Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP.    a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table. Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places. SEE PICTURE!!! b. Compare the MPC and the multiplier with those of the pretax consumption schedule.      Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers. SEE PICTURE!!

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP

 

a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table.

Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places.
SEE PICTURE!!!


b. Compare the MPC and the multiplier with those of the pretax consumption schedule.

     Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers.

SEE PICTURE!!!

Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below.
Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP.
a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table.
Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round
your answers to 2 decimal places.
Disposable Income, Consumption After
Billions
Tax Rate,
Consumption Before
Tax, Billions
GDP, Billions
Tax, Billions
Tax, Billions
Percent
$100
$120
200
200
300
280
400
360
500
440
600
520
700
600
b. Compare the MPC and the multiplier with those of the pretax consumption schedule.
Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers.
MPC for the lump-sum tax consumption schedule =
MPC for the pretax consumption schedule =
Multiplier for the lump-sum tax consumption schedule =
Multiplier for the pretax consumption schedule =
Transcribed Image Text:Assume that, without taxes, the consumption schedule for an economy is as shown in the first two columns of the table below. Suppose that a lump-sum (regressive) tax of $10 billion is imposed at all levels of GDP. a. Calculate the tax rate at each level of GDP and enter the tax, disposable income, consumption, and tax rate in the table. Instructions: For the tax, disposable income, and consumption after tax, enter your answers as whole numbers. For the tax rate, round your answers to 2 decimal places. Disposable Income, Consumption After Billions Tax Rate, Consumption Before Tax, Billions GDP, Billions Tax, Billions Tax, Billions Percent $100 $120 200 200 300 280 400 360 500 440 600 520 700 600 b. Compare the MPC and the multiplier with those of the pretax consumption schedule. Instructions: For the MPC, round your answers to 1 decimal place. For the multiplier, enter your answers as whole numbers. MPC for the lump-sum tax consumption schedule = MPC for the pretax consumption schedule = Multiplier for the lump-sum tax consumption schedule = Multiplier for the pretax consumption schedule =
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Recession
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education