This topic contains a solution. Click here to go to the answer

Author Question: How does an increase in the proportional labor income tax modify the consumer's budget constraint? ... (Read 151 times)

sammy

  • Hero Member
  • *****
  • Posts: 818
How does an increase in the proportional labor income tax modify the consumer's budget constraint?
 
  A) a parallel move up
  B) a parallel move down
  C) the slope decreases (constraint gets steeper)
  D) the slope increases (constraint gets flatter)

Question 2

Explain whether each of the following variables is a lagging, leading, or coincident indicator: In each case, is the economy likely in a recession, heading for a recession, in an expansion, or heading for an expansion?
 
  a. Industrial production is falling.
  b. The number of building permits issued for new private housing units begins to decline.
  c. The number and amount of commercial and industrial loans start to rise.
  d. The average prime interest rate charged by banks begins to fall.
  e. The M2 money supply begins to rise.

Question 3

Explain how each of the following might make use of the futures market. (a) A lender who is worried that its cost of funds might rise during the term of a loan it has made (b) A speculator who believes strongly that interest rates will rise
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

juwms

  • Sr. Member
  • ****
  • Posts: 337
Answer to Question 1

D

Answer to Question 2

a. Industrial production is a coincident indicator, as it tends to rise and fall at the same time as real GDP and other measures of aggregate economic activity. Since industrial production is falling, the economy is likely in a recession.
b. The number of building permits issued for new private housing units is a leading indicator, as it tends to rise and fall in advance of real GDP and other measures of aggregate economic activity. Since the number of issued permits is beginning to decline, the economy is likely heading for a recession.
c. Commercial and industrial loans are lagging indicators, as they tend to rise and fall after real GDP and other measures of aggregate economic activity. Since these loans are starting to rise, the economy is likely already in an expansion.
d. The average prime interest rate charged by banks is a lagging indicator, as it tends to rise and fall after real GDP and other measures of aggregate economic activity. Since the prime rate is beginning to fall, the economy is likely already in a recession.
e. The M2 money supply is a leading indicator, as it tends to rise and fall in advance of real GDP and other measures of aggregate economic activity. Since M2 is beginning to rise, the economy is likely heading for an expansion.

Answer to Question 3

(a) The lender could hedge the risk by selling futures contracts on Treasury bills.
(b) The speculator could buy futures contracts on Treasury bills.




sammy

  • Member
  • Posts: 818
Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)


sarah_brady415

  • Member
  • Posts: 328
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

Chronic marijuana use can damage the white blood cells and reduce the immune system's ability to respond to disease by as much as 40%. Without a strong immune system, the body is vulnerable to all kinds of degenerative and infectious diseases.

Did you know?

Parkinson's disease is both chronic and progressive. This means that it persists over a long period of time and that its symptoms grow worse over time.

For a complete list of videos, visit our video library