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a) Let's use the model of inter temporal consumption choice to consider the behaviour of a hypothetical individual. This person is not liquidity constrained and is endowed with an exogenous amount of income in each of the current and the future periods. Assume the person must pay an income tax; that is assume he must pay fraction t of his income in the form of tax.es. Thus if he has of Y dollars then his tax bill is tY dollars and his after-tax income is (1-t)Y dollars. Use the model as an aid to showing that if it is announced the income tax rate imposed on income will increase at some point in the future, this will influence current consumption expenditures. As always, your diagram should be large, neatly drawn, well-labelled and fully explained.
b) On the basis of your answer to part (a), speculate on what this suggests for how and when policy-makers make announcements of policy changes.
c) Suppose you win $100,000. What does the permanent income hypothesis suggest will happen to your consumption spending? Explain.
Suppose Mike and Johnson produce two products- hamburgers and T-shirts. Mike produces 10 hamburgers or 3 T-shirts a day and Johnson produces 7 hamburgers or 4 T-shirts. Assuming they can devote time in making either hamburgers or T-shirts. Draw the p..
q.the pbp company acquired a warm n cook heat treating furnace so that it can properly heat treat parts for its high
An office building should last 60 years, but this owner will sell it at 20 years for 40% of its construction cost. For the first 20 years it can be leased as Class A space, which is all this owner operates. When the building is sold, the land’s cost ..
Your weekly costs to producing q units are given by the following equation: C(q)=7+10q+3.5q2 +q3. With this technology, AC is minimized at approximately q = 1.11. What is the long-run equilibrium price of in this market, given that there are no barri..
A company expects to achieve cost savings of $4,500 the first year and amounts increasing by $800 each year for the next 5 years. At an interest rate of 10% per year, what is the total present worth of the savings?
Consider a committee of Ann, Bob, and Carol that is choosing between three alternatives, {x, y, z}. Player i’s preferences are represented by the ordering i . Suppose the three player’s preferences are: x A y A z. y B z B x. z C x C y. Each player ha..
The consulting firm McKinsey and Company expects this combination of medical care and tourism in India to approach $2 billion a year by 2012.
Does your home state's (AZ) jurisdiction follow a contributory or comparative negligence theory? How does this affect the outcome of lawsuits?
What is wrong with claiming that changes in the distribution of income are associated with trade instead of the technological changes that the article discusses.
Assume an economy without government and without trade. Suppose the Consumption function is given by C=100+0.8Y, whereas I=50. What is the equilibrium level of income in this case? What is the level of saving in equilibrium?
Describe the characteristics of optimal contracts in principal-agent problems when the agent (manager) is risk neutral.
q1. do you believe economic darwinism is reflected in the us banking policy of some banks are too big to fail
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