Identify the role imposing a tax in an economy.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

A health study tracked a group of persons for five years. At the beginning of the study, 20%were classified as heavy smokers, 30% as light smokers, and 50% as nonsmokers. Resultsof the study showed that light smokers were twice as likely as nonsmokers to die duringthe five-year study, but only half as likely as heavy smokers.A randomly selected participant from the study died during the five-year period. Calculatethe probability that the participant was a heavy smoker

Consider two assets with the following returns: State Prob. of state R₁ R2 1 23 13 25% 5% 2 -10% 1% Compute the optimal portfolio for an investor having a Bernoulli utility of net returns u(r) = 2√√r+ 10. Compute the certainty equivalent of the optimal portfolio. Do the results change if short-selling is not allowed? If so, how?

Answer 2

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 6

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 7

Chapter 12, Problem 1.1P

To determine

Identify the role imposing a tax in an economy.

Answer 8

Expert Solution & Answer

Explanation of Solution

When the tax is imposed by the government on an economy, it will reduce the disposable income of the people. When the income falls, people will reduce the consumption. As a result, the overall aggregative demand in an economy will tend to fall. It causes to reduce the employment opportunities and output in an economy. In short, when the tax is imposed on the economy, it will reduce the national output.

If the GDP decreases due to the imposition of tax on an economy, then the investment level will also show a declining trend. The decline in the rate of interest with expansionary fiscal policy can stimulate this problem.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Tax: The tax is a compulsory and unilateral payment made by the people towards the government which acts as the major source of revenue to the government. There are different types of taxes such as the income tax, property tax, professional tax, and so on.

Disposable income: Disposable income refers to the amount remaining after paying all the necessary tax.

Expansionary fiscal policy: It is a form of fiscal policy that involves either decreasing taxes or increasing government expenditures, or both, in order to fight recessionary pressures.

Answer 12

Ch. 12 - Prob. 1.1P Ch. 12 - Prob. 1.2P Ch. 12 - Prob. 2.1P Ch. 12 - Prob. 2.2P Ch. 12 - Prob. 2.3P Ch. 12 - Prob. 2.4P Ch. 12 - Prob. 2.5P Ch. 12 - Prob. 2.6P Ch. 12 - Prob. 2.7P Ch. 12 - Prob. 2.8P

Identify the role imposing a tax in an economy.

Identify the role imposing a tax in an economy.

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions