Stimulus package by using the income multiplier

Assignment Help Business Economics
Reference no: EM131431761

In mid-February 2008, President Bush and Congress approved a $168 billion stimulus package that will provide tax rebates to all taxpayers, that is to those who file their tax returns. The tax stimulus was in addition to a tax rate cut, which was implemented earlier in 2002.  The stimulus checks were mailed in May 2008. In February 2011, under President Obama administration, Congress voted to extend the Bush era tax rate cut to all levels of income.

Please analyze the stimulus package by using the income multiplier. (A tax rebate is a decrease in autonomous tax, the To in the total tax formula mentioned in class).

Using the derivation of the income multiplier, which we discussed in class, please show the effects of:

5ai - A tax rebate on the US GDP; and

5aii - A tax rate cut on the US GDP.

Which tax strategy has a stronger effect in the long term?

Reference no: EM131431761

Calculate the price elasticity of demand and interpret

If a 10 percent increase in price decreases the quantity demanded by 12 percent, the price elasticity of demand is. The price of strawberries falls from $1.50 to $1.00 per car

Link between goods market and asset market

Why does a horizontal LM curve imply that fiscal policy has the same effects on the economy as those derived in Keynesian Model (horizontal AS)? What are the implications of a

Calculate total surplus of the market with the price ceiling

A market has a demand curve described by P=30-Q, a supply curve described by P=16+Q, and a price ceiling of 20. Calculate the Total Surplus of the market with the price ceilin

Illustrate what is the cost elasticity of output

Substitute the values of L* and K* in the total cost equations and obtain an expression for the total cost C*. then calculate the average and marginal costs and plot them. I

Calculate the point price elasticity of demand for tickets

The current price charged by a local movie theater is $8 per ticket. At the current ticket price, the theater typically sells 300 tickets per showing. If the theater raises ti

Many people focus on the effect of monetary policy

Many people focus on the effect of monetary policy on interest rates in the economy. Use the loanable funds market to explain how unexpected contractionary monetary policy aff

Law is constitutional using analysis of fundamental

From FDR's Folly Chapter 15: Explain and critique the current policy of the Supreme Court in determining whether or not a law is constitutional using analysis of fundamental a

What is the amount of five equal annual deposits

What is the amount of five equal annual deposits that can provide five annual withdrawals, where a first withdrawal of $1500 is made at the end of year six and subsequent with

Reviews

Write a Review

 
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