Investment Opportunity Expected Annual Return (%)
Purchase stock 11
Purchase home 9
TABLE 1-1 Expected Financial Returns of Investment Opportunity
Gross
Income ($)
Taxes
Paid ($)
Percentage of Income
Paid in Taxes
30,000 – 0.00
40,000 1,700 4.25
50,000 3,400 6.80
60,000 5,100 8.50
TABLE 1-2 Flat Tax Proposal
Household
Name
Gross Income
($)
Income, SS,
and Medicare
Taxes ($)
Federal
Taxes Paid
as a % of
Gross
Income
Disposable
Income ($)
Fixed
Expenses ($)
Discretionary
Income ($)
Jones 30,000 5,228 17.43% 24,773 19,673 5,100
Roberts 50,000 9,758 19.52% 40,243 32,683 7,560
TABLE 1-3 Income and Expenses of Variable Households
TABLE 1-4 Supply Table: Money Saved for Seven Sample Families
Annual
Interest
Rate (%)
Jones Roberts Smith Brown Meeks Adams Charles Total
0 –$ –$ –$ –$ –$ –$ –$ –$
2 – – – – – – – –
4 – – – 500 780 1,940 5,790 9,010
6 – – 670 1,250 1,940 2,720 7,530 14,110
8100 200 930 1,760 2,020 3,890 12,000 20,900
10 200 500 1,500 3,000 3,500 7,000 16,000 31,700
12 250 750 2,500 5,000 6,000 10,000 20,000 44,500
14 300 1,000 3,250 9,000 12,000 15,000 25,000 65,550
Annual Savings ($000)
Interest
Rate (%)
Amount
Financed ($)
Interest Paid ($)
0180,000$ –$
1155,454 24,546
2135,274 44,726
3118,595 61,405
4104,731 75,269
593,141 86,859
17 35,071 144,929
18 33,177 146,823
19 31,468 148,532
20 29,922 150,078
TABLE 1-5 Ann Smith’s Demand for Money
Type of Rate Definition Rate (%)
Discount
The charge on loans to depository institutions by
the New York Federal Reserve Bank
0.75
Federal Funds
The rate banks charge each other for overnight
loans in minimum amounts of $1 million
The rate on government treasury bills sold at a
discount of face value in units of $10,000
The interest rate that banks charge their most
creditworthy customers
TABLE 1-6 Money Rates, as of January 6, 2012
Amount
Financed
($)
Amount
Financed
($000)
Money
Saved
($000)
Annual
Interest
Rate (%)
xx’ y
180000 180 –$ 0 –$ 180 0
155454 155 – 1 – 158 1
135274 135 – 2 – 135 2
118595 119 – 3 – 120 3
104731 105 9 4 9 104 4
93141 93 11 5 11 94 5
83396 83 14 6 14 83 6
75154 75 17 7 17 75 7
68142 68 21 8 21 68 8
62141 62 27 9 27 63 9
56975 57 32 10 32 57 10
52503 53 38 11 38 53 11
48609 49 45 12 45 48 12
45200 45 55 13 55 45 13
42199 42 65 14 65 42 14
39543 40 78 15 78 40 15
37181 37 90 16 90 37 16
35071 35 107 17 107 35 17
33177 33 114 18 114 33 18
31468 31 117 19 117 32 19
29922 30 130 20 130 30 20
28516 29 131 21 131 29 21
27233 27 132 22 132 27 22
26059 26 132 23 132 26 23
24980 25 132 24 132 25 24
10
12
14
16
18
20
22
24
Figure 1-1 Supply of Money
14
16
18
20
22
24
Figure 1-2 Demand for Money
18
20
22
24
Figure 1-3 Demand for Money