Why do people still think that trickle down economics works, even though there is no evidence for it?
Because they are either uninformed, delusional, or crooked.Trickle-down economics is a theory that says benefits for the wealthy trickle down to everyone else. These benefits are usually tax cuts on businesses, high-income earners, capital gains and dividends.It doesn’t work.According to research by the International Monetary Fund shows that giving tax cuts to the poor appears to have a dramatic effect:A 1% increase in income for the bottom 25% results in a 0.38% increase in GDP.Meanwhile, the same increase for the top 20% results in a 0.08% decrease in GDP growth.If you give $1,000 to someone making $30,000 a year, they’re going to spend it, increasing demand and raising GDP. Someone making $1 million a year is barely going to notice $1,000, much less spend it at Wal-Mart.Reagan cut the top rate from 70% to 28% and cut corporate taxes from 46% to 40%. As a result, between 1980 and 2005, after-tax household income rose 6 percent for the bottom fifth. That sounds great until you see what happened for the top fifth: Their income increased by 80 percent. The top 1 percent saw their income triple. Instead of trickling down, it appears that prosperity trickles up.It also almost tripled the federal debt, from $997 billion in 1981 to $2.85 trillion in 1989.Tax benefits for the middle and bottom increase growth and income. Tax cuts for the rich do little for GDP, while expanding both the deficit and income inequality.The current GOP tax plan, even with their own growth estimates, will add one trillion dollars to the deficit.Then what happens?Republicans are secretly fine with this, because it gives them a reason to cut social programs: Medicare, Medicaid, the VA, social security, and so on. They’ve been trying to undo the New Deal and The Great Society (LBJ’s creation of Medicare) for decades. Exploding the deficit with tax giveaways to the rich, gives them a sinister way to do it.
Would giving $1000 to the poorest person you know help them or hurt them? What impact would it make to their life?
I have to disagree with all the answers which assume (based on no evidence whatsoever) that $1000 would not do any good, or be wasted.I actually know a very poor person, he is a member of the family. He has schizophrenia and has lived on the streets at one point. He is surviving now on a small disability pension which covers his rent/accomodation, volunteer work at a community shelter (which provides a lot of his meals), and another family member has a food box sent to his home twice a month. We do give him cash money, up to $2000 per year though not all at once. With all the medications he needs to take to avoid becoming completely unstable and violent, he can only work about 3 hours a day. He sleeps a lot but he is independent, very functional and is a valued member of his community through his volunteer work.The impact to his life when we give a large gift of cash? Well, he can buy gifts for his large group of friends including street people. At first I found this annoying, but I think it's actually for the best. They are the ones he can go to for help in the future, and it gives him some standing as a person of merit in the community. The gift currency in his social group is, sadly, cigarettes. He doesn't smoke any more, but he can buy them for his friends and they can trade them for other things, or use them to purchase future favors. So the $1000 (or $2000) is actually improving the life of more than just one person, and is being administered by someone who actually knows what it's like to be poor.With our contributions he buys food, new clothes at the second hand store, and other basic things that he generally has to do without, and second hand gifts for others who need it more. He also was able to get training in a personal service trade, and get accredited. He doesn't earn a lot from this, but it's been a huge boost to his self esteem. I'm not sure whether our money helped him accomplish this or not, but probably.
How was the religion and economy in europe 1600-1700?PLZ HELP?
The religion was Catholic in France, Spain, Portugal and Greece. In The Netherlands and in England it was Protestant. Germany was not yet a nation, but numerous states, some of which were Catholic and some Protestant (Lutheran). This led to tensions and war. The Catholic inclined Stuart kings of England looked to France for inspiration - after Charles I had been executed, his son, the future Charles II took refuge in France. When James II ascended the throne as a Catholic there were tensions between him and Parliament which led to his eventual overthrow and the invitation to the Protestant William of Orange and his wife Mary to become joint monarchs. France began to take a harder line against Protestants during the century with Louis XIV repealing the Edict of Nantes which allowed religious toleration. Generally the century, throughout Europe, was not noted for toleration anywhere with constant conflict between Catholic and.Protestant. I'll leave someone else to comment on economy.
