The typical household buys the following basket of goods within a year: Quantity 2020 2021 2022 Cereal 10 boxes $3.00 $3.50 $4.00 Milk 15 gallons $3.50 $3.65 $3.75 Eggs 20 dozen $3.85 $3.95 $4.15 Price of the basket ------ CPI ------ A.Find the price of the baskets. (Hint: multiply price and quantity for all goods and then add the totals) B.Using 2020 as the base year, calculate the CPI for each year. C.What is the inflation rate from 2020 to 2021? D.What is the inflation rate from 2021 to 2022?
The typical household buys the following basket of goods within a year: Quantity 2020 2021 2022 Cereal 10 boxes $3.00 $3.50 $4.00 Milk 15 gallons $3.50 $3.65 $3.75 Eggs 20 dozen $3.85 $3.95 $4.15 Price of the basket ------ CPI ------ A.Find the price of the baskets. (Hint: multiply price and quantity for all goods and then add the totals) B.Using 2020 as the base year, calculate the CPI for each year. C.What is the inflation rate from 2020 to 2021? D.What is the inflation rate from 2021 to 2022?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter30: Government Budgets And Fiscal Policy
Section: Chapter Questions
Problem 6SCQ: What taxes would an individual pay if he were self-employed and the business is not incorporated?
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1. The typical household buys the following basket of goods within a year:
|
|
Quantity
|
2020
|
2021
|
2022
|
|---|---|---|---|---|
|
Cereal
|
10 boxes
|
$3.00
|
$3.50
|
$4.00
|
|
Milk
|
15 gallons
|
$3.50
|
$3.65
|
$3.75
|
|
Eggs
|
20 dozen
|
$3.85
|
$3.95
|
$4.15
|
|
Price of the basket
|
------
|
|
|
|
|
CPI
|
------
|
|
|
|
A.Find the price of the baskets. (Hint: multiply price and quantity for all goods and then add the totals)
B.Using 2020 as the base year, calculate the CPI for each year.
C.What is the inflation rate from 2020 to 2021?
D.What is the inflation rate from 2021 to 2022?
2.Using the demand and supply for loanable funds and the AD-AS model, illustrate what happens in the economy when the Federal Reserve decides to sell government bonds.
A.What type of policy is this?
B.Why would the Federal Reserve adopt this type of policy?
3.A person deposits $5000 into an account and the reserve requirement is 12.5%.
A.Set up a T-account
C.How much is money created through fractional reserve banking?
B.If the Federal Reserve purchased $75,000 in government bonds, how much money would be created?
4.An individual made $85,000 for the year. Using the tax table above, answer the following questions:
A. What is this person's marginal tax rate?
B.How much tax does this person owe?
C.What is the effective tax rate?
Transcribed Image Text:If Taxable Income Is Between:
0 - $9,875
$9,876- $40,125
$40,126 $85,525
$85,526 $163,300
$163,301 - $207,350
$207,351 - $518,400
$518,400
Individual Taxpayers
The Tax Due Is:
10% of taxable income
$987.50 +12% of the amount over $9,875
$4,617.50 +22% of the amount over $40,125
$14,605.50 +24% of the amount over $85,525
$33,271.50 +32% of the amount over $163,300
$47,367.50 + 35% of the amount over $207,350
$156,235 +37% of the amount over $518,400
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