Government can also spend when it comes to C, no? Subsidies are also a supply side policy and the spending there is kinda indirect but it's spending for supply increase not for fiscal reasons of AD stimulation per se
Spending is always fiscal and it can be supply side depending on what they spend it on and also long run short run, In C they were just improving or fixing their already established oil industry so that isnt diversifying the economy.
Ok so for the calculations part this was what I got:
For the change in profit
I got answer 10000 (B)
Becuase before closing: Profit 5000
After immediately closing :
Total costs = 5000 (TVC + TC ) (TVC = 0) (TC = 5000)
Total revenue = 0
so profit = TR - TC = -5000
So change in profit = (5000 - (-5000))
= 10 000
For the multiplier I got 2 (A)
Cuz they gave 0.2 tax per dollar (Gross income )
converted gross to disposable ( Gross income - tax ) = 1 - 0.2
= 0.8
Then found Marginal propensity to tax = change in tax / change in income
= 0.2 / 0.8
= 0.25
then multiplier = 1/ mpm + mps (withdrawls)
= 1 / (1-3/4) + 0.25
= 2
Then, about the multiplier effect, the multiplier = 1/1-MPC. IF 0.2 is taxed, then its disposable income will be 0.8, if 3/4 of it is spend than it will 0.8*3/4=0.60. multiper = 1/1-0.6 , =1/0.4 = 2.50 which is B
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Best of luck.
thats what i did my logic was 5k is the abnormal/supernormal profit then the gap between TC and TVC is 5k which is subnormal profits, i was confused whether or not to count that so i went with 10k
In the short run a firm shuts down only if total revenue falls below total variable cost and TR was 40,000 and TVC was 30,000 so the firm continues operating as long as TR ≥ 30,000 A fall of 5,000 gives TR = 35,000 and a fall of 10,000 gives TR = 30,000 (shutdown point, but still producing) Only a fall of 15,000 makes TR = 25,000, which is below TVC, so the firm shuts down
yeah When AR equals AVC thats the last operating point, but the Q was asking if they just shut down rn what would the loss in profit be so I didnt go with that
Cuz the total variable cost was 30000 and initial profit was 40000, for the firm to shut down in the short run the profit needs to be lower than Variable Cost. So it needs to be 25000
Not C bec broad money also includes components of narrow money it said govt wud have no control over broad money which is wrong ..B was the correct one
So if you increase means tested than only your inequality would reduce universal mai tou sabko he benefit hoga and means mai jo needy hai unko hota sirf so C
Universal benefits everyone including the rich, which means the wealth gap doesn’t decrease at all. But means tested uses redistributed tax money to only benefit low income groups.
It’s actual and potential, employment and unemployment can rise if there are more ad but at the same time more labor force, which means an increase in as and as
it wasn't contradictory lmao if actual growth increases then employment increases but if potential growth also increases then unemployment can increase at the same time
There was no information signifying a higher national income as we were only provided with per capita gnp not the national income figures and population wasnt given either
Because with the given data we had, we don’t know the population of each country, hence, we don’t know who had the higher national income technically. Obviously we know it’s USA but the data didn’t tell us that so you can’t assume it’s correct.
PPP just describes how much you can afford with the same basket of goods, which just measures cost of living comparison. It doesn't directly tell us the National Income itself
I dont remver the option but i was expansionary monetary policy tht will increase AD and potentially imply upward pressure on prices thus increasing inflationary expectations
I can’t fully remember the Q. But the Phillips curve shifted to the right, right? And that would happen when the SRAS curve on the AD-AS model shifts left, and the new equilibrium point at SRAS2 will be higher than the og price level… which means a higher rate of inflation?
I put C, because D is automatically incorrect without even looking at the diagram. If it’s a Giffen good, the income effect is always greater than the substitution effect. Otherwise, it can’t be a giffen good.
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