If you were given $1,000 to change the life of a perfect stranger, what would you do?
I would find a sad and lonely person who was also very pessimistic and pay for an experience where they can help others in the hope that they will find that giving of yourself can be a great present to yourself as well as the person who is helped. I would take this stranger to a children's hospital ward with board games and other interactive fun games so that they can interact with the sick children and see how happy they are when they have new people spending time with them and taking their mind's off their illness. The stranger will see that their life isn't so bad and every time they feel themselves getting sad or pessimistic they can remember how happy they made these sick children. With any luck, the stranger would continue to see the sick children. Good deeds are often contagious and when others find out about what you are doing it can encourage others to do the same. The more we get out there and help others, the better off we will all be. It can even be something very small - for example, I was once driving over the Harbour Bridge and went to pay the toll and was told that the person in front had paid mine as well and wished me a happy day. I, of course, paid someone else's toll another day. This chain reaction of good deeds hopefully is still happening!
PLEASE HELP IN ECONOMICS!?
1 I guess everyone will have a different answer to that one. I don;t think many people actually think in terms of the optimal consumption rule, but we have budgets for different expenses, food, rent, clothing... I would say that the optimal consumption rule is likely to apply more or less once these basics have been catered to. Personally my entertainment spending follows optimal alocation rule, I do ponder what would give me more bang for my buck, chocolate or ice cream... for example. I guess if we really wanted to be closer to the rule, we shoudl allocate the basics based on the rule, but it's quite difficult. Rent for example is chunky and is quite a fixed expenditure. 2 Both fruits cost $1 each, and you get more utils from your last apple. Hence you should switch your expenditure fromoranges to apples, more apples will cause the utils from each succcessive apple to fall, whereas less oranges will do the reverse to utils from oranges. You stop reallocation when the utils from the last apple are equal to the utils from the last orange. You'd then be in equilibrium, unable to change allocation without being worse off. 3 I don;t know what your chapter suggested. However, a voucher system basically forces some spending in specific areas. FOr example, education. Instead of getting $50, you get a voucher worth $50 that you can only spend on education, so either you spend it on education, or it goes to waste. If a voucher system is designed properly, then all educational institutions should accept them. Schools you wouldn't be able to afford with cash, you still wouldn't be able to aford with vouchers. However, different people value different things differently. May be to you, $25 is enough to spend on education, but the voucher has transformed your $50 into a $50 voucher, so to you you are overspending on education. Also vouchers are 'chunky'; if your school costs $37.5, you ar ein effect losing $12.5 when using your $50 voucher. (Getting change from voucher use makes voucher useless as it would be close-cash). Hope that helped
Help with Micro Economic problem on lottery annuity?
This is not too difficult. You simply need to calculate the Present Value of the stream of payments under each condition. In the first case, this would be: $1,000+$1,000/(1.09)^1+$1,000/(1.09)^2 = $2,759.11 Similarly, if you had an interest rate of 11%, the calculation would be this: $1,000+$1,000/(1.11)^1+$1,000/(1.11)^2 = $2,712.53. The general formula is for an annuity amount of (p) over time period (t) for a given interest rate (i) over a number of time periods (n) the Present Value should be: PV=p+p/(1+i)^t1+p/(1+i)^t2+p/(1+i)^t3.... where the number of payments depends on the number of time periods over which the annuity will pay out. This equation says that the total value of the annuity will increase for every additional year the annuity pays out, but each succeeding payout will be smaller in present value terms because it is further away in time. You can keep extending this equation out for any number of periods So the answers to your questions are under a 9% interest rate, you would be happier with the annuity, since the Present Value of the stream of payments would be higher than what you are offered as a lump sum. With an 11% interest rate, you would be happier with the lump sum, since the Present Value of the stream of payments would be lower than what you are offered as a lump sum. As for your lucky friend, the answer would depend on what interest rate she could get. She would have to do the math to figure it out. Either way, you would not be losing a lot of money by choosing incorrectly (less than $30 in the worst case) so it doesn't really matter much. But don't say that on your homework, the teacher might not take it well.