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Liberty University ECON214 Problem Set 4 Complete Solutions Correct Answers Key

A complete Problem Set 4 solution for ECON214, providing step-by-step answers.

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ECON 214Liberty University ECON214Problem Set4complete solutions correct answers key1)Explain the difference between a budget deficit and the national debt.2)Use the Marginal Income Tax Rates in Figure 15.6 (see p. 463) to compute thefollowing:a.Tax due on taxable income of $100,000, $200,000, and $500,000.b.Average tax rate on taxable income of $100,000, $200,000, and $500,000.3)Greece, Ireland, Portugal, and Spain all went through national budget difficulties in recentyears. Use the data below to answer questions regarding the sovereign debts of thesenationals(All data comes from the OECD and is in billions of current US dollars.).20002010DebtGDPDebtGDPGreece$138$127$455$308Ireland$34$98$ 124$206Portugal$62$118$ 203$231Spain$292$586$734$1,420a.Compute the debt-to-GDP ratio for all four nations in both 2000 and 2010.b.Compute the average yearly budget deficit for each of the nations over this period.c.In your judgment, which of the four nations was in the worse fiscal shape in 2010? Use yourcomputations from above to justify your answer.4)Explain the differences between typical demand side fiscal policy and supply side fiscalpolicy.For each of the following fiscal policy proposals, determine whether the primary focusis on aggregate demand or aggregate supply or both.a.A $1000 per person tax reduction.b.A5% reduction in all tax rates.c.Pell grants, which are government subsidies for college education.d.Government sponsored prizes for new scientific discovery.e.An increase in unemployment compensation.5)Fill in the blanks in the table below. Assume that the MPC is constant over everyone in theeconomy.MPCSpendingmultiplierChange inGovernmentSpendingChange inIncome5502.5-5000.53000.21000

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Document Details

University
Liberty University
Course
ECON 214
Subject
Economics

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