When the candidates promise the moon in pre-election time, what fundamental economic logic is swept under the brush and not mentioned by the candidates?
Answer to Problem 1E
The economic concept, 1) only that much of
Explanation of Solution
Let us take the example of the fine business person that American President, Mr. Donald trump is. Before elections, Trump had promised to revive the business competitiveness. For this, he proposed corporate tax cut from substantial 35% to 21%. He went by his words and reduced the tax rate in his first term. Now let us see the likely results. Tax cuts mean greater profit for the companies. That is fine for the corporates. However, what is in store for the economy?
Tax cuts mean lower supply of disposable funds for the government. This translates to slackening of the economy owing to lesser spending by the government on essential nation building activities like infrastructure, social responsibilities, healthcare, military etc.
Again, when some pre-poll candidate is vowing to increase budget of healthcare, because the supply of money is limited, either that may lead to less expenditure in fields like infrastructure or increasing money supply by levying excess tax from companies or the common people. Demand (of voters) that can be met is a function of the available resources. Scarce supply cannot lead to greater supply of any commodity.
It is not that candidates do not understand the implication of the sky-high promises they make, if they were to execute them. However, the voters also play a part in these untenable statements by falling for it and electing that candidate.
Introduction:
Anything in the economy is based on
Want to see more full solutions like this?
- Bzbsbsbdbdbdbdarrow_forwardRecent research indicates potential health benefits associated with coffee consumption, including a potential reduction in the incidence of liver disease. Simultaneously, new technology is being applied to coffee bean harvesting, leading to cost reductions in coffee production. How will these developmentsaffect the demand and supply of coffee? How will the equilibrium price and quantity of coffee change? Use both words and graphs to explain.arrow_forwardRecent research indicates potential health benefits associated with coffee consumption, including a potential reduction in the incidence of liver disease. Simultaneously, new technology is being applied to coffee bean harvesting, leading to cost reductions in coffee production. How will these developmentsaffect the demand and supply of coffee? How will the equilibrium price and quantity of coffee change? Use both words and graphs to explain.arrow_forward
- ► What are the 95% confidence intervals for the intercept and slope in this regression of college grade point average (GPA) on high school GPA? colGPA = 1.39 + .412 hsGPA (.33) (.094)arrow_forwardG Interpret the following estimated regression equations: wagehr = 0.5+ 2.5exper, where wagehr is the wage, measured in £/hour and exper is years of experience, colGPA = 1.39.412 hsGPA where colGPA is grade point average for a college student, and hsGPA is the grade point average they achieved in high school, cons 124.84 +0.853 inc where cons and inc are annual household consumption and income, both measured in dollars What is (i) the predicted hourly wage for someone with five years of experience? (ii) the predicted grade point average in college for a student whose grade point average in high school was 4.0, (iii) the predicted consumption when household income is $30000? =arrow_forward1. Solving the system of inequalities: I≥3 x+y1 2. Graph y=-2(x+2)(x-3) 3. Please graph the following quadratic inequalities Solve y≤ -1²+2+3arrow_forward
- Not use ai pleasearrow_forwardnot use ai pleasearrow_forwardWhat are the key factors that influence the decline of traditional retail businesses in the digital economy? 2. How does consumer behavior impact the success or failure of legacy retail brands? 3. What role does technological innovation play in sustaining long-term competitiveness for retailers? 4. How can traditional retailers effectively adapt their business models to meet evolving market demands?arrow_forward
- Problem 1.1 Cyber security is a very costly dimension of doing business for many retailers and their customers who use credit and debit cards. A recent data breach of U.S.-based Home Depot involved some 56 million cardholders. Just to investigate and cover the immediate direct costs of this identity theft amounted to an estimated $62,000,000, of which $27,000,000 was recovered by insurance company payments. This does not include indirect costs, such as, lost future business, costs to banks, and cost to replace cards. If a cyber security vendor had proposed 8 years before the breach that a $10,000,000 investment in a malware detection system could guard the company's computer and payment systems from such a breach, would it have kept up with the rate of inflation estimated at 4% per year?arrow_forwardNot use ai pleasearrow_forwardAnalyze financial banking products from the Asset-Based Financial Products side (like credit cards, loans, mortgages, etc.). Examine aspects such as liquidity, risk, and profitability from a company and an individual point of view. Ensure that the interventions demonstrate analytical skills and clearly express the points of view regarding the topic.arrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
