8. A. President Trump’s tax cut passed in December and the new federal budget has large...

8. A. President Trump’s tax cut passed in December and the new federal budget has large increases in spending, what type of fiscal policy (Expansionary or Contractionary) has occurred. Defend your answer. B. Since the Trump tax cut has taken effect what has happened to the deficit in the federal budget? Has it increased, decreased or remained the same? Use numbers to defend your answers. SEE QUESTION 5 URL 30 points ((Go to the following link to find the numbers. Click on 2019 and scroll down to the tables. Once you have accessed the link go to Statistical tables—2019, then Government Finance and table B-45(PDF) and B-46 (PDF). Look only at On-Budget deficit.) http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=ERP)

Expert Solution

1. This is definitely Expansionary fiscal policy as it includes lowering of taxes. This tax cuts pushed the federal deficit to $1 trillion which is due to the lowering of standard corporate rate of 21% from 35%. The Trump Administration stated this would benefit themselves by generating more revenue from faster economic growth.

2. Multinational repatriated $306 billion which is above the average quarterly amount over the last five years in the form of dividends in this first quarter of the year.

3. White house officials feel that the above phenomenon is the result of the positive impact of the President Trump's Law.

4. Economists truly believe that this thing will decrease the revenue in the short run but in the long run, it will definitely pave way for economic growth.

5. Due to the tax cuts, the multinationals will be likely to shift their money on paper into the US in order to take advantage of this provision and try to reduce their American tax bills.

Rahul Sunny answered 1 year ago

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