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The government will be decreasing
income taxes. To an entity producing
luxury bags, it would:
A. Expect lower
B. Expect higher economic growth and may plan to produce more of these bags.
C. Expect lower economic growth and may plan to produce more of these bags.
D. Expect higher economic growth and may plan to produce less of these bags.
Step by step
Solved in 2 steps
- 1) Fiscal policy refers to a) making changes in private expenditures as a result of changes in government spending. b) making changes in the quantity of money to achieve particular economic goals. c) efforts to balance a government's budget. d) making changes to government budgets to achieve particular economic goals. 2) The economy suffers a positive supply shock. As a result, in the short run Real GDP will and the price level will a) fall; fall b) fall; rise c) fall; remain constant d) rise; fall 3) A change in Real GDP in the short run can be brought about by a change in a) labor productivity. b) wealth. c) All of the options available d) the exchange rate. 4) An expansionary fiscal policy will a) never result in a budget surplus. b) always result in a budget deficit. c) sometimes result in a budget deficit. d) always result in a budget surplus.2. Which of the following is a fiscal policy that would increase aggregate demand in the short-run? (A) A decrease in personal income taxes (B) A decrease in government spending (C) An increase in corporate income taxes (D) A purchase of government bonds by the Federal ReserveAssume the government introduces a lump-sum tax on each firm within a perfectly competitive industry. Which of the following will be true after the introduction of this tax? a. Consumer prices will increase b. There will be no change in any firm’s level of profits c. A deadweight efficiency loss will occur d. There will be no change in the market quantity of output
- The government announces a cut in the income tax rate. Explain the multiplier effect by analysing how a typical consumer would react to this tax cut and which other decisions this reaction would trigger in the economy.In the short-run macro model, if aggregate expenditure is less than GDP, output in the future will a. decline as firms cut production to stop the buildup of inventories b. increase as firms cut their prices to try to stop depletion of inventories c. remain unchanged indefinitely unless government takes action d. decline as firms increase their prices to stop the buildup of inventories e. increase as firms increase production to try to stop depletion of inventorieswhich of the following is an example of unsystematic risk? decrease income tax for all company soft tech won a new sales contract increase in inflammation rate deccrease in government bond rate
- If we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.Suppose a government starts spending less than it receives in tax revenue each year. All else equal, this action would cause the net present value of firms' projects to do what: a. Increase b. Decrease c. Change uncertainly d. Not changeTax planning is the act of arranging one’s tax affairs in ways that postpone or avoid taxes. By employing effective tax planning variables, one can have more positive cash flows to save and invest or more money to spend.Required:Explain what constitutes the variables of tax planning. The Government of Ghana has been worried by the rising incidence of Transfer Pricing abuses by Multinational and Group Companies. For this reason, it introduced new transfer pricing rules and guidelines through the Transfer Pricing Regulations, 2012 (LI 2188).Required:a. Explain any four (4) objectives of the transfer pricing regulations of Ghanab. Explain the arm’s length principle
- Lower rates of interest means higher levels of loans, and therefore, higher level of investment in real capital equipment. With more capital we would expect an economy to be more productive and to have higher levels or real income and economic growth. Critically analyse this statement by connecting it with the financial intermediaries and how viral they are to a well-functioning financial system.One of the main arguments against using Fiscal Policy is the crowding out effect. Suppose the government uses government purchases to stimulate the economy. a) Explain the crowding out effect in detail using a graph for the bond market, the money market, the foreign exchange market, and the AD SRAS LRAS model. b). Explain quantitative easing? c) If the Fed’s current policy is quantitative easing, do you think that there is a danger of the government’s current fiscal policy being crowded out? Why or Why not? Explanation required for credit.Explain in your own words, how you believe a reduction in the General Consumption Tax (GCT) rate can positively and/or negatively impact the Jamaican economy.