1. Let the (pre-tax) price level P equal 1. Let W denote the nominal wage rate and L denote the number of hours worked. Suppose the income tax rate is th (a) Suppose that L equals 100. Calculate after-tax income (after-income tax income). (b) Suppose the sales tax rate (the tax rate on consumption) is denoted to . Suppose that, with the pre-sales tax P equal to 1, the price of goods equals (1+ tc). Calculate after-tax real (labour) income (this after-tax variable depends on both tax rates). Explain, in words, what this after-tax real income variable measures.

1. Let the (pre-tax) price level P equal 1. Let W denote the nominal wage rate and L denote the number of hours worked. Suppose the income tax rate is th (a) Suppose that L equals 100. Calculate after-tax income (after-income tax income). (b) Suppose the sales tax rate (the tax rate on consumption) is denoted to . Suppose that, with the pre-sales tax P equal to 1, the price of goods equals (1+ tc). Calculate after-tax real (labour) income (this after-tax variable depends on both tax rates). Explain, in words, what this after-tax real income variable measures.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Within the circular flow of income, withdrawals are composed ofA) saving, net taxes and import expenditure.B) consumption, net taxes and import expenditure.C) saving, net taxes and export expenditure.D) saving, investment and import expenditure.
The value of Consumption is $2000 and the disposable income is given as $2700 Calculate the value of APC
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ABC Computer Company has a $20 million factory in Silicon Valley in which in builds computer components. During the current year, ABC's costs are labor (wages) of $1.1 million; interest on debt of $0.2 million; and taxes of $0.1 million. ABC sells all its output to XYZ Supercomputer for $2.0 million. Using ABC's components, XYZ builds four supercomputers at a cost of $0.800 million each, which comes from $0.500 million worth of components, $0.2 million in labor costs, and $0.1 million in taxes per computer. XYZ has a $30 million factory. XYZ sells three of the supercomputers to other businesses for $1.0 million each. At year's end, it had not sold the fourth. The unsold computer is carried on XYZ's books as a $0.800 million increase in inventory. According to the product approach, the total GDP contribution of these companies is $ 3.8 million. According to the expenditure approach, since the three supercomputers are sold to businesses, XYZ's sales are counted as investment computer is…
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Suppose you have the following information about household expenditure:Year Nominal ($m) Real ($m)2013 145 1302014 150 128Which of the following must be true? Select one: a. Both the price and quantity of goods and services in household expenditure have increased. b. Both the price and quantity of goods and services in household expenditure have decreased. c. The price of goods and services in household expenditure has increased and the quantity has decreased. d. The price of goods and services in household expenditure has decreased and the quantity has increased.
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