Answered: b) Discuss the effects of a tax…

Business

Economics

b) Discuss the effects of a tax increase on a small and closed economy's short run equilibrium

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: If you make $800 from a lucrative side business selling snack food in dorms, how much would you save…

A: Given Total Earning = $800 MPC = 0.75 We know that MPS + MPC = 1 Where MPS is Marginal propensity…

Q: On the diagram sample (a) show the effect of a decrease in interest rate on equilibrium on Goods…

A: The combinations of Y(output) and i (interest rate) at which there is an equilibrium in goods market…

Q: On the supply side of the GDP, Structures account for around __________ of U.S. GDP. a)57% b)7%…

A: C or Consumption expenditure is the expenditure incurred on the consumption by households.G or…

Q: What is a budget surplus? Outline the benefits and use of a budget surplus in macroeconomic…

A: The government expenditure level and the amount of tax collection determine whether the government…

Q: Use the following information to answer questions 9 and 10. C = 635 + 0.79Yª I = 303 If T = 198 G =…

A: Y = C+I+G Y = [635 + 0.79(Y-T)] + [303] + [235] Y = [635 + 0.79(Y-198)] + [303] + [235] Y = [635 +…

Q: Question 6 refers to the graph below. Aggregate Supply1 Aggregate Supply2 Aggregate Supply3…

A: Aggregate demand (AD) curve is a downward sloping curve indicating a negative relationship between…

Q: which of the following is true about supply-side economic policies a) tax cuts tend to almost…

A: Supply-side economics is a macroeconomic theory which states that increase in supply of goods leads…

Q: The economy of Bananaland can be characterized by Equation 9.3. EQUATION 9.3:…

A: Consumption function includes autonomous consumption and consumption dependent on Income of…

Q: [0.1 0.3 C=0.5 0.1 0.2 0.4 0.21 [18 0.21: d d = |40 0.3 26

A: An input-output model in economics is a numerical accounting framework which illustrates how…

Q: The following graph shows the short-run aggregate supply curve (AS), the aggregate demand curve…

A: If the bout of severe weather increases the agriculture cost, cost of transporting and cost of…

Q: ___ are now the largest single component of the supply side of GDP, representing over half of GDP.…

A: Gross domestic product refers to total goods and services produced within the economy within the…

Q: 6

A: Investment is the summation of induced investment and autonomous investment. The induced investment…

Q: 1. Use the following lon from a fictional economy: Consumption, C = 250 + 0.8 Yd Investment, I = 200…

A: NOTE:Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Consider the following demand components: Consumption described as a following: 120 million USD as…

A: The value of the total production of services and goods at a particular period is Gross Domestic…

Q: Suppose we start with a general equilibrium, and there is a decrease in the effective tax rate on…

A: Reduction of taxes on capital will ensure greater availability of capital in the economy in short…

Q: If you make $800 from a lucrative side business selling snack food in dorms, how much would you save…

A: The marginal propensity to consume is a statistic in economics that quantifies induced consumption…

Q: If the economy is in equilibrium, how can a recessionary gap exist, and how will producers respond…

A: The recessionary gap occurs due to deficient demand. When demand is not sufficient to reach full…

Q: (a) Interest rate, i Demand, Z Output, Y Output, Y Hint: IS: Y= C(Y-T) + I(Yi) + 9+ (b) Interest…

A: The IS-LM curve model is concerned with the interaction of the goods and money markets. When…

Q: In a situation of recession, what are the types of goods that will see their demand increase? Give…

A: Recession refers to a period of temporary economic fall during which trade and industrial activity…

Q: Describe the following term in your own words. Balanced budget

A: Budget shows the total receipts(income) and total expenditure of the government in a fixed period of…

Q: In a two-good economy, we have the following information about the demand for good 1: the income…

A: It can be defined as the concept of economics which shows how much the quantity demand of a…

Q: What is the economic interpretation of the intertemporal budget constraint?

A: In the economy, there is a constraint on the consumption of income and spending. The decisions of…

Q: Discuss the impact of the increase in government taxes on investment in the long run.

A: Investment: Investment can be defined as the sum of money that is being set aside by the individual…

Q: Given the following model of the economy. C = 13,005 +0.8YD 1 = 8209 G = 10083 T = 10947 Calculate…

A: Given, Consumption: C=13005+0.8YDInvestment: I=8209Government Spending: G=10083Taxes: T=10947The…

Q: Compare the impact of a recession that reduces consumer income by 10 percent on the consumption of…

A: A recession means a sustained period of weak growth in real GDP (output) that is accompanied by a…

Q: Government is considering a policy change to stimulate the economy by encouraging private…

A: Government is considering a policy change to stimulate the economy by encouraging private…

Q: Aggregate Demand (AD) - According to the Total Supply (AS) Model, by comparing the initial…

A: The equilibrium situation with the two developments as the increase in the transfer expenditures of…

Q: 1. Is this statement True or False? "The equilibrium price and output values does not change in…

A: The economics as a study is based upon the basic idea that the resources which are present with the…

Q: An economy is described by the following: C=20+0.9Y I=120-200r Md=250+0.2Y-400r Ms/P=1250 Y=70…

A: Aggregate demand implies the total amount of products and services that consumers, businesses, and…

Q: Suppose an economy is characterised by the following: C = 160 + 0.6 (400 - T) | = 150 G = 150 T =…

A: C=160+0.6(400-T)I=150G=150T=100 (i) For equilibrium output…

Q: Using a model of incomplete market. explain the consumption correlation puzzle.

