand if the economy is in recession. A fiscal expansion will have more of an effect on prices and less impact on total output if the economy is at full employment. To restore output during a recession the government can run an expansionary fiscal policy helping to restore and to return the unemployed to work. The government can run a budget surplus; this will help to slow the economy when inflation seems to be a larger dilemma than unemployment, leading to a budget balanced on
There is almost always waste associated with industry and production. The negative social effects of this waste are not deducted from GDP. “Ironically, when money is spent to clean up pollution and reduce congestion, those expenses are added to GDP” (McConnell & Brue 2005). Conclusion Some data suggests, “positive fiscal impulses are expansionary, particularly where they do not create fiscal credible issues and are expected to be sustained” (Reserve Bank of New Zealand). A government tax and spend plan is its fiscal policy.
What was Keynes fundamental criticism of Neo-Classical Economics? The Neo-Classicals assumed that full employment would naturally occur guided by market forces. In equilibrium the economy would always be at full employment. Keynes argued that equilibrium was possible at less than full employment so that if unemployment occurred it would not always be automatically corrected. 4.
That is, market-regulated growth espoused by the model is unstable and, thus, necessitates government intervention. 2.11 EMPIRICAL REVIEW Many empirical studies have put to test the predictions of endogenous growth theory since it provides governments a theoretical basis for active participation in the growth process of developing economies (Suleiman, 2010).
The economic way of thinking is not very different from the American culture’s way of thinking as a whole. The textbook lists the first element of the economic way of thinking as using assumptions to simplify (Sullivan, pg. 7). In America we tend to simplify things until details are needed, this creates more efficiency in the day-to-day activities. An economist would not make an excuse when the problem at hand is a serious one with detrimental side effects.
In the end, the free economic system can fulfill almost everyone's needs and wants, while ensuring profit for everyone. A free economic system discourages judgment based on race, creed, color or political affiliation. A company that refused to sell its products to certain types of people or refused to hire or do business with certain groups would face higher costs than
A country can be a capital (or labor)-abundant nations and labor (or capital)-scarce nations which consider their comparative advantage in technologies, input productivity, and wages of labor. Free trade can bring a lot of advantage to us; however, it does not apply in real world. Tariff and non-tariff are the tools that use to trade protection or prevent the economy from undergoing adjustment during economic stagnation. Although tariff and other restriction can concede the economic losses and using resource with less efficiency, but protectionism argue that non-economic benefit such as a national security can more than offset those economic losses. Normally trade protection is use to secure domestic industry and labor union’s economy welfare.