Social Rate of Discount

question 42

Essay

Social Rate of Discount. Assume that the rate of return on long-term government bonds is 10%, a typical after-tax return on investment in the private sector is 12%, the marginal corporate and individual tax rate is 40%, and consumption averages 95% of total income.
A. Based on the information provided, calculate an economically appropriate social rate of discount.
B. Is a decrease in the marginal corporate tax rate likely to increase, decrease, or have no effect on the appropriate social rate of discount?

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Definitions:

Diuresis

Increased or excessive production and excretion of urine, which can occur naturally or be induced by medication, often used in managing fluid balance.

Hematuria

The presence of blood in the urine, which can be a sign of various underlying conditions.

Incontinence

The inability to control the excretion of urine or feces.

Estradiol

is a form of estrogen, a female sex hormone involved in the regulation of the reproductive and menstrual cycle.