This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Year 2 nominal GDP is A) 200. B) 270. C) 310. D) 390.[br][br][b][color=#7BCCB5]Question ... (Read 46 times)

mia

  • Hero Member
  • *****
  • Posts: 564
on: Jun 30, 2018
Year 2 nominal GDP is
 
  A) 200.
  B) 270.
  C) 310.
  D) 390.

Question 2

Suppose the government decides to decrease the amount of investment spending that firms are allowed to depreciate for tax purposes from 50 to 25, effective next year.
 
  What effect should this change have on the desired capital stock and the level of investment spending next year? Use a graph to explain your answer.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Li Jun

  • Sr. Member
  • ****
  • Posts: 335
Reply #1 on: Jun 30, 2018
Answer to Question 1

D

Answer to Question 2

If depreciation is decreased, the tax rate on investment projects next year has effectively increased, so the after-tax user cost of capital curve will shift up, from uc1 to uc2. This decreases the desired capital stock from K1 to K2. The decrease in the desired capital stock means the gap between the desired capital stock and yesterday's capital stock has decreased, so firms will decrease investment spending today to try to decrease the capital stock toward the desired level.


mia

  • Member
  • Posts: 564
Reply 2 on: Jun 30, 2018
Wow, this really help

kjohnson

  • Member
  • Posts: 330
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

The most dangerous mercury compound, dimethyl mercury, is so toxic that even a few microliters spilled on the skin can cause death. Mercury has been shown to accumulate in higher amounts in the following types of fish than other types: swordfish, shark, mackerel, tilefish, crab, and tuna.

Did you know?

The first documented use of surgical anesthesia in the United States was in Connecticut in 1844.

Did you know?

More than nineteen million Americans carry the factor V gene that causes blood clots, pulmonary embolism, and heart disease.

Did you know?

Since 1988, the CDC has reported a 99% reduction in bacterial meningitis caused by Haemophilus influenzae, due to the introduction of the vaccine against it.

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

How to solve a linear system when the variable is in the denominator position (Question 2 of 2) How to solve a linear system when the variable is in the denominator position (Question 2 of 2)
How to solve word problems with two unknowns (Question 1) How to solve word problems with two unknowns (Question 1)
How to use Cramer's rule to solve a second-order determinant (Question 2) How to use Cramer's rule to solve a second-order determinant (Question 2)
economic question economic question
Business Math Question Business Math Question
Position effect variegation of eye color in Drosophila Position effect variegation of eye color in Drosophila
Video: Secondary and tertiary levels of protein structure Animation

For a complete list of videos, visit our video library