A: The following problem has been answered as follows:

Q: Austria is one of the largest exporters of oil. At the end of 2019, the global price of oil fell…

A: Austria Economy: The economy of Austria is an all-around created social market economy, with the…

Q: The marginal propensity to consume for this economy is …………. if income rises from $9000 to $10000…

A: In economics, the consumption function describes the relationship between consumer spending and the…

Q: Suppose the government of a particular state has a large surplus, so the state's policymakers want…

A: the above problem discusses the effects of a one-time large tax cut on a state's economy in three…

Q: Suppose that the components of planned spending in an economy are C-500 +0.8(Y-T), I-1500, G-2000,…

A: Given C = 500 + 0.8(Y - T) I = 1500 G = 2000 X = 0 T = 0.25Y

Q: Q1: There are two equations for macroeconomic equilibrium in an economy. State them Show…

A: Macroeconomic equilibrium can be defined as a point wherein the amount of aggregate demand rises to…

Q: When the economy is out of general equilibrium, which of the three curves (FE, IS, LM) shifts to…

A: General equilibrium investigates the economy overall, rather than examining single business sectors…

Question

b) Discuss the effects of a tax increase on a
small and closed economy's short run
equilibrium

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

I need the top part and the bottom one
Identify the word, concept, or expression most closely related to the word, concept, or expression below: 1. Short-run effect of an increased number of Canadians vacationing and shopping at home. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 2. Short-run effect of increased government spending on infrastructure. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 3. Short-run effect of a large increase in commodity (input) prices for businesses. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product…
Q2. The economy is originally at S and D levels for supply and demand. Explain the effects on the economy when the income declines and there are technological innovations. Where will supply and demand curves shift? (S, or S2 and D; or D2). Why? Explanation: 51 SE 52 02 DE monsteR
During an economic downturn, households respond to a decline in income by reducing taxes.
Q)government has decided to rise its overall taxes. Which effect might it cause in the Spanish economy based on the good market equilibrium ? -Private savings increases -Trade balance worsens -trade balance improves - output rises
CANBERRA, AUSTRALIA - Australia's prime minister achieved an important political victory on Thursday when the Senate passed personal income tax cuts worth 144 billion Australian dollars ($106 billion) over a decade. The tax cuts for most of Australia's workforce were a centerpiece of Prime Minister Malcolm Turnbull's annual budget plans revealed in May. That budget is expected to be the last before Turnbull's conservative coalition seeks another three-year term at elections due by early next year. The center-left opposition Labor Party supported the proposed initial tax relief for low- and middle-income earners beginning next month. But it opposed a third and a final stage of the plan that reduces taxes of those with incomes from AU$120,000 to AU$200,000 beginning in mid-2024. Turnbull on Wednesday refused to split the legislation so that the Senate could reduce taxes for those on lower incomes but not for higher-income earners. The Senate had to pass or reject the changes in their…
LRAS, LRAS₂2 A. B. C. D. E. A B C E D LL AD₁ SRAS₁ W SRAS2 AD2 Real GDP (Y) Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D? The population has aged and there are fewer people in the labor force. Firms and workers expected the price level to rise. The economy experienced an increase in government spending. The economy was in an expansion and has adjusted. The country's overall productivity increased.
The tax cuts of 2008 and 2009 reduced the disposable income of U.S. consumers. True or False
Suppose that the production function for the economy is given by: Y = AL/3K/3 Suppose that this economy has 1,000 units of Labour, and 125 units of capital, and TFP (A) is equal to 10. The Short-Run Aggregate Supply Curve (AS) here is given by: Y = 5p And when we consider the AEF at a price level of $1,400, the main components of it (C, I, & G) are given by (we are assuming a closed economy NX = 0): C = 300 + 0.8Y I = 300 G = 200 1. What is potential GDP in this question (Y*)? Show your work. Suppose also that for any $10 decrease in price, desired consumption will increase by $5. 2. Write down the equation for the Aggregate Demand Curve (AD) in the form of Y = a + bp. Show your work. 3. What is the current Short-Run Equilibrium value for Real GDP (Y) and the price level (p)? Show your work. 4. Draw the AD, AS, and LRAS curves. Label all x-intercepts and y-intercepts. Are we currently in an Inflationary Gap, Recessionary Gap, or in Long-Run Equilibrium? How do you know?
Problem 1. The following equations characterize country's economy. Assume that the economy is a closed economy. Production function: Y = A·K'N – 3·N²/2. where A = 5 and K = 21. Labor supply: N$ = 5 + 3w. Desired Consumption: Cd = 56 +0.75Y – 100r Desired Investment: Iª = 130 – 900r Government Spending: G = 300 (a) Find the equilibrium levels of the real wage, employment and output (you may want to go back and read your notes on labor market). (b) Find the equilibrium level of the real interest rate, consumption, investment and national saving. (c) Illustrate your answers to parts (a)and (b) with appropriate graphs. (d) Suppose that due to a wave of immigration, labor supply increases. The new labor supply curve is given by Labor supply: N$ = 25 + 3w. Find the new equilibrium values of the real wage, employment, output, the real interest rate, investment, saving and consumption. Illustrate these new answers in the graphs that you drew for part (c).
1a) and b)
1) https://hbr.org/2012/01/the-economics-of-well-being 2) https://www.youtube.com/watch?v=PzAr_mL0Qd8 3) https://gnhusa.org/gross-national-happiness/ please I need a short summary of these links.