What are the values of the tax-adjusted utilize cost

Assignment Help Business Economics
Reference no: EM1320161

Q. Assume that the economy wide expected future marginal product of capital is MPKf = 20 - 0.02K, where K is the future capital stock. The depreciation rate of capital, d, is 20% every period. The current capital stock is 900 units of capital. The price of a unit of capital is 1 unit of output. Industries pay taxes equal to 50% of their output. The consumption function of the economy is Cd = 100 + 0.5Y - 200r, where Cd is desired consumption; Y is output also r is the real interest rate. Government purchases equal 200 also full employment output is 1000.

a. Assume that the real interest rate is 10% every period. Illustrate what are the values of the tax-adjusted utilize cost of capital, the desired future capital stock also the desired level of investment? Explain your answers.

b. Now consider the real interest rate concluded by goods marketplace equilibrium. The subsequent parts of the problem will guide you to this interest rate.

i. Write the tax-adjusted utilize cost of capital as a function of the real interest rate r. Also write the desired future capital stock also desired investment as functions of r.

ii. Utilize the investment function derived in part (i) along with the consumption function also government purchases to compute the real interest rate that clears the goods marketplace. Illustrate what are the goods marketplace-clearing values of desired consumption, desired saving also desired investment? Illustrate what are the tax-adjusted utilize cost of capital also the desired capital stock in this equilibrium? Explain your answers.

 

Reference no: EM1320161

Questions Cloud

Find the mean and variance of the given data : The mean and variance of the total amount of money that is collected from a car that crosses the bridge are:
How much work is completed on gas : What is the time constant of a 9.50 thick membrane surrounding a 4.0×10-2 diameter spherical cell? Suppose the resistivity of the cell membrane as and the dielectric constant is approximately 9.00.
Illustrate what is the gdp of georges : Illustrate what is the GDP of George's also John's island in terms of clamshells?
Descriptive statistics for problem like minimum-maximum : Aggregate the opinions of the experts by computing the minimum, maximum, 25 th  percentile, 50 th  percentile, and 75 th  percentile values.
What are the values of the tax-adjusted utilize cost : Illustrate what are the values of the tax-adjusted utilize cost of capital, the desired future capital stock also the desired level of investment
Find the velocity at time t0 : Suppose an initial speed of 21.4 m/s, at an angle of 61.10° with respect to the positive x axis. Find the velocity at time t0; enter x component, after that the y component.
Calculate the sample proportion : Calculate the sample proportion, µ for the proportion of offspring peas with yellow pods.
Service industry production line approach or self-serve : Could a service industry utilize production line approach or self-serve design also still keeps a high customer focus
What is the eastward component of this vector : A 0.525 kg ball starts from rest and rolls down the hill with uniform acceleration, travelling 150 m throughout the second 10.0 rm s of its motion.

Reviews

Write a Review

Business Economics Questions & Answers

  A government may want to impose price control

Talk about why a government may want to impose price control. But in this case, does the Mugabe government achieve its intended purpose

  Key economic factors for this country

Contrast two or three key economic factors for this country with the U.S. economy, and comment.

  Vertical axis of a production

If today's production of capital goods exceeds the depreciation of capital.

  United states trades

Who has the comparative advantage in what product. Once they specialize, how much does output increase. What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing.

  Widespread utilize of vending machines in japan

Do vending machines conserve on any possessions other than labor. Does your answer offer any additional insight into the widespread utilize of vending machines in Japan.

  Most important in determining development

Illustrate what factors seem to be most important in determining development also why

  What value of y survives

What value of y survives as a solution if all firms are competing for high ability workers.

  Positive also negative contributions of fdi inflow

Converse the positive also negative contributions of FDI inflow to the competitive benefit of host countries with regard to the subsequent matters

  Evaluate the impact globalization on domestic governance

Evaluate the impact globalization on domestic governance. Identity and explicate at least three significant factors requiring domestic changes.

  Central bank changes the reserve requirement ratio

What happens to each of these values if the central bank changes the reserve requirement ratio to 3%.

  Worlds largest economies and policymakers

The economys business cycles are not well synchronized with any of the world's largest economies and policymakers.

  Short-term impact on the production

What would be a short-term impact on the production of the corporation. Illustrate what would be the long term.

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