Indicate the Effect of Each of the Following Policies on the Variables

question 5

Essay

Indicate the effect of each of the following policies on the variables: Y, C, S, r, I, Ms, and Md.
(a) The government reduces the personal income tax rates.
(b) Firms become more pessimistic about future sales.

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Definitions:

Receivables

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

ACP

An acronym that needs specification to provide an accurate definition, as it can stand for many different things depending on the context.

Operating ROA

A profitability ratio that measures how efficiently a company utilizes its assets to generate operating income.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively a company uses investments to generate profit.