Question

Why would tax cuts promote savings and investment not work if the economy is in a...

Why would tax cuts promote savings and investment not work if the economy is in a slump when one conceptualizes investment in this way

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Tax cuts promoting savings and investment woud not work when the economy is in a slump. When the economy is in a slump, it would need a push from the consumption side. One of the major reasons for an economic slump is the drop in aggregate demand. Therefore, a strong push from the demand side would be needed to get the economy out of the slump. Tax cuts promoting savings and investment will not help revive the demand. Therefore, it would not be of much use during the time of an economic slump.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When the economy is in a recession, the Federal Reserve usually cuts interest rates. Why would...
When the economy is in a recession, the Federal Reserve usually cuts interest rates. Why would the federal government do this?
Why government spending may give bigger boost to the economy than tax cuts? Short answer please.
Why government spending may give bigger boost to the economy than tax cuts? Short answer please.
Explain how tax cuts affect the economy from a Supply-Side economist’s perspective.
Explain how tax cuts affect the economy from a Supply-Side economist’s perspective.
Explain how tax cuts affect the economy from a Supply-Side economist’s perspective.
Explain how tax cuts affect the economy from a Supply-Side economist’s perspective.
The House of Representatives recently passed what “will be the biggest tax cuts in the history...
The House of Representatives recently passed what “will be the biggest tax cuts in the history of our country.” However, do tax cuts really work? Use the “Keynesian Cross” model to evaluate the effectiveness of cutting taxes by 10%. You should consider the effect of he tax cuts on GDP, employment, and the government’s budget. Is there an alternative proposal that would increase GDP by the same amount but have a smaller impact on the government’s budget? Assume the US...
Explain why the bush’s tax cuts was or was not a good idea .
Explain why the bush’s tax cuts was or was not a good idea .
Theoretically prove that savings equals investment in a closed economy.
Theoretically prove that savings equals investment in a closed economy.
Savings is always good for the economy. Automatic stabilizers work on the economy without new laws...
Savings is always good for the economy. Automatic stabilizers work on the economy without new laws being passed. Recognition lag is usually the largest time delay for fiscal policy. Crowding in is the opposite of crowding out. Running a deficit decreases the national debt. The Keynesians felt automatic stabilizers were sufficient to stabilize the economy. Savings is the only source of leakage in the basic Keynesian multiplier. U.S. unemployment benefits cover most unemployed workers. Unemployment benefits and corporate income tax...
1. Why did Adam Smith assert that "a free market economy would best promote economic growth...
1. Why did Adam Smith assert that "a free market economy would best promote economic growth and raise living standards?" 2. Why did Karl Marx predict that "the capitalist system of private ownership would eventually self-destruct?"  3. What opportunity costs did you incur ? 4. Assume that it takes four hours of labor time to paint a room and two hours to sand a floor. If all 24 hours were spent painting, (a) How many rooms could be painted by one worker?...
The result of the large tax cuts in the first Reagan Administration demonstrated very convincingly that...
The result of the large tax cuts in the first Reagan Administration demonstrated very convincingly that Arthur Laffer was correct when he asserted that cuts in tax rates would increase tax revenue. a. True b. False
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT