The Local Operations Manager for the Internal Revenue Service Must

question 50

Multiple Choice

The local operations manager for the Internal Revenue Service must decide whether to hire one, two, or three temporary tax examiners for the upcoming tax season. She estimates that net revenues (in thousands of dollars) will vary with how well taxpayers comply with the new tax code just passed by Congress, as follows:
If she feels the chances of low, medium, and high compliance are 20 percent, 30 percent, and 50 percent respectively, what is her expected value of perfect information?

• A) $16,000
• B) $26,000
• C) $46,000
• D) $48,000
• E) $50,000

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Definitions:

Aggregate Demand

Total pull for goods and services in an economy, measured at a specific wide price level during a prescribed time scope.

Economic Boom

A period characterized by significant expansion in the economy, marked by increased production and consumption, lower unemployment rates, and robust economic growth.

Government Expenditures

Represents the total spending by the government on goods, services, and public works.

Money Supply

The entire pool of monetary assets at a specific point in an economy's timeline.