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You are an assistant to a senator who chairs an ad hoe committee on reforming taxes o telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs, Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer's phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the regulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that based on current tax rates, the monthly market demand for telecommunication services is given by Qd=250 -5P and the market supplying (including taxes) is Qs=4P-110(both in millions) where P is the monthly price of telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function reform that would dramatically cut tax rates, leading, to a supply function under the new tax policy of Q^s= 4.171P -110. How much money would a typical consumer save each month as a result of the proposed legislation?
Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment
In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?
Describe the present economic crisis situation in Europe. Why has it been so difficult for the Europeans to find a solution to this problem? Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..
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Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?
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