Calculate the change in private savings

Assignment Help Business Economics
Reference no: EM131091453

Suppose the government is considering a tax policy that will reduce taxes by $100. In the economy, household consume 80% of each additional dollar earned. Assume that the tax cut has no effect on GDP (Y).

a) How will this tax affect consumption?

b) Calculate the change in private savings

c) Calculate the change in government savings and national saving

d) What will happen to the current account as a result of this policy?

e) How would your previous answers change if we assume Ricardian equivalence?

Reference no: EM131091453

Questions Cloud

What good for wal-mart : Is Walmart Good for America? Read John Miller, “What’s Good for Wal-Mart” (article 4.4 in Real World Micro). Are lower prices at Wal-Mart necessarily good? Would it be a good or bad thing if Wal-Mart raised wages and raised prices? What would you nee..
Describe a client reward system such as a loyalty program : What are some different ways that the hospitality, travel or tourism industries promote products and services? Describe a client reward system such as a loyalty program that you have encountered in the service industry
Describe how you plan to apply at least two strategies : Discuss two (2) ways in which this course has helped you adjust to being a college student. Then describe how you plan to apply at least two strategies to other areas of your life.
How population genetics relates to your topic : A balanced discussion of bioethical issues related to genetic analyses and manipulation concerning your topic. Be sure to provide multiple perspectives and take a pro or con position on the issue.
Calculate the change in private savings : Suppose the government is considering a tax policy that will reduce taxes by $100. In the economy, household consume 80% of each additional dollar earned. Assume that the tax cut has no effect on GDP (Y). How will this tax affect consumption? Calcula..
Notes for case study and exam : Stars: The business units or products that have the best market share and generate the most cash are considered stars. Monopolies and first-to-market products are frequently termed stars.
Change in the criminal justice organization : Identify a reason to necessitate change in the criminal justice organization of your choice (police, courts corrections, etc.) and discuss the process in which the change will occur.
Applied knowledge summary-accountable care organizations : As a summary exercise, use all that you have learned in this course to analyze this case study. Review the following Web resource: Getting Ready for Accountable Care Organizations
Allow company to pursue an outpacing strategy : What are the factors that allow a company to pursue an outpacing strategy?. Identify the ways that companies can follow in order to deal with a disruptive innovation. Explain the six paths framework and be able to use it for value creation in e-busin..

Reviews

Write a Review

Business Economics Questions & Answers

  Contestants have chance to increase their current winnings

In the final round of a TV game show, contestants have a chance to increase their current winnings of $1 million to $2 million. If they are wrong, their prize is decreased to $500,000. A contestant thinks his guess will be right 50% of the time. Shou..

  Treasury sells bonds

When the US. Treasury sells bonds, the money supply does not increase, while when the Central Bank sells bonds, the money supply contracts. Explain why?

  Q1 illustrate trade-off must be considered when deciding

q1. illustrate trade-off must be considered when deciding explain how much of your wealth is to be held as money

  Discuss the role of risk and return

Discuss the role of risk and return in the pharmaceutical industry. In the U.S. health expenditures on drugs amount to about 10% of total health expenditures. In Japan, where physicians are legally permitted to sell pharmaceuticals, national expendit..

  Despite recent positive economic news for the us economy

Despite recent positive economic news for the US economy, some Federal Reserve officials are still worried about inflation being too low or even the threat of deflation. Why might an inflation rate that is too low be harmful to the US economy? Why mi..

  A machine makes drill bits

A machine makes drill bits. When the machine is operating correctly, the variance of the diameter of drill bits is no more than .04 inches. In a random sample of 81 drill bits, the sample variance was .07. Test the hypothesis at the 1% level that the..

  Why can re be multiple steady states for a given

Why can re be multiple steady states for a given. What is maximum decit compatible with a steady state.

  Several of his research scientists seems to be spending work

He finds which he is overworked also which several of his research scientists seems to be spending work hours playing tennis.

  Competitive equilibrium under asymmetric information

(Karloff) Consider the following market for used cars. There are many sellers of used cars. Each seller has exactly one used car to sell and is characterized by the quality of the used car he wishes to sell. Let θ ∈ [0, 1] index the quality of a used..

  What do you abou semi-salt is earning monopoly profits

Despite the absence of patent protection, Semi-Salt has averaged accounting profits of 5.5 percent on investments since it began producing polyglutamate-a rate comparable to the average rate of interest that large banks paid on deposits over this ..

  An option holder is not entitled to receive dividends unless

An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.

  Standard deviations from the population mean weight

Weights of newborn babies in the United States are normally distributed with a mean of 3420 grams and a standard deviation of 495 grams. A newborn weighing less than 2200 grams is considered to be at risk. What fraction of newborn babies are in the “..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd