You graduate from college and take a job at a consulting firm with a wage of $25 per hour. your job is extremely flexible: you can choose to work any number of hours from 0 to 2,000 per year. a. suppose that there is an income tax of the following form: income up to $10,000: no tax income from $10,000 to $30,000: 20% tax rate income from $30,000 up: 30% tax rate draw your budget constraint with the tax and under a policy of no taxes. with the tax system in place, are there any points that you are particularly unlikely to choose? why or why not?

b. say that you choose to work 1,500 hours per year. what is your marginal tax rate? what is your average tax rate? do these rates differ? why or why not?

c. suppose that the two tax rates are increased to 25% and 50%. what is the likely effect on the labor supply of the primary earner? what is the likely effect on secondary earners? explain how the responses might differ between these groups, both in terms of underlying economic effects and in terms of the empirical evidence on labor supply responses.

In year 1, the bennetts' 25-year-old daughter, jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. in previous years, jane has never worked and her parents have always been able to claim her as a dependent. in year 1, a kind neighbor offers to pay for all of jane's educational and living expenses. which of the following statements is most accurate regarding whether jane's parents would be allowed to claim an exemption for jane in year 1 assuming the neighbor pays for all of jane's support? a.no, jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative.b.yes, because she is a full-time student and does not provide more than half of her own support, jane is considered her parent's qualifying child.c.no, jane is too old to be considered a qualifying child and fails the support test of a qualifying relative.d.yes, because she is a student, her absence is considered as "temporary." consequently she meets the residence test and is a considered a qualifying child of the bennetts.

Match the different financial task to their corresponding financial life cycle phases

Which of the statements best describes why the aggregate demand curve is downward sloping? an increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases. as the aggregate price level increases, consumer expectations about the future change. as the aggregate price level decreases, the stock of existing physical capital increases. as a good's price increases, holding all else constant, the good's quantity demanded decreases.