What arguments might be used to oppose such a tax cut

Assignment Help Econometrics
Reference no: EM131309078

Suppose that the government of Lumpland is enjoying a fat budget surplus with fixed government expenditures of G = 150 and fixed taxes of T = 200. Assume that consumers of Lumpland behave as described in the following consumption function:

C = 150 + 0.75(Y - T)

Suppose further that investment spending is fixed at 100. Calculate the equilibrium level of GDP in Lumpland. Solve for equilibrium levels of Y, C, and S. Next, assume that the Republican Congress in Lumpland succeeds in reducing taxes by 20 to a new fixed level of 180. Recalculate the equilibrium level of GDP using the tax multiplier. Solve for equilibrium levels of Y, C, and S after the tax cut and check to ensure that the multiplier worked. What arguments are likely to be used in support of such a tax cut? What arguments might be used to oppose such a tax cut?

Reference no: EM131309078

Questions Cloud

How qualitative research tools : Research how qualitative research is used in your field. Write an essay that describes how qualitative research tools can be used to aid in decision making within your field. Be sure your essay addresses the following questions/topics:
Derive the saving function and the consumption function : Derive the saving function and the consumption function, and draw a graph showing these functions. At what level of aggregate output does the consumption curve cross the 45° line? Explain your answer and show this on the graph.
What project areas need to be assessed in readiness process : Why is the readiness process so important to an ERP implementation? What project areas need to be assessed in a readiness process? What is included (and not included) during the stabilization timeframe?
What is knowledge transfer during erp implementation : What is knowledge transfer during ERP implementation? How does an organization ensure that knowledge is transferred properly and to the right individuals?
What arguments might be used to oppose such a tax cut : What arguments are likely to be used in support of such a tax cut? What arguments might be used to oppose such a tax cut?
How different models integrate with each other to create erp : Explain functions associated and how the different models integrate with each other to create this ERP. Examine customer reviews, and find an organization that is currently using that particular product and why it has chosen this product.
Write an object-oriented console application in the java : CPT121 / COSC2135 Programming Assignment. For this assignment you need to write an object-oriented console application in the Java programming language which adheres to basic object-oriented programming principles shown below: Setting the visibilit..
Write a page fault handler process that can be invoked : Write a page fault handler process that can be invoked by the interrupt dispatcher when a page fault occurs. The address space and page number of the missing page are made available to the fault handler by the addressing hardware.
Compare your percentage of occurrence of colors : Compare your percentage of occurrence of colors to that shown as the M&M standard. Create a chart showing the comparison.

Reviews

Write a Review

Econometrics Questions & Answers

  What is the dollar value of gdp

What is the dollar value of GDP?

  What is the deadweight loss

The private marginal cost of producing steel isMC = 5Q + 40, while the external marginal cost of producing steel is $12. In a perfectly competitive steel industry, the deadweight loss is:

  What is the elasticity of demand for the parking lot spaces

Suppose your elasticity of demand for your parking lot spaces is -2, and price is $8 per day. If your MC is zero, and your capacity is 80% full at 9 a.m. over the last month, are you optimizing

  What are sources of economies of scale for choosen company

Consider the following questions: What factors may affect the mix of inputs used to produce the product or service? To what extent does your chosen company benefit from economies of scale? What are the sources of economies of scale for your chosen..

  What are the potential lessons to be derived from the asian

What are the potential lessons to be derived from the Asian crisis?

  Determine the marginal and average tax rates

suppose in Fiscalville there is no tax on the first 10000 of income but a 20 % tax on earning between $10000 and $20000 and a 30% tax on earnings between 20000 and 30000. any income above $30000 is taxed at 40%. if your income is $50000.

  Compute confidence intervals for unknown population mean

In a study of the income of U.S factory workers, a random sample of 125 workers shows a sample mean of $29,000. Assume that the population standard deviation is $4,500.

  Estimate the probability of smoking

What does the coefficient on smkban suggest and Estimate the probability of smoking by using smoking ban as your independent variable.

  Calculate the value of objective function over the 5-year

Consider three alternative policies, each with a different set of outcomes in terms of output and inflation, as shown in following table: Output Output Output Inflation Inflation Inflation Policy A Policy B Policy C Policy A Policy B Policy C

  What is probability linda lahey received exactly one e-mail

An internal study by the Technology Services department at Lahey Electronics revealed company employees receive an average of four e-mails per hour. Assume the arrival of these e-mails is approximated by the Poisson distribution.

  What would drive the market toward the equilibrium

If the actualy price in this market were above the equilibrium price, what would drive the market toward the equilibrium. If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium

  Discuss the properties of this estimator

Given a sample of n observations, the investigator estimates β2 by calculating it as the average value of Y divided by the average value of X. Discuss the properties of this estimator. What difference would it make if it could be assumed that β1 i..

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