Suppose the private market return is r=20%. The economy has progressive tax system as follows. Low income: t=10%, High income: t=30%. Assume each group has some amount of capital that can be invested in either a private bond or state bond. Low income: $100,000 to invest, Moderate income: $50,000 to invest, High income: $250,000 to invest. Suppose the state government needs to raise $350,000. a. How much does the state government save or lose? b. How much does the federal government save or lose?

Suppose the private market return is r=20%. The economy has progressive tax system as follows. Low income: t=10%, High income: t=30%. Assume each group has some amount of capital that can be invested in either a private bond or state bond. Low income: $100,000 to invest, Moderate income: $50,000 to invest, High income: $250,000 to invest. Suppose the state government needs to raise $350,000. a. How much does the state government save or lose? b. How much does the federal government save or lose?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter11: Fiscal Policy And The Federal Budget

Section: Chapter Questions

Problem 5WNG

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True or False: A progressive tax system is one in which the average tax rate increases as income increases. Don't use Ai
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