5. The market for loanable funds and government policyThe following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help youcomplete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of eachindividual scenario. (Note: You will not be graded on any changes you make to the graph.)INTEREST RATE (Percent)SupplyDemandLOANABLE FUNDS (Billions of dollars)DemandSupply(?)Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annualcontribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year.Shift the appropriate curve on the graph to reflect this change.This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds toinvestment spending toand the level ofScenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose thegovernment implements a new investment tax credit. INTEREST RATE (Percent)SupplyDemandLOANABLE FUNDS (Billions of dollars)Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annualcontribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year.Shift the appropriate curve on the graph to reflect this change.This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds toinvestment spending toShift the appropriate curve on the graph reflect this change.The implementation of the new tax credit causes the interest rate toDemandSupplyScenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose thegovernment implements a new investment tax credit.This change in spending causes the government to run a budgetThis causes the interest rate toShift the appropriate curve on the graph to reflect this change.Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changingtaxes.and the level of saving to""whichand the level ofthe level of investment spending.national saving.

Loanable funds market, is the market where funds are being borrowed and lent.Lending of funds is…

5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply ? Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to investment spending to and the level of Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the

5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply ? Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to investment spending to and the level of Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose Sam has a total taxable income of $40,000, and he must pay $3,600 in taxes for clothing purchased this year. Teresa has a total taxable income of $60,000. The average tax rate for Sam is %. Based on Teresa's taxable income and the average tax rate you found for Sam in the prior question, calculate the minimum amount of tax Teresa must pay to achieve each tax structure listed in the following table. Type of Tax Structure Progressive Proportional Regressive Tax Needed to Achieve Tax Structure (Dollars)
Consider an economy in which individuals choose between work time and leisure time. They spend all of their wages from work hours on consumption goods. Suppose that the government introduces an ad valorem tax of 45 percent imposed on all consumption goods and on leisure time. In the case of consumption, the tax applies to the expenditure amount. In the case of leisure time, the tax applies to the value of leisure time assessed at the individual's hourly wage from labour. What income tax rate is equivalent to this tax on consumption and leisure? [NOTE: If necessary, please round your answer to the nearest percent. Enter the whole number corresponding to the percentage rate. Do not enter the percent sign. For example, if your answer is 12 percent, you should enter 12 in the answer space, not 0.12.]
1. A middle-income worker with a dependent spouse older than the normal retirement age retired in January 2004. In the year prior to retirement, her gross monthly earnings are $1,500. Her Social Security pension benefit is $1,000 per month. Prior to retirement, she was subject to total taxes on her labor earnings amounting to 20 percent. Calculate her gross and net replacement rates. Suppose the cash value of Medicare subsidies that she expects to receive during retirement amount to $2,000 per year. Recalculate the replacement rates, including the Medicare benefits.
Consider the following hypothetical income tax brackets for a married couple. Assume for simplicity there are no exomptions or deductions Income $0-520,000 $20,000-$50,000 $50,000-$100,000 Over $100,000 Tax Rate 10% 20 35 50 Suppose the couple's income is $90,000. What is the couple's marginal tax rate? The couple's marginal tax rate is percent. (Enter your response as an integer.)
Consider the following hypothetical income tax brackets for a married couple. Assume for simplicity there are no exemptions or deductions. Income $0-$20,000 $20,000-$50,000 $50,000-$100,000 Over $100,000 Tax Rate 10% 20 45 50 Suppose the couple's income is $70,000. What is the couple's marginal tax rate? The couple's marginal tax rate is 45 percent. (Enter your response as an integer.) What is their average tax rate? The couple's average tax rate is percent. (Enter your response as a real number rounded to one decimal place.)
Suppose in Fiscal illegal there is a 0 percent tax on the first 10,000 of income, but there is a 20% tax on earnings between $10,000 and $20,000 and a 30% tax on income $20,000 and $30,000. Any income above $30,000 is taxed at 40%. If your income is $70,000, how much will you pay in taxes? Determine your average tax rate?
The calculation used by social security to calculate retirement benefits is meant to replace ______________ preretirement income for low-income retirees than high-income retirees.
Marissa just got hired at a new job for an annual salary of $112,200. After the standard deduction, her taxable income will be $100,000. Use the marginal tax rates shown in the table to calculate how much she will owe in income taxes if she has no other income and no additional deductions. 2019 Tax Rate Schedule for Single People For taxable income over... ...but not over... ...the marginal tax rate is: $0 $9,700 10% $9,700 $39,475 12% $39,475 $84,200 22% $84,200 $160,725 24% $160,725 $204,100 32% $204,100 $510,300 35% $510,300 - 37% a. Marissa will pay $ in income taxes. b. What share of her income would she be paying in taxes? %
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability: Taxes owed = (1/4 of income) - $12,000 %3D A family earning $48,000 before taxes would have how much after-tax income? Select one: a. $48,000 b. $12,000 C. $0 d. $32,000
Suppose you return to college and earn an MBA, after which you get a middle-management position with General Mills, the firm that makes Lucky Charms and other breakfast cereals. If the tax rates are the same as in 2018 and your starting salary is $90,000, how much will General Mills pay on your behalf in federal social insurance taxes?
Suppose that a nation decides to introduce a new income tax system with the tax brackets shown in the table. Income range Tax rate $0-$20,000 0% $20,001–$39,000 31% 42% $39,001-$70,000 $70,001+ 50% Use the table to calculate the average tax rate and marginal tax rate for each of the families. Where applicable, round your answer to the nearest whole number.
Federal income tax is (a. progressive b. proportionate (flat) c. regressive) , Social Security tax is (a. progressive b. proportionate (flat) c. regressive ) , Medicare tax is (a. progressive b. proportionate (flat) c. regressive) and sales tax is (a. progressive b. proportionate (flat) c. regressive) when comparing an income of $50,000 per year to an income of $150,000 per year.