Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you please help me with this Macroeconomics HW please. Scenarios: 1. Bush tax cut expires, so income taxes increase. 2. Congress passes a bill

Can you please help me with this Macroeconomics HW please.image text in transcribed

Scenarios: 1. Bush tax cut expires, so income taxes increase. 2. Congress passes a bill that increases the amount of investment tax credit. 3. The government starts worrying about its budget deficit, so it decides to reduce government spending. Assignment Requirements To be successful with this homework, you will need to complete the following steps for each of the three scenarios listed above: 1. Draw the loanable funds model diagram. Label everything clearly. Find the initial equilibrium and mark it as Point A 2. Draw in the shift: Find which curve shifts in which direction. Draw in the new curve, label it, and draw in an arrow that indicates the direction of the shift. 3. Find the new equilibrium and mark it Point B 4. Answer the following (write your answers next to the diagram): a. What happens to the equilibrium interest rate? b. What happens to the equilibrium national saving? c. What happens to the equilibrium investment? Scenarios: 1. Bush tax cut expires, so income taxes increase. 2. Congress passes a bill that increases the amount of investment tax credit. 3. The government starts worrying about its budget deficit, so it decides to reduce government spending. Assignment Requirements To be successful with this homework, you will need to complete the following steps for each of the three scenarios listed above: 1. Draw the loanable funds model diagram. Label everything clearly. Find the initial equilibrium and mark it as Point A 2. Draw in the shift: Find which curve shifts in which direction. Draw in the new curve, label it, and draw in an arrow that indicates the direction of the shift. 3. Find the new equilibrium and mark it Point B 4. Answer the following (write your answers next to the diagram): a. What happens to the equilibrium interest rate? b. What happens to the equilibrium national saving? c. What happens to the equilibrium investment

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions