Question

Evaluate how the 2016 House Republican Tax Reform Plan might affect the national economy from the perspective of Classical approaches (e.g., Classical or Supply-siders).  Evaluate how the 2016 House Republican Tax Reform Plan might affect the national economy from the perspective of interventionist approaches (e.g., Keynesians or Structuralist-Keynesians).    

Answer 1

2016 Trump Repubican reform is all set to cut down incone taxes for 80% of US Population and is all set to bring following results :

• 9.1%higher GDP pver long term
• 7.7% wage increase over long term
• 1.7million equivalent full time jobs

This will cost Federal government 2.4trillion dollars however since due to higher tax base this is one time loss, but revenues will decline by 191billion dollars only.

Hence as per Classical economists the above proposal is all set to increase inflation, appreciate currency steeply and national debt.

However Keynesian largely favour this as GDP enabler and growth driver with millions of job creation opportunities.