1(a) (b) (c) 2 (b) (c) The following statistics are given relating to a hypothetical closed economy for the financial year 2022.GDP = $5000, Consumption Expenditure = $3000, Govt Purchase = $2000, Budget deficit = $1000. Find out tax revenue, private savings, public savings, national savings, and national investment. Assume the government announces a Tax Cut of $500. If consumers save the full proceeds of the tax cut amount, i.e., $500, then analyze its impact on private savings, public savings, national savings, and investment. Assume the government announces a Tax cut of $500. If consumers spend the full proceeds of the tax cut amount, i.e., $500, then analyze its impact on private savings, public savings, national savings, and investment. In a hypothetical economy, demand for loanable funds (DLF) is represented by I = 10000-800r, and supply of loanable funds (SLF) is represented by S = 200r, where I = Investment, S = National saving, r = real interest rate. Assume the loanable fund market is in equilibrium. Plot the demand and supply function for loanable funds in a graph and determine the equilibrium real interest rate in the loanable funds market. If the actual interest rate exceeds the equilibrium real interest rate, then analyze its impact on demand for loanable funds, supply of loanable funds, and the loanable funds market. The government decided to exempt the tax rate imposed on firms on purchasing new pieces of capital equipment. Analyze its impact on the real interest rate, national saving, and investment. Also, analyze the effect of this government policy on the economic growth of this economy.
1(a) (b) (c) 2 (b) (c) The following statistics are given relating to a hypothetical closed economy for the financial year 2022.GDP = $5000, Consumption Expenditure = $3000, Govt Purchase = $2000, Budget deficit = $1000. Find out tax revenue, private savings, public savings, national savings, and national investment. Assume the government announces a Tax Cut of $500. If consumers save the full proceeds of the tax cut amount, i.e., $500, then analyze its impact on private savings, public savings, national savings, and investment. Assume the government announces a Tax cut of $500. If consumers spend the full proceeds of the tax cut amount, i.e., $500, then analyze its impact on private savings, public savings, national savings, and investment. In a hypothetical economy, demand for loanable funds (DLF) is represented by I = 10000-800r, and supply of loanable funds (SLF) is represented by S = 200r, where I = Investment, S = National saving, r = real interest rate. Assume the loanable fund market is in equilibrium. Plot the demand and supply function for loanable funds in a graph and determine the equilibrium real interest rate in the loanable funds market. If the actual interest rate exceeds the equilibrium real interest rate, then analyze its impact on demand for loanable funds, supply of loanable funds, and the loanable funds market. The government decided to exempt the tax rate imposed on firms on purchasing new pieces of capital equipment. Analyze its impact on the real interest rate, national saving, and investment. Also, analyze the effect of this government policy on the economic growth of this economy.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:1(a)
(b)
(c)
2
(b)
(c)
The following statistics are given relating to a hypothetical closed economy for the
financial year 2022.GDP = $5000, Consumption Expenditure = $3000, Govt
Purchase = $2000, Budget deficit = $1000.
Find out tax revenue, private savings, public savings, national savings, and national
investment.
Assume the government announces a Tax Cut of $500. If consumers save the full
proceeds of the tax cut amount, i.e., $500, then analyze its impact on private
savings, public savings, national savings, and investment.
Assume the government announces a Tax cut of $500. If consumers spend the full
proceeds of the tax cut amount, i.e., $500, then analyze its impact on private
savings, public savings, national savings, and investment.
In a hypothetical economy, demand for loanable funds (DLF) is represented by
I = 10000-800r, and supply of loanable funds (SLF) is represented by S = 200r,
where I = Investment, S = National saving, r = real interest rate. Assume the
loanable fund market is in equilibrium.
Plot the demand and supply function for loanable funds in a graph and determine
the equilibrium real interest rate in the loanable funds market.
If the actual interest rate exceeds the equilibrium real interest rate, then analyze its
impact on demand for loanable funds, supply of loanable funds, and the loanable
funds market.
The government decided to exempt the tax rate imposed on firms on purchasing
new pieces of capital equipment. Analyze its impact on the real interest rate,
national saving, and investment. Also, analyze the effect of this government policy
on the economic growth of this economy.
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