Reference no: EM131542202

1. Assume that you have won $2 million in the California lottery. Explain exactlywhat you would do with this windfall within the next year.

2. Using your response to the above example:

a. What would be your MP0 (marginal propensity to consume) and your MP8 (marginal propensity to save)? Refer to lecture notes explaining each.

b. Instead of an extra $2 million assume you get an extra $2,000. What would be your MP0 and MP5 in this case?

c. Explain why there was or was not a change from 'a' to 'b' above.

3. Assume that you feel you have a great idea for a startup web based business. You've done quite a bit of research and with an investment of$50,000 feel that this business could potentially give you a return of 20% per year on your initial investment ($1 0000). The problem though, is if you borrow $50,000 for this business you will not be able to continue your education and eventually your bachelor's degree in business management because you won't have the money to pay for it. Which investment in this case do you think is more important (business or education)? Explain your reasoning in detail.

4. Wealthy members of the US society are taxed at the highest rates while a large percentage of non-wealthy Americans pay the lowest taxes and in many cases no taxes at all (see the last portion of the lecture). Explain why or why not you feel this is or is not fair.

5. Explain in detail how you would structure the tax system on wage earners. About 46% of all US debt is owed to foreign governments.

a. List what you think would be two advantages to borrowing money from foreign governments by the US.

b. List what you think would be two disadvantages to borrowing money from foreign governments by the US.

c. In your own opinion, how could the fact that we owe foreign countries money we've borrowed from them be a possible preventive measure against war (technological, economic, or military)?