Question

can anyone help me answer these questions?

WHO nemde Microsoft Word Actonated Аавьсо Аавысіб Аавьсс Аавьсс Аав аас даас авсар даасар Аавьсер Аавьса 1. What is a business cycle? Why are macroeconomic fluctuations a cause for concern? 2. Suppose that a tax system is set up as follows: Everyone gets to subtract $3,000 from their income and then pays the government 20 percent of the rest. Is this tax proportional, progressive, or regressive? Show your reasoning. (Hint: Calculate what households with incomes of $10,000 per year. $50,000 per year, and $100,000 per year would pay in taxes and what percentage of their total income their taxes represent.) 3. Choose two countries not mentioned in the textbook and write a paragraph comparing their performance on the Gini ratio and according to income share by quintile. Which country seems to have a more unequal distribution of income? For data, consult the World Development Indicators Online database 4. What are the three approaches to GDP measurement? Explain why, in a simple economy, the three approaches would yield the same figure for the value of total production. Type here to search OP e

Answer 1

1)Business cycle shows the trends that occur in the economy during a period of time. It is also called trade cycle. It determines the level of economic activities based on various phases the economy goes through. The four phases are expansion, peak, contraction, trough.

The macroeconomic fluctuations are a cause of concern because:

These change the inflation rates , which impact the living standards of people. Since the people are bound by wage contracts,it becomes difficult for the workers to adjust to increasing prices when their wages do not increase.

Also these causes recession and contraction which are causes of low demand, unemployment etc which could again effect the people of an economy and their living standards.

Morever these fluctuations also cause the interest rates to rise and fall which impacts the borrowing and lending rates and patterns.

The imports and exports are also influenced by these fluctuations and these also impact the fluctuations which could change the Foreign exchange reserves.

2) This could be shown with the given incomes:

Tax on $10,000 per year would be

10,000-3000=$7000

Tax is 20% ,so 20% of $7000=$1400 would be the tax for income of $10,000

1400/10000=14%

Now if income is $50,000

50,000-3000=$47000

20% of $47,000=$9400

9400/50000=18.8%

If the income is $100,000 per year

100,000-3000=97000

20% of 97000=$19400

19400/100000=19.4%

So from the above calculation we can see that the tax rate is increasing with the increase in income.

Hence this type of tax is called progressive tax system.