Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 18%. Now suppose there is an increase in the tax rate on interest income, from 18% to 22%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to level of investment spending to and the

Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 18%. Now suppose there is an increase in the tax rate on interest income, from 18% to 22%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to level of investment spending to and the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Need help with this. Thanks! Just for information the point can move left and right and the line can move up and down. When line moves up the point can move to the left only and when the line moves down, the point can move to the right only. I hope that makes sense to you.
Suppose Janet is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Janet resides. Compute the spendable income level Janet would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work (Dollars) Transfer Benefits Income and Employment Taxes (Dollars) (Dollars) 0 Spendable Income (Dollars) 9.954 0 9,954 6,000 8.800 272 772 1,424 2.225 2,656 12.000 18,000 24,000 30,000 7,389 5,384 2.697 1,033 If Janet's income from work increased from $18,000 to $24.000, her implicit marginal tax rate would be If Janet's income from work increased from $24,000 to $30.000, her implicit marginal tax rate would be
The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. Supply 5 Demand 1 100 200 300 400 500 600 LOANABLE FUNDS (Billions of dollars) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied Suppose the interest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans ▼ of loanable funds. This would encourage lenders to the interest rates they charge, thereby demanded, resulting in a the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the market toward 0% the equilibrium interest rate of INTEREST RATE (Percent)
I need help in solving this problem.
Economists in Pakland, a closed economy, have collected the following information about the economy for a particular year: Y = Rs.10,500 C = Rs.6,000 T = Rs.1,500 G = Rs.1,700 The economists also estimate that the investment function is: I = 3,300 - 100r Where, r is the country’s real interest rate, expressed as a percentage. Calculate: Private savingBlank 1(Write Only numbers in the blank. Do not write plus signs, minus signs, commas, full stops, currency etc.)Public savingBlank 2(Write Only numbers in the blank. Do not write plus signs, minus signs, commas, full stops, currency etc.)National savingBlank 3(Write Only numbers in the blank. Do not write plus signs, minus signs, commas, full stops, currency etc.)InvestmentBlank 4The equilibrium real interest rateBlank 5(Write Only numbers in the blank. Do not write plus signs, minus signs, commas, full stops, currency etc.)If the government increases taxes to Rs.1,800, calculate private savingBlank 6((Write Only numbers in the…
Suppose that a country has only two commodities, two factors of production, and no savings. The two commodities are wine (W) and cheese (C) and the two factors of production are capital (K) and labour (L). The country collects the following partial factor taxes: tKC is a tax on capital used in the production of cheese equal to 20%. tKW is a tax on capital used in the production of wine equal to 25%. tLC is a tax on labour used in the production of cheese equal to 20%. tLW is a tax on labour used in the production of wine equal to 15%. Which of the following would have the same outcome as the above taxes? A) Replacing tKW and tKC with a 22.5% tax on capital. B) Replacing tKC and tLC with a 20% tax on cheese. C) Replacing tKW and tLW with a 20% tax on wine. D) Replacing tLW and tLC with a 17.5% tax on labour. E) All of the above. Please explain
Step 2 Determine the equilibrium real interest rate. The table below is broken down by Month, Real Interest Rate (%), Loanable Funds (trillions of $), Exogenous Change, Equilibria (increases, decreases, or no change. Use the data table to determine the equilibrium real interest rate after certain factors change: Equilibria (increases, decreases, or no change) Month Real Interest Loanable Funds Exogenous Rate (%) (trillions of $) Change 3 no change no change January 3% April 3% 4 increased fund ? supply decreased fund July 4% supply December 3% 3 increased fund ? demand
Question 7 The country of Kingsland is considering the introduction of a compulsory retirement saving scheme. Under this scheme all workers are required to save ten per cent of their annual wages and salaries until they retire. Use the supply and demand model (and a diagram) for saving and investment to explain the likely effects of this scheme on national saving, investment and the real interest rate in New Holland. Explain the effects on employment of the saving scheme. (You can assume that New Holland is a closed economy).
Consider the market for loanable fund. Suppose that government started to give tax incentives for investment (so the cost of investment fell.) Answer which curve (Demand or Supply) would shift to which direction (Left or Right), and answer how the equilibrium saving would change (Decrease or Increase)Curve: Direction: Saving:
Suppose the real interest rates in the United States and Switzerland are both 2%. Now suppose that the Federal Reserve in the United States conducts monetary policy that in turn raises domestic interest rates. Assume there are no policy changes in Switzerland and that their real interest rates stay steady at 2%.
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