Unit 2 Assignment #2

Unit 2 Assignment #2 - HURT OR HELPED 1 A state government...

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HURT OR HELPED 1. A state government receives revenue mainly from a progressive income tax. U : This is dependent upon the increase of tax revenue in correlation to the increase of inflation. If the increase of tax revenue is slower, then it will hurt the state government. 2. A local government receives revenue mainly from fixed-rate license fees charged to businesses. H : The revenue received will have less purchasing power if the rate is fixed. If the rate had increased with the rate of inflation, then it would the purchasing power would remain the same. 3. Your friend rents an apartment with a three-year lease. G : The rent payments will remain fixed, but the purchasing power of those rent payments will decrease. Thus, the friend is actually, theoretically, spending less in views of actual purchasing power. 4. A bank has loaned millions of dollars for home mortgages at a fixed rate of interest. H : When these loans are repaid in the future when there is an increase in inflation, then the repayments will have less purchasing power. 5. Parents are putting savings for their child's college education in a bank savings account.
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Unit 2 Assignment #2 - HURT OR HELPED 1 A state government...

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