Since 70 percent of preferred dividends received by a corporation is excluded from taxable income, the component cost of equity for a company which pays half of its earnings out as common dividends and half as preferred dividends should, theoretically, be
cost of equity = rs(0.30)(0.50) + rps(1 - t)(0.70)(0.50).
a. true
b. false

Suppose the government enacts a stimulus program composed of $600 billion of new government spending and $300 billion of tax cuts for an economy currently producing a gdp of $14 comma 000 billion. if all of the new spending occurs in the current year and the government expenditure multiplier is 1.5, the expenditure portion of the stimulus package will add nothing percentage points of extra growth to the economy. (round your response to two decimal places.)