I. Taiwan has an income tax rate, t1, of 28% and a Marginal Propensity to Save (MPS) of 0.4. It is in Eqm but is currentlysuffering from an "inflationary gap" of $350 m. (that is, Eqm Y>Y full employment, FE, aka Yn). Make the necessarycalculations for the to policy that should be instituted. Provide the full name of this policy.II. Most economists believe that tariffs are not the best way to reduce the US trade-balance deficit -- the fact that USIM>US X. (Macro problems should be fixed with macro tools and tariffs are a micro tool.) Derive the identity for Yfrom the expenditure approach for an open economy to discuss what it means when a country is running a trade-balancedeficit and whether it is an economic "good" or "bad." Then derive the twin-deficit identity and use it to explain why theUS runs trade-balance deficits and what can be done, if anything, to reduce them. Make all your assumptions clear.

I. Taiwan has an income tax rate, t,, of 28% and a Marginal Propensity to Save (MPS) of 0.4. It is in Eqm but is currently suffering from an "inflationary gap" of $350 m. (that is, Eqm Y>Y full employment, FE, aka Yn). Make the necessary calculations for the to policy that should be instituted. Provide the full name of this policy.

I. Taiwan has an income tax rate, t,, of 28% and a Marginal Propensity to Save (MPS) of 0.4. It is in Eqm but is currently suffering from an "inflationary gap" of $350 m. (that is, Eqm Y>Y full employment, FE, aka Yn). Make the necessary calculations for the to policy that should be instituted. Provide the full name of this policy.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 10SCQ: Many financial analysts and economists eagerly await the press releases for the reports on the home...

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