Y=C0+C1(Y-T)+I+G, C0=100 dollars, C1=0.8 (1) Suppose that tax collection (t) increases as much as 200 dollars. What would be its effect on national income? (2) Suppose that government expenditure (G) and tax collection (T) increases as much as 200 dollars, respectively. What would be its effect on national income?
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Y=C0+C1(Y-T)+I+G, C0=100 dollars, C1=0.8
(1) Suppose that tax collection (t) increases as much as 200 dollars. What would be its effect on
(2) Suppose that government expenditure (G) and tax collection (T) increases as much as 200 dollars, respectively. What would be its effect on national income?
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- Your research into a nation has yielded the following Information: Autonomous expenditure (A) = $300 Gross Investment (1) = $200 Government purchases (G) = $300 Net exports (NX) = $225 Taxes (T) = $300 MPC=0.75 Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. Substitute the values above into the equation: AE=A+ [MPC × (Y-T)] +1+G+NX to determine the abbreviated equation for aggregate expenditures (AE). AE= Y b. Knowing that AE - Y at the equilibrium level of output, what is the equilibrium level of output for this nation? Ye: $ c. What is the tax multiplier for this economy? d. If taxes decrease by $40, from $300 to $260, what is the new equilibrium level of output? Ye: $ e. With this new tax level of $260, the government will O have enough tax revenue to pay for all its imports. O collect more in taxes than it spends on government purchases. O not tax businesses enough. • spend more on government purchases than…C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550Q.2.5 Calculate what the new equilibrium income should be if the government of thiscountry decides to cancel all taxes, implying the tax rate would now be 0%.Consider the following economy: C = 300 + 0.8 (Y – T) I = $300 G = $200 and T = $250 What is the equilibrium level of national income? What is the change in national income, if only government spending increases by $10? What is the government spending multiplier? What is the change in national income, if only taxes increase by $10? What is the tax multiplier? Based on (b) and (c), does the balanced budget multiplier theorem hold? What is the change in national income, if both government spending and taxes increase by $10 each?
- Now calculate the government's tax revenue if it sets a tax of $0, $20, $40, $50, $60, $80, or $100 per bottle. (Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer curve by using the green points (triangle symbol) to plot total tax revenue at each of those tax levels. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. TAX REVENUE (Dollars) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 0 10 20 True 30 40 50 60 70 TAX (Dollars per bottle) False 80 + 90 100 pose the government is currently imposing a $60-per-bottle tax on gin. Laffer Curve True or False: The government can raise its tax revenue by increasing the per-unit tax on gin. ?Assume for the following scenario that there is a 10% sales tax on gasoline. Gasoline Expenditures Total Tax Due Name (Dollars) (Dollars) Determine the amount of money each individual in the following table spends on gasoline taxes and their average tax rate. Total Taxable Income Average Tax Rate (Percent) (Dollars) Tim 10,000 10,000 Brian 40,000 32,000 Crystal 55,000 38,500 Hilary 85,000 51,000 Given the information in the previous table, sales tax on gasoline is because the average tax rate as income rises.C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Calculate the tax revenue to the government of this country when the economy remains in equilibrium. Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%. Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?
- QUESTION 18 Answer questions 17 and 18 based on the following information: As you know, Flabovia has adopted a Value Added Tax (VAT); the tax rate across the board is 15%. A farmer grows vegetables and sells them to the wholesaler for $1/lb. The wholesaler sells them to the local market for $3/lb. The market then sells them to its customers for $10/lb. Question 18. What is the net tax paid by the wholesaler? O a. $0.15 O b. $0.45 c. $1.15 d. $0.30 O e. None of the Above QUESTION 19 For most companies, Tax Havens offer the benefits/advantages of_ O a. More sales and lower costs of production O b. Easier access to their markets and less regulation O c. Lower taxes and more regulation Od. Less regulation and lower taxes O e. Larger markets and less regulation andSuppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) Find out the equilibrium value of income. (b) What is the value of export multiplier?Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) If the equilibrium national income is less than the full-employment level of income by N$100, what should be the increase in government spending or in exports to attain the full-employment level of income? (b) With a help of a diagram explain and discuss life cycle hypothesis.
- The economy of Godzillaland is represented by the following:C=50+0.25Y d , T=1000, G=1000, I=100 (a) Calculate the equilibrium level of output. Graph your solution. (b) If the government spending increases by 50 what is the new equilibrium level of output? Use the government spending multiplier. (c) If the government increases taxes by 50 what is the new equilibrium level of output? Use the tax multiplier. (d) If the government increases taxes and spending by 50 what is the new equilibrium level of output? (e) Calculate the equilibrium level of output in case where taxes depend on income according to the following: T=-25+0.125Y.In February 2020, 15,300 people were employed, 2,700 were unemployed, and 7,000 people were not in the labor force. During March 2020, 160 people lost their jobs and didn't look for new ones, 140 people quit their jobs and retired, 800 unemployed people were hired, 100 people stopped looking for jobs and quit the labor force, and 700 people entered the labor force to look for work. a. Calculate for February 2020 i. The unemployment rate ii. The employment-to-population ratio b. Calculate for the end of March 2020 i. The number of people unemployed ii. The number of people employed iii. The unemployment rateC = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Q.2.5 Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.