Question

In: Economics

Tax Policy What would happen to inflation, GDP, unemployment and economic growth in the short run...

  1. Tax Policy
  1. What would happen to inflation, GDP, unemployment and economic growth in the short run and the long run if we cut income taxes by 100 billion and the marginal propensity to consume (MPC) is equal to .75? Make sure to include the appropriate equation and an analysis of the impacts of C, I, G, NX, AD, AS, P, Q, inflation and economic growth.
  2. How would this tax cut impact the National Budget and the National Debt? What are the pros and cons of running a deficit? Would you support such a tax cut and for whom should we impose the tax cut?
  3. What would happen to these variables and the AD/AS graph if we had a corporate tax cut of 100 billion instead?
  4. What are 4 policies that the Supply-side Model supports?

Solutions

Expert Solution

Rahul Sunny answered 7 months ago
Next > < Previous

Related Solutions

What is the effect, in the short-run, on inflation and unemployment if there is a negative...
What is the effect, in the short-run, on inflation and unemployment if there is a negative demand shock (such as a significant decrease in wealth from … say, a decrease in housing prices)? i) Therefore, based on your answer to the question above, IN THE SHORT-RUN, if the AD is moving around (and the AS is relatively stable) then will there be a trade-off between inflation and unemployment (ie, do they move in the same direction or do they move...
What is the effect, in the short-run, on inflation and unemployment if there is a negative...
What is the effect, in the short-run, on inflation and unemployment if there is a negative demand shock (such as a significant decrease in wealth from … say, a decrease in housing prices)? i) Therefore, based on your answer to the question above, IN THE SHORT-RUN, if the AD is moving around (and the AS is relatively stable) then will there be a trade-off between inflation and unemployment (ie, do they move in the same direction or do they move...
Explain the following : Short run tradeoff (negative relationship) between unemployment & inflation. policy is not...
Explain the following : Short run tradeoff (negative relationship) between unemployment & inflation. policy is not efficient in the LR. Money supply curve is vertical. Expenditure multiplier + Tax multiplier = 1.
What are the economic effects of COVID-19 pandemic on Saudi Arabia's economy (GDP growth, unemployment, inflation/deflation,...
What are the economic effects of COVID-19 pandemic on Saudi Arabia's economy (GDP growth, unemployment, inflation/deflation, fiscal deficits, net capital outflows etc)?
Explain what happens to the output gap, unemployment, and inflation in the short run if there...
Explain what happens to the output gap, unemployment, and inflation in the short run if there is a permanent income tax cut implemented by the federal government. You do not need to draw any graphs, but thinking about the short run model will help. Be sure to explain which part of IS/MP/PC is affected and why. You may start with an economy at full employment and inflation at the central bank target. Also, discuss what the central bank is likely...
Explain what happens to the output gap, unemployment, and inflation in the short run if there...
Explain what happens to the output gap, unemployment, and inflation in the short run if there is a permanent income tax cut implemented by the federal government. You do not need to draw any graphs, but thinking about the short run model will help. Be sure to explain which part of IS/MP/PC is affected and why. You may start with an economy at full employment and inflation at the central bank target. Also, discuss what the central bank is likely...
There is a short-run tradeoff between inflation rate and unemployment rate. In the short-run the tradeoff...
There is a short-run tradeoff between inflation rate and unemployment rate. In the short-run the tradeoff of between inflation rate and unemployment rate creates a challenge for macroeconomic policymakers. If you were macroeconomic policymaker, how do you balance the short-run tradeoff between inflation rate and unemployment rate? Explain. What is the historical relationship between rates of unemployment and inflation in the U.S. economy? What are the most current figures for the unemployment rate and the inflation rate? What does this...
The short-run Phillips curve is the negative short-run relationship between the unemployment rate and the inflation...
The short-run Phillips curve is the negative short-run relationship between the unemployment rate and the inflation rate.  Suppose the Phillips curve is given by ?t = ?e + 0.2 – 5ut  where ?e= ? ?t-1. In this context ? is the actual inflation rate, ?e is the expected inflation rate and ? is a parameter indicating the relative speed of adjustment of expected inflation to actual inflation. Explain to the best of your abilities, the following questions. a) Explain the difference between...
Using the AD-AS model, graph and explain what would happen to unemployment and inflation in the...
Using the AD-AS model, graph and explain what would happen to unemployment and inflation in the following situations. a) Assume the economy begins at potential output. Consumer confidence rises. What is the short run effect? b) Starting with the previous question, consumer confidence rises. What is the long run effect?
What is your understanding of the relationship between economic growth (GDP), high/low unemployment, high/low Inflation, high/low...
What is your understanding of the relationship between economic growth (GDP), high/low unemployment, high/low Inflation, high/low wages, and the way they impact one another?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT