Suppose the private market return is r=20%. The economy has progressive tax system as follows. Low income: t=10%, High income: t=30%. Assume each group has some amount of capital that can be invested in either a private bond or state bond. Low income: $100,000 to invest, Moderate income: $50,000 to invest, High income: $250,000 to invest. Suppose the state government needs to raise $350,000. a. How much does the state government save or lose? b. How much does the federal government save or lose?

Suppose the private market return is r=20%. The economy has progressive tax system as follows. Low income: t=10%, High income: t=30%. Assume each group has some amount of capital that can be invested in either a private bond or state bond. Low income: $100,000 to invest, Moderate income: $50,000 to invest, High income: $250,000 to invest. Suppose the state government needs to raise $350,000. a. How much does the state government save or lose? b. How much does the federal government save or lose?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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