Week 6 Homework Solutions Question 3 Explain how built-in (or automatic) stabilizers work. What are the differences between proportional‚ progressive‚ and regressive tax systems as they relate to an economy’s built-in stability? Answer In a phrase‚ “net tax revenues vary directly with GDP.” When GDP is rising‚ so are tax collections‚ both income taxes and sales taxes. At the same time‚ government payouts—transfer payments such as unemployment compensation and welfare—are decreasing. Since net
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2 GENERAL COMMENTS This year a total of 4‚ 913 candidates registered for the Principles of Business General Proficiency examination. The examination is comprised of the following Papers: Paper 01 Paper 02 Paper 032 - Multiple Choice Essay Paper Alternative to School Based Assessment (Private Candidates) Paper 01 consists of 60 multiple–choice items taken from the three profiles of the syllabus. The performance of candidates on this paper was commendable. The mean mark was 33.69
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Eventually the budget goes to the Senate for approval & then to the President. 3) Automatic stabilizers are elements of fiscal policy that automatically change in value as national income changes. Three examples of automatic stabilizers are progressive income taxes‚ welfare benefits‚ and unemployment benefits. 4) Fiscal policy is different in different economic systems. The government tends to play a larger role in investment spending in developing countries. A reason for this is that state
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other options Problem 7: Suppose in Fiscalville there is no tax on the first $10‚000‚ of income‚ but Fiscalville imposes a 20% tax on earnings between $10000 and $20000 and a 30% tax on income between $20000 and $30000. Any income above $30000 is taxed at 40%. If your income is $50000‚ how much will you pay in taxes? $13000-Marginal tax rate is 40% and average tax rate is 26%. This is a progressive tax since as income goes up‚ so does tax.
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3. Outline the objectives of economic management and analyse the role of fiscal policy in achieving these objectives in the Australian economy The Australian Government targets economic objectives that may provide equality and higher living standards throughout the country. For these benefits to reach Australian households‚ the Australia government has to overcome objectives such as economic growth‚ distribution of income‚ and external stability. To do so‚ the government uses the fiscal policy
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Session #1 – International Business - Review Part 1: Main topics covered and their explanation - 1) Foreign Direct Investment – a) What is Foreign Direct Investment (FDI)? FDI is “investment for control” in a foreign country – foreign investment where control is acquire‚ vs. Portfolio Investment which includes purchasing securities or bonds of a firm without exercising control over the firm. Most Intl’ units (MFI‚ UNCTAD) classify an FDI if the foreign investor holds at least 10% of the
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pull inflation‚ is when prices rise because the economy cannot produce enough goods to satiate the economy. An automatic stabilizer‚ that is beneficial to combat such a problem‚ is a progressive tax. A progressive tax‚ is a tax that becomes a higher rate for each increasing level of gross domestic product. If such a tax is present within the economy‚ when the society becomes more prosperous‚ such as in the situation with demand-pull inflation‚ the citizens are taxed more‚ therefore decreasing the
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President‚ congress‚ and the senate try their hardest to work together to please the entire population with all of the reforms they make. Not only is paying taxes mandatory for American citizens‚ it is a public duty. The reason people are required to pay tax is because the government uses the money collected to support the country Americans live‚ breath‚ and work in. Taxes are like a form of rent. With our country being as diverse as it is‚ there are many people that cannot survive on their own nor pay
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individual income tax‚ payroll tax (used to finance social) security‚ corporation income tax (tax on net profit of corporations)‚ tax on property. Indirect taxes are custom duties on imported goods from abroad‚ exice taxes (telephone services‚ air travel‚ luxury commodities). VAT (Value-added tax) are taxes on the difference of value of sale and value purchased. Income tax makes a biggest percent in the tax revenue in the USA. USA relies much more on the individual income tax‚ unlike EU countries
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identifies inequality patterns across OECD countries and provides new analysis of their policy and non-policy drivers. One key finding is that education and anti-discrimination policies‚ well-designed labour market institutions and large and/or progressive tax and transfer systems can all reduce income inequality. On this basis‚ the chapter identifies several policy reforms that could yield a double dividend in terms of boosting GDP per capita and reducing income inequality‚ and also flags other policy